Australia's largest airport operator can do no wrong as it posts another monthly increase in passenger numbers flowing through its terminal although there could be early signs that its golden run is running a little out of puff.
The share price of Sydney Airport Holdings Pty Ltd (ASX: SYD) climb 0.7% to $7.00 in morning trade after management reported a 1.8% increase in international travellers to 1.4 million for April compared to the same month last year, while domestic travellers jumped 3.1% to 2.3 million.
While any increase is good news for shareholders, the growth stands in stark contrast to its stellar March results and belies a drop in Chinese visitors who have been fuelling the tourism boom.
Shareholders will be hoping that this is just an anomaly. The earlier Easter break had help deliver a stunning 11.1% increase in international travellers with passengers from China and its special administrative regions jumping 19.9% in March 2018 versus the same month last year.
This time round, the number of Chinese nationals fell 2.7% in April even though the number of Taiwanese travellers surged 70% (albeit from a low base) as China Airlines added flights between that country and Australia.
The number of Indian and American visitors also jumped by an impressive 18% and 9.9% last month, but it's the Chinese that investors will want to be looking at closely as they make up the largest group of international visitors to our shores.
But one data point doesn't make a trend and the Chinese traffic figures from Sydney Airport can be fairly volatile – so this is definitely not a time to panic.
Furthermore, the Chinese tourism boom is far from over in my opinion given the mass transition of households in poverty to the middle-class and the high regard that the Chinese public has for our lucky country.
But we also know that an increasing number of Chinese visitors are choosing to use airports in other cities as an entry and exit point.
It also doesn't help that bond yields are staging another rally with the 10-year US government bond (which is used as a benchmark for all other bonds and debt) reaching just over 3.1%.
Rising bond yields are typically bad news for infrastructure stocks although Sydney Airport and Transurban Group (ASX: TCL) have been able to hold their own against this headwind.
However, that's when the US benchmark yield was struggling to break through the psychologically important 3% level.
Now that it has decisively breached that level, investors may need to reassess the attractiveness of holding these bond-proxy stocks.
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