Malaysia has been the Asian country to benefit most from a fresh influx of mainland Chinese tourists following the diplomatic row between China and South Korea over the siting there of a U.S.-supplied missile defence system, says a note from Maybank IB Research.

The Maybank note cites data from ForwardKeys.com, a Spain-based research service that claims to collate and analyse 14 million travel bookings made daily across the world.

Maybank analysts Wong Chew Hann and Samuel Yin Shao Yang wrote regarding the controversy over missiles based in South Korea: “We had postulated that CNTA [China National Tourism Administration] will encourage more Chinese tours to Malaysia… True enough, ForwardKeys reported that China to Malaysia airline bookings from 16 March, 2017 to 31 August, 2017 surged 72 percent year-on-year.”

The brokerage said one of the “prime beneficiaries” of this market development could be Genting Malaysia Bhd, which runs Malaysia’s only casino resort, Resorts World Genting, in a highland area outside the country’s capital Kuala Lumpur. The company is currently in the midst of a major overhaul of the resort’s facilities; a project known as the Genting Integrated Tourism Plan.

The Maybank team added: “ForwardKeys ranks Malaysia as the prime Asian beneficiary from CNTA discouraging Chinese tours to South Korea.”

The brokerage stated: “If we assume that Chinese tourist arrivals for the whole of 2017 grow by a narrower 50 percent year-on-year, this will result in 3.2 million Chinese tourist arrivals for 2017. We estimate that the additional 1.1 million Chinese tourist arrivals will grow total [Malaysian] tourist arrivals by 4 percent year-on-year.”

The Maybank team said the estimate for national growth in tourism was conservative, as it did not take into account a new Malaysian visa processing centre at Xiamen in mainland China, and what the brokerage said was the waiving of visa requirements for Indian nationals resident outside India, as well as a 76 percent reduction in the visa fee payable by resident Indians – from MYR370 (US$83.43) to MYR88.50.

China’s position

Regarding the purported displacement of outbound Chinese tourism from South Korea mentioned by Maybank, there has been no report of any official confirmation from China’s tourism body that it is intervening directly in the missile row by discouraging its nationals from visiting South Korea.

But as long ago as October last year, stock prices of some South Korean companies with exposure to outbound tourists from China – including South Korean casino firms and cosmetics makers – saw a dip. The corrections followed rumours of retaliatory action by China in terms of outbound tourism to South Korea, with the suggestion it was linked to the placement of the anti-missile system, which was said to be a counter to North Korean ballistic missile testing.

In early March, China’s tourism administration had warned Chinese travellers about potential entry visa issues when travelling to Jeju Island – a South Korean holiday destination with foreigner-only casinos drawing Chinese visitors.

In a March 6 note, analyst David Bain of Aegis Capital Corp, said Macau might benefit from any displacement of mainland Chinese tourists from the South Korea market.

South Korea’s Yonhap news agency has meanwhile reported the nation was “actively” considering filing a complaint to the World Trade Organization regarding what South Korea considered “escalating economic retaliation” by China against South Korean commercial interests.

On March 13, South Korean and international media outlets reported more than 3,400 Chinese tourists had refused to disembark from their cruise ship after arriving at Jeju the previous Saturday. On the same day, China’s Global Times, a newspaper generally considered the most hawkish in defence of Chinese national interests, described the action of the Chinese tourists as “patriotic” and “civilised” but said any decision on whether to visit South Korea was up to the individuals concerned.