A growing number of Chinese people are traveling abroad, and more tourists are visiting China. That spells opportunity. Thinkstock By Carolyn Bigda, Contributing Writer April 20, 2015 Investors fret about China’s slowing economy and the impact it will have on world markets, but they might be less concerned if they looked at the country’s burgeoning tourist industry. Since 2012, China has dominated the global “outbound” travel market, with more Chinese heading abroad than people from any other country. And that number is expected to grow. Only 5% of China’s 1.4 billion people hold passports, and government policies, from paid leave for workers to relaxed visa requirements, are helping to promote travel, according to a report by Bank of America Merrill Lynch. See Also: The World's Greatest Stocks The impact on businesses catering to these travelers is enormous. Spending by Chinese citizens abroad totaled $164 billion last year and is expected to reach $264 billion by 2019, says Merrill Lynch. And although Hong Kong and Macau have long been top destinations for mainland Chinese, tourists are beginning to venture farther afield. The number of Chinese people visiting Japan during the Chinese New Year in February more than tripled, helped by a weak yen, which made travel to Japan more affordable for foreigners. In 2014, the number of Chinese visiting South Korea, just a two-hour flight from Beijing and Shanghai, jumped 42% from the year before. You can tap into the tourism boom by focusing on stocks in these regions, as well as companies that are popular with travelers today, including gaming concerns, operators of duty-free shops, and retailers of accessories and cosmetics. Citizen Holdings (CHCLY, $40.66) is a prime example. For the nine months through December 2014, sales at the Japanese watchmaker were up 5.6% in yen, helped largely by duty-free purchases. Tourism is also benefiting Don Quijote Holdings (DQJCY, $276.08), a Japanese discount-store chain, as the Chinese load up on low-cost appliances, brand-name fashions and cosmetics, say analysts Qian Yao and Katherine Chan of Nomura Group, an Asia-based financial services company. (The two stocks trade in the U.S. as American depository receipts, but they trade infrequently, so if you intend to invest in them, use a limit order that designates a maximum buy price. ; all share prices are as of April 15.) Advertisement The tourism industry in China remains fragmented, but one leading player is Ctrip.com International (CTRP, $63.75). The travel search engine is the largest in the country, and through its Web site Chinese people can purchase flights, hotels and vacation packages. So far, Ctrip caters mainly to domestic tourism, but sales of overseas trips are growing. The stock trades at a steep 57 times estimated 2016 earnings of $1.11 per share (up from a forecast 13 cents per share in 2015). But Michael Kass, manager of the Baron Emerging Markets Fund, argues that the price-earnings ratio is justified. “Ctrip has very visible growth in very large markets,” he says. For a cheaper way to tap into Ctrip’s potential, check out U.S.-based Priceline Group (PCLN, $1,200.95). In 2014, the online travel site invested $500 million in Ctrip for about 6% of the company, with the option to increase its stake to as much as 10%. Priceline’s stock has gained only 3% over the past year, lagging Standard & Poor’s 500-stock index by 14 percentage points. The problem has been the strong dollar. More than 80% of Priceline’s bookings are made overseas. Thanks to the sturdy dollar, analysts project that Priceline’s earnings will rise by only 7% this year, to $57.04 per share. But they see profits expanding by 19% in 2016. If that big jump materializes, the stock, at 21 times estimated 2015 earnings, looks as attractive as some of Priceline’s travel deals. As for gaming, business in Macau—the only region in China where casino gambling is legal—has plummeted because of a government crackdown on corruption. That has hurt Las Vegas Sands (LVS, $56.77), whose stock has sunk 36% since March 2014. But Chinese players still drive gaming revenues in Asia, and Sands is well positioned for the eventual rebound. The U.S.-based casino operator owns four hotels and casinos in Macau and will open another in 2016. In addition, Sands has casinos in Las Vegas and Singapore and is bidding to expand into Japan if lawmakers there legalize gaming. S&P Capital IQ analyst Tuna Amobi has a 12-month price target of $65 for the stock, which yields a generous 4.6%.