Sectors to watch as the UK continues to ease restrictions

© Reuters.

By Samuel Indyk

Investing.com – England moved to its next stage of its emergence from lockdowns by lifting more restrictions on Monday. From today, pubs and restaurants are open for patrons to sit indoors, the international travel ban has been lifted and cinemas can now reopen.

Hospitality

The hospitality sector will be hopeful that the restrictions that forced a closure in the early part of 2021 and during much of 2020 will not return. Pubs and restaurants have been allowed to open recently but only for customers seated outdoors. Thankfully, the weather hasn’t been awful but with the UK weather known to change regularly, pubs will be pleased that they can now open their doors inside.

The British Beer and Pub Association said they expected 45,000 pubs to open and 3mln pints served today, on what is being dubbed as “Freedom Monday”. Although that sounds a lot, that number is still 65% lower than an average Monday pre-pandemic.

Listed names in the space include J D Wetherspoon (LON:JDW), Marston’s (LON:MARS), Restaurant Group (LON:RTN), and Mitchells & Butlers (LON:MAB).  

Airlines & Travel

International travel is no longer illegal although there are still restrictions on travel to most countries. Only 12 countries made the government’s ‘green’ list, meaning passengers returning from those countries will not have to isolate or quarantine upon their return. Those countries include Portugal, Australia, New Zealand, and Singapore. Some of these countries still will not let in international passengers, including those from the UK.  

Airlines will be hoping the pent-up demand for travel will see a surge in bookings. Just today, budget airline Ryanair (LON:RYA) noted that appetite for travel is picking up.

Other airlines listed in the UK include British Airways parent IAG (LON:ICAG), EasyJet (LON:EZJ), and Wizz Air (LON:WIZZ). Tour and cruise line operators in the space include Carnival (LON:CCL), Tui (LON:TUIT), and Jet2 (LON:JET2).

It is not only airlines that look set to benefit from the travel industry picking up again. The likes of WH Smith (LON:SMWH), SSP Group (LON:SSPG) and Trainline (LON:TRNT) will all be set benefit from the economy reopening. WH Smith and SSP operate concessions in many transport hubs, including airports and rail stations, while Trainline operates a rail ticket booking platform.

There are still fears that the B.1.617.2 Covid variant, also referred to as the ‘Indian variant’, is spreading rapidly across the UK which could potentially delay the final step of the reopening on June 21^st and impact domestic and international travel.

But will it mean stricter restrictions are around the corner? Dutch bank ING doesn’t expect it to.

“For the time being, the probability of this happening – at least a return to widespread business closures and strict mobility restrictions – seems less likely,” ING said in a research note. “That’s partly because the early evidence from both lab experiments and real-world data suggests the vaccines are still effective against this new variant.”

Leisure stocks

Cinemas, bowling alleys and bingo halls can also reopen, as well as football and other sports stadia, although at reduced capacity.

Hollywood Bowl (LON:BOWL), the UK listed bowling alley, is optimistic as it reopens its doors, according to AJ Bell investment director Russ Mould.

“Hollywood Bowl is as enthusiastic as it can get, given it is finally able to reopen its doors after a lengthy period of enforced closure,” Mould said. “Before the pandemic it proved good at getting landlords to help pay for new or refurbished bowling sites; now it is likely to be in an even stronger position to strike deals with property owners given how its units are key attractions for bringing visitors into leisure and retail outlets.”

Other UK-based companies to look out for in the sector include Rank Group (LON:RNK) and Cineworld (LON:CINE).

Next stage

The UK government’s next stage for easing restrictions is June 21^st where they hope that all social distancing measures can be consigned to the scrapheap.

However, as yet, no decision has been made.

“We're not at the point where we can make a definitive judgment,” said Prime Minister Johnson’s spokesperson. “We want to keep a close eye on the data, we want to get as much data in as possible before considering the next steps.”