Detailed Reopening Plans to be Revealed by Airlines and Tech Companies

In Asia, the theme of reopening has been playing out for several quarters. This week's earnings results from airlines and tech companies may show whether the exuberance is justified.

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There has been a trend towards long-haul international passenger and cargo traffic, which has been mainly driven by Singapore Airlines Ltd and Qantas Airways Ltd.

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Based on increased capacity mix and greater freighter yield, Citi analysts Kaseedit Choonnawat and Lu Xu expect air freight yield to rise 10% above pre-pandemic levels by 2024. The carriers in North Asia were preferred over those in Asean, as pent-up demand has not yet fully developed in the region.

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As a result of visa requirements and other hurdles, Chinese tourists have been slow to rebound in international travel.

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A surge in visitors, including from Sun Hung Kai Properties Ltd, flooded Hong Kong after the border reopened, Trade Algo reported.

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The recent recovery in the stock prices of Baidu Inc and Alibaba Group will also be in the spotlight this week.

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According to Trade Algo, even though China tech valuations are normalizing, a recovery in earnings may be necessary to sustain the momentum.

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The third quarter earnings report for Singapore Airlines (SIA) will be released today.

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In addition to lower jet fuel prices, the carrier should benefit from an acceleration of passenger recovery momentum. The passenger load factor of group airlines reached 89.7% in December, almost double that in December of the previous year, boosted by looser rules for travel in Hong Kong, Japan, and Taiwan.

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As SIA recovers to its pre-Covid capacity, it could manage its variable costs better than its peers. In contrast to Cathay Pacific and Qantas, the group has avoided significant headcount reductions, and may be spared staff shortages as capacity ramps up.

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As soon as the Hong Kong stock market closes tomorrow, Baidu will report its earnings. Investor interest is growing after Baidu recently affirmed its plans to publicly launch its ChatGPT-like service in March. Trade Algo consensus estimates anticipate the company's fourth-quarter revenue to be flat after growing 9.8% sequentially.

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Analysts at Citi including Alicia Yap wrote in a note that it is "too early" to assess whether it will lead to new monetisation opportunities for Baidu, adding that Baidu's advertising business is recovering and cloud opportunities are growing.

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Besides developing and testing ChatGPT-like robots, Alibaba plans to release earnings on Thursday.

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After zero-Covid curbs were lifted in China, Bloomberg Intelligence said the eCommerce behemoth's business and consumer sentiment can rebound.

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The first-half results for Qantas are also scheduled to be released on Thursday before the market opens. A booming travel market is expected to result in a return to profits, ending a streak of five consecutive losses in half-years.

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As Asia reopened and jet fuel prices steadily declined from June highs, the airline's earnings would have gone up due to a rise in passenger profits.