Modetour office in Seoul is almost empty in this October 2020 file photo as most of its employees took unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. Yonhap
Modetour office in Seoul is almost empty in this October 2020 file photo as most of its employees took unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. Yonhap


Doubts remain on US investment bank’s market predictions

By Park Jae-hyuk

JPMorgan is drawing attention after the U.S. investment bank increased its stake in Modetour, a local travel agency that remains dismal in terms of business operations that have been hit heavily by the spread of the COVID-19 pandemic.

According to a recent regulatory filing, the aggregate stake in Modetour owned by JPMorgan Investment Management and its affiliate, JPMorgan Asset Management, increased to 7.47 percent last month from 6.4 percent last December.

Its additional purchase of Modetour shares was seen as a surprise move by many market observers, considering the tour agency suffered a huge operating loss last year.

Modetour posted a 20.9 billion won ($18.9 million) operating loss for 2020 after sales dropped 81.5 percent year-on-year to 54.9 billion won.

JPMorgan’s recent investment activity is viewed as an indication of its hope for a gradual recovery from the pandemic in the tourism industry, and the reorganization of the market here by a small number of survivors, such as Hanatour and Modetour.

Marko Kolanovic, an analyst at the bank, also said the pandemic could be effectively over by April in his team’s recent report, according to Barron’s.

“While the dataset is still small, statistical analysis of current vaccination data is consistent with a strong decline (i.e. effective end) of the pandemic within 40 to 70 days,” Kolanovic was quoted as saying by the American weekly magazine.

JPMorgan’s predictions on the pandemic have been considered to be quite accurate here, since its report published in February last year said Korea’s coronavirus cases might peak at 10,000 last March.

Domestic equity analysts also backed JPMorgan’s optimistic outlook for the tourism industry.

“Considering each country’s plan to roll out the coronavirus vaccines, developed countries will resume overseas travels during the third quarter at the earliest,” Yuanta Securities analyst Park Sung-ho said. “In this case, Modetour is expected to return to profit during the fourth quarter.”

Modetour office in Seoul is almost empty in this October 2020 file photo as most of its employees took unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. Yonhap
JPMorgan headquarters in New York. AFP-Yonhap


However, doubts still remain on JPMorgan’s market forecast as it has differed from predictions by other global institutions, when it comes to the target prices of Tesla shares and Bitcoin, both of which have skyrocketed lately.

Last December, JPMorgan analysts rated the Tesla stock “underweight,” with a 12-month price target of $90, while Goldman Sachs had a “neutral” rating for it and 12-month price target of $780.

JPMorgan also said in its report this week that the Bitcoin rally is unsustainable unless volatility ebbs, reiterating its stance shown in a previous report that said Tesla’s purchase of Bitcoin would not trigger a wave of corporate demand. This was in contrast to moves by BlackRock and other global asset management firms that have started to include the cryptocurrency in their portfolios.

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