Raphael Stevens

Travel restrictions launched in the wake of China’s border reopening may be affecting where people there are booking trips.
But it’s not out of spite, said several Chinese travelers who spoke to CNBC.

It’s because some countries aren’t letting them in easily, they said.

‘I think it’s unfair’

Reactions from Chinese travelers who spoke to CNBC were varied, ranging from indifference to confusion to anger.
“Of course, I think it’s unfair,” said one citizen, who asked to be called Bonnie. “But at the same time, we understand what’s going on.”
So far, more than a dozen countries have announced new rules for travelers departing from China. Last week, the European Union recommended that its members require Chinese travelers to take Covid tests before entering.

But Covid tests aren’t the problem, Shaun Rein, managing director of China Market Research Group, told “Squawk Box Asia” on Monday. It’s that “these policies are directed only towards mainland Chinese,” he said.

South African Mansoor Mohamed, who lives in China, agreed. “It is relatively easy and cheap to do a Covid test in China, so it will not affect my travel planning,” he said.
“However, I know that many patriotic Chinese colleagues and friends will avoid those countries for now because the practice of only testing passengers arriving from China is discriminatory,” he said.
Of course, China requires travelers to test negative before entering China, and has for three years.
The difference, Mohamed said, is that “every arrival [to China], including Chinese nationals … [is] subjected to the same rules.”

Where the Chinese are going

Gao Dan told CNBC she is planning to travel out of the province of Qinghai for the first time in more than two years. But she said she’s staying in China, adding that she “hasn’t looked into what other countries’ travel policies are,” according to a CNBC translation.
Others are booking trips abroad, but some not to their first-choice destinations — namely Japan and South Korea.

One traveler, named Bonnie, told CNBC her friends in China are going to Thailand rather than South Korea, even though “they wouldn’t have considered Thailand” before.
Tuul & Bruno Morandi | The Image Bank | Getty Images

“When China said they were opening the borders in January, all my friends said they’re going to Japan and Korea,” said Bonnie.
But they couldn’t get visas, she said. “So they are now going to Thailand.”   
Rein said Chinese travelers are now headed to Singapore and Thailand because “both countries are welcoming us.”
Of the top destinations Chinese nationals searched after the border reopening announcement, those are the only two that haven’t imposed new restrictions on incoming Chinese travelers.

Data shows search interest for outbound flights from mainland China rose by 83% in the 11 days after the announcement, compared with the 14 days before it, according to data from Trip.com Group.
During this period, search interest for Thailand and Singapore grew by 176% and 93%, respectively, according to the company.

Angrier at some more than others

Chinese officials called the rules from South Korea and others “excessive” and “discriminatory.”
But South Korea refutes claims of discrimination. Seung-ho Choi, a deputy director at the Korea Disease Control and Prevention Agency, pointed out to CNBC that the country’s rules apply to “Korean nationals and non-Korean nationals coming from China. … There is no discrimination for nationality in this measure.”
“China’s Covid situation is still worsening,” he said. The number of people traveling from China to Korea who tested positive for Covid-19 went up 14 times from November to December, he said.

The Prime Minister’s Office of Japan did not respond to CNBC’s request for comment. A representative at Japan’s Embassy in Singapore told CNBC that Japan is processing Chinese travel visa requests as usual.
Citing a discrepancy in infection information from China, Japan Prime Minister Fumio Kishida told reporters on Dec. 27: “In order to avoid a sharp increase in the influx of new cases into the country, we are focusing efforts on entry inspections and airports,” according to an article published by Nikkei Asia.
Both Japan and South Korea have taken conservative stances toward the Covid pandemic.
Japan, in particular, has been sluggish to bounce back to pre-pandemic life, with residents showing little enthusiasm when its own border fully reopened in October 2022.  

‘A political issue’

Rein told “Squawk Box Asia” that the rules are not just about tourism.
“This is a political issue,” he said, adding that he expects Japanese stocks to be affected, singling out two cosmetics names.

Read more about China’s reopening

“I would be cautious on Shiseido. I’d be cautious on Kose, because there are going to be some boycotts,” he said. Shares of Kose were lower on the Tokyo stock exchange on Tuesday, but Shiseido was higher.
Rein said animosity toward South Korea and Japan will be short-lived.
“It’ll take about three months for the anger to dissipate,” he said. “There’s going to be massive revenge travel outside to Korea to Japan — if those two countries treat Chinese properly.”
New Zealander Darren Straker, who lives and works in Shanghai, said he, too, believes the policies are politically motivated, calling them a “last sad gasp [as] the Covid geopolitical door closes.” More

Mainland China has reopened its borders, and citizens eager to travel are booking not just flight tickets, but also vaccination appointments.
“I believe that the natural first destination of the Chinese vaccine tourism is Hong Kong. It will then spread to Asia and the U.S., maybe extend to Europe,” Sam Radwan, president of management consultancy Enhance International, told CNBC.

Passengers prepare to enter Shenzhen through the Lok Ma Chau Spur Line Control Point on the first day of the resumption of normal travel between Hong Kong and mainland China on Jan. 8, 2023, in Hong Kong.
Li Zhihua | China News Service | Getty Images

Mainland China’s move away from its zero-Covid policy has led to a sharp surge in infections, and the resumption of travel means some are looking farther afield for vaccines. 
In mid-December, China’s full Covid vaccination rate stood near 87%, with 54% boosted. The main Covid vaccines approved for use in China are from Sinovac and Sinopharm.

Mainlanders have been flocking to Macao in recent months for Western mRNA vaccines, which are widely administered around the world but not endorsed by China. 
But even if patients attempted booking an appointment as early as mid-December, the next available slots at the Macau University of Science and Technology Hospital, the only location offering jabs to tourists, are as late as February.
Analysts expect that the list of destinations for vaccine tourism will grow.

‘Natural first destination’: Hong Kong

“I believe that the natural first destination of the Chinese vaccine tourism is Hong Kong. It will then spread to Asia and the U.S., maybe extend to Europe,” Sam Radwan, president of management consultancy Enhance International, told CNBC.
“It’s been long since I went to Hong Kong. I can take a vacation, as well as get vaccinated. Won’t this be killing two birds with one stone? Without saying further, I have made my appointment and am getting ready,” a man from Shaanxi province posted Friday on Chinese social media website Weibo.

Hong Kong Chief Executive John Lee said in a press briefing in late December that the city “has reached a relatively high vaccination rate,” adding that it has a “sufficient amount of medicine to fight Covid.”
But Hong Kong won’t provide free Covid vaccinations to short-term travelers.
“We want to prevent visitors coming to Hong Kong to use the vaccines at the expense of Hong Kong people and we will not offer government procured vaccines free of charge to non Hong Kong residents,” Hong Kong’s government officials said, adding that visitors have to stay a minimum of 30 days to receive a booster shot.

Our recent study suggests Hong Kong and Thailand may benefit the most from the international tourism channel if China removes visa restrictions and outbound travel gradually normalizes

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Expect to see a wave of mainlanders traveling to Hong Kong to get their jabs, said Lam Wingho, a member of Hong Kong’s Scientific Committee on Vaccine-Preventable Diseases, according to a local media report.
Lin said he received a steady stream of inquiries from citizens who wanted to know how relatives from mainland China could get vaccinated in Hong Kong, he was reported as saying.
Thailand is another viable destination for vaccine tourists, and the country ranks among the top destinations that the Chinese are keen on traveling to, which include Japan, South Korea, the U.S. and Singapore.
Thailand’s Tourism and Sports Minister in late December said he was considering proposing free vaccines for foreign tourists who request booster shots.
And there’s interest from the Chinese.
“At first I did not plan to go to Thailand, but for the sake of the Pfizer or Moderna vaccine, I’m thinking of going,” a Weibo user based in Shanghai said upon the announcement.
Another Weibo user residing in Beijing wrote that such a policy move would not only “help attract tourists to Thailand,” but also offer more variety for inoculation. “For mainland Chinese who are hoping for more vaccine options, they will be able to get vaccinated with the jabs they want. Win-win.”

“Going outside of China is definitely a big remedy on the minds of a lot … I believe that the Chinese will travel wherever they can get the medicine,” said Sam Radwan, president of management consultancy Enhance International.
CFOTO | Future Publishing | Getty Images

“On the spillover effects of China reopening, our recent study suggests Hong Kong and Thailand may benefit the most from the international tourism channel if China removes visa restrictions and outbound travel gradually normalizes,” Goldman Sachs wrote in a research note dated Dec. 27.
“Going outside of China is definitely a big remedy on the minds of a lot … I believe that the Chinese will travel wherever they can get the medicine,” Enhance International’s Radwan said.

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Virgin Orbit stock fell in trading on Monday evening, after the company confirmed that its first launch out of the United Kingdom failed to reach orbit.
The company uses a modified 747 jet to send satellites into space, by releasing a rocket from under the aircraft’s wing mid-flight.
This was Virgin Orbit’s sixth mission to date, and its second launch failure.

Cosmic Girl, a Virgin Boeing 747-400 aircraft sits on the tarmac with Virgin Orbit’s LauncherOne rocket attached to the wing, ahead of the first UK launch tonight, at Spaceport Cornwall at Newquay Airport in Newquay, Britain, January 9, 2023.
Henry Nicholls | Reuters

Virgin Orbit stock fell in trading on Monday evening, after the company confirmed that its first launch out of the United Kingdom failed to reach orbit.
Shares of Virgin Orbit fell as much as 30% in after-hours trading, from its previous close of $1.93 a share.

The company uses a modified 747 jet to send satellites into space, by dropping a rocket from under the aircraft’s wing mid-flight – a method known as air launch.
Virgin Orbit’s webcast showed its LauncherOne rocket released and fired its engine, with the company saying in a tweet that the rocket “successfully reached Earth orbit.” But about half an hour later, the company announced the launch had “an anomaly” and that the nine satellites onboard would not reach orbit.
Virgin Orbit is reviewing the launch data to identify the source of the failure, and acknowledged that it deleted the tweet about reaching orbit. The 747 jet and its crew safely returned and landed at Spaceport Cornwall in southwest England.

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Monday’s mission was Virgin Orbit’s sixth to date, and its second launch failure.
The company conducted just two launches in 2022, short of the forecast for four to six missions that Virgin Orbit gave at the beginning of last year. At the end of the third quarter, Virgin Orbit had $71.2 million in cash on hand, and raised an additional $25 million from Richard Branson’s Virgin Group, an existing major shareholder, in the middle of the fourth quarter.

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Rolls-Royce sold a record number of cars in 2022 as demand for its $500,000 vehicles remained strong, despite recession fears, according to CEO Torsten Muller-Otvos.
“We haven’t seen any slowdown or downturn,” Muller-Otvos told CNBC. “We haven’t seen any negative impact.”

Rolls-Royce delivered 6,021 cars last year, up 8% over 2021 and the first time the company crossed the 6,000 mark. The British carmaker, which is owned by BMW, doesn’t break out its profits and revenue. But the company said the average price of a Rolls-Royce soared to $534,000 last year — thanks largely to its customization program known as Bespoke.
With Bespoke commissions customers can help design and customize their Rolls-Royce cars with everything from unique paint colors to silk-embroidered headliners, one-of-a-kind wood materials and personalized champagne chests.
The company opened an invitation-only Private Office in Dubai to better service VIP and Bespoke clients in the Middle East, the leading region for ultra-customized ‘High Bespoke’ vehicles, and said more Private Offices will open around the world in the coming months.
Still, the U.S. was the largest market overall for Rolls-Royce in 2022, accounting for nearly 35% of its global sales, Muller-Otvos said. China, its second-largest market, saw a slight decline in sales but still claimed 25% of global sales and posted its second-strongest year for the company. Muller-Otvos said China’s reopening and economic recovery could help make China its largest market in the future.
“I foresee that market being quite a stunning business for us,” he said. “Particularly in the luxury segment, it’s in growth mode. I would not be surprised to see one day China being the largest region for us worldwide.”

Rolls-Royce
Steve Christo – Corbis | Corbis News | Getty Images

The company’s SUV, the Cullinan, was its bestseller in 2022, making up about half of global sales, Muller-Otvos said. Its Ghost model accounted for over 30% of sales, while the Phantom accounted for about 10%.
Meanwhile the automaker’s biggest launch of 2022 was the Spectre, Rolls-Royce’s first electric vehicle and the beginning of its plan to become fully electric by 2030.
Spectre, with a starting price of $413,000, saw more than 300 preorders from U.S. customers before it was officially unveiled last October. Muller-Otvos said U.S. orders have continued to climb, though he declined to provide numbers.
“Definitely far more than 300,” he said. “The orderbook has exceeded our expectations — even our highest expectations.”
Rolls-Royce has a big order backlog that will help cushion the company against any potential recession, Muller-Otvos said. The backorders now stretch for nearly a year, meaning anyone purchasing a Rolls-Royce today will most likely have to wait between 10 months and a year, depending on the model and features.
As for 2023, Muller-Otvos said it’s difficult to forecast so early, but signs point to continued strength.
“I’m not saying we’re immune from recessionary tendencies. We have seen years when our business was affected. So let’s cross our fingers that isn’t happening this year. I’m cautiously optimistic about us delivering another strong year in 2023,” he said.

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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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ADMA Biologics Inc: “It’s a great spec, but it is losing money hand over fist. I think it’s very binary. I can not like binary situations.”

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The new Alzheimer’s treatment Leqembi will cost an estimated $26,500 per year, according to Eisai, the company that led the drug’s development.
Most seniors who are eligible for Leqembi will have to pay out of pocket because Medicare has limited coverage to people participating in studies approved by the federal government.
“Without Medicare coverage, this drug is pretty much unaffordable,” said Tricia Neuman, a Medicare expert at the Kaiser Family Foundation.

Visoot Uthairam | Moment | Getty Images

Few seniors with early Alzheimer’s disease will have access to the new treatment Leqembi due to its high cost and very limited coverage by Medicare.
The Food and Drug Administration on Friday granted accelerated approval to Biogen and Eisai’s monoclonal antibody after the treatment appeared to modestly slow the progression of Alzheimer’s disease in clinical trial participants with mild cognitive impairment.

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The Japanese pharmaceutical company Eisai, which led the drug’s development, said Leqembi will cost an estimated $26,500 per year, though the exact price tag will vary by patient.
Most seniors who are eligible for the treatment will have to pay for it out of pocket because Medicare has limited coverage to people participating in studies approved by the federal government.
Medicare recipients have a median income of about $30,000 per year, according to Tricia Neuman, the executive director of the Kaiser Family Foundation’s Medicare policy program.
“Without Medicare coverage, this drug is pretty much unaffordable,” Neuman said. “Even with Medicare coverage, beneficiaries would still be responsible for 20% coinsurance, and that’s not a trivial amount.”
Eisai’s launch price for Leqembi came in higher than an independent estimate by the Institute for Clinical and Economic Review, a nonprofit that analyzes drug prices based on their benefit.

ICER, in a draft report, found that the drug would be cost effective for patients at a price ranging from $8,500 to $20,600 per year.
Rough estimates put the number of people ages 65 and older suffering from mild cognitive impairment due to Alzheimer’s disease at about 5 million, according to the Alzheimer’s Association
The Centers for Medicare and Medicaid Services restricted coverage back in April for a whole class of experimental Alzheimer’s drugs brought to market using the FDA’s accelerated pathway.
CMS made the decision due to safety and efficacy concerns that arose in the wake of the FDA’s controversial early approval in June 2021 of Aduhelm, which was also developed by Biogen and Eisai. Drugs like Aduhelm and Leqembi can cause brain swelling and bleeding.
An investigation by lawmakers in the House concluded that the FDA approval process for Aduhelm was “rife with irregularities.” The FDA approved the treatment despite opposition from its independent expert panel, which found that the available data did not demonstrate clear clinical benefit.
The CMS coverage limitations apply to monoclonal antibodies that target a protein called amyloid, which builds up into a plaque on areas of the brain in patients with Alzheimer’s disease.
CMS said on Friday that the coverage limitations currently apply to Leqembi, though the agency is examining the available information and could reconsider coverage based on the review’s conclusions.
“It’s not going to be widely available even to people who are potentially eligible based on whether or not they have mild cognitive impairment related to Alzheimer’s disease,” Neuman said.
Dr. Joanne Pike, president of the Alzheimer’s Association, called the coverage limitations “unprecedented and wrong” in a statement Friday. Pike said CMS denied coverage for Leqembi months ago before reviewing the available evidence.
“CMS has never done this before for any drug, and it is clearly harmful and unfair to those with Alzheimer’s,” Pike said. “Without access to and coverage of this treatment and others in its class, people are losing days, weeks, months — memories, skills and independence. They’re losing time.”
CMS plans to provide broader coverage for Leqembi if the treatment receives full FDA approval under the traditional process, according to an agency statement. But it’s not clear if or when this will happen. Eisai submitted an application to the FDA on Friday for full approval of Leqembi.
The FDA’s accelerated approval program is designed to bring drugs to market faster for patients with serious illnesses who don’t have any better options. The drug companies are continuing clinical trials, and the FDA gives its full approval if the data confirms a clinical benefit.
If the trials do not confirm a clinical benefit, the FDA can remove the drug from the market. Neuman said the stakes are high for Medicare and CMS is taking a cautious approach until there’s more data on Leqembi’s safety and effectiveness.
Clinical trial data published in the New England Journal of Medicine found that participants’ cognitive decline was 27% slower over 18 months for people who received Leqembi.
But 14% of people who received the drug suffered serious adverse events, compared with 11% of those who did not receive the treatment.
Neuman said finding a way to address the needs of people with Alzheimer’s is a “huge national challenge.” There is no cure for the disease and the drugs on the market have a limited effect, she said. Leqembi has raised hopes that the disease can at least be slowed.
“Families are struggling with the effects of Alzheimer’s with no cure in sight,” Neuman said. “So there’s a lot of pent-up demand for any drugs that could have a meaningful impact on family members who are starting to decline cognitively because they have Alzheimer’s disease.”

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A monthly housing sentiment index from Fannie Mae showed sentiment improving from November to December.
The share of respondents saying now is a good time to buy a home was still low, at just 21%, but it was up from 16% in October and November.
More consumers now believe home prices will fall in the next 12 months, and more also said they believe mortgage rates will come down.

Mortgage rates are still twice what they were a year ago, but home prices have been falling since June, and that’s finally making consumers feel better about what had been an overheated, highly competitive housing market.
A monthly housing sentiment index from Fannie Mae showed sentiment improving from November to December. The index is still lower than it was a year ago and just slightly off its record low set in October and November.

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The share of respondents saying now is a good time to buy a home was still low, at just 21%, but it was up from 16% in October. The share saying now is a bad time decreased.
On selling, however, sentiment continued to drop. The share of respondents saying now is a good time to sell dropped to 51% from 54%, while the share saying now is a bad time to sell increased.

Prospective buyers view a real estate showing.
Carline Jean | Sun Sentinel | Tribune News Service | Getty Images

More consumers now believe home prices will fall in the next 12 months, and more also said they believe mortgage rates will come down.
Prices in November, the most recent measurement, were 2.5% lower than the spring 2022 peak, according to CoreLogic. They were still over 8% higher year over year, but that annual comparison is now half of what it was in June.
The average rate on the popular 30-year fixed mortgage hit a recent high of 7.37% in October but then fell back into the mid-6% range throughout November and into December. As of last Friday it had dropped to 6.2%, according to Mortgage News Daily.

“As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices — from the perspective of the buyer — may not produce sufficient purchasing power,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist, in a release. “At the same time, existing homeowners may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable.”
That tension will continue to drive home sales lower in the coming months, Duncan said.
Adding to the confidence in housing, the share of consumers who said they were concerned about losing their jobs in the next 12 months dropped from 21% to 17%. Fewer, however, said their household income is significantly higher than it was a year ago.
With the housing market now in its historically slow winter season, some agents are reporting activity is “frozen.” Pending home sales, which represent signed contracts on existing homes, dropped more than expected in November, suggesting that closed sales in January will be lower as well.
Those sellers who are braving the housing chill are offering more concessions: Roughly 42% of sellers did so in the fourth quarter, the highest share in recent years, according to Redfin, a real estate brokerage. That’s up from just over 30% in both the previous quarter and the fourth quarter of 2021, and is higher than the previous high of 40.8%, notched during the three months ending July 2020, at the start of the Covid pandemic.

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