Japan’s Tourism Shares Drop After China Warning On Travel

Japanese tourism and retail-related stocks slumped Monday after Beijing warned its citizens against traveling to and studying in Japan amid a deepening diplomatic spat between the nations.

Cosmetics firm Shiseido Co.'s shares plummeted as much as 11%, the most since April, with Pan Pacific International Holdings, which operates Don Quijote retail stores, plunging as much as 8.9%, the most since August 2024. The two companies are popular with Chinese tourists.

Department store operator Isetan Mitsukoshi Holdings lost over 12% with its peers J Front Retailing Co. and Takashimaya Co. down over 6%. Meanwhile, Tokyo Disney Resort operator Oriental Land Co. shares fell over 5% and Uniqlo parent Fast Retailing dipped 6.9%, the most since mid-July.

The declines come after Beijing warned students planning to study in Japan of heightened risks for Chinese citizens in the country. The directive followed comments by Japanese Prime Minister Sanae Takaichi that military force used in any Taiwan conflict could be considered a "survival-threatening situation."

Read: China Warns Its Students in Japan of Risks as Tensions Rise

China's warning "threatens tourism-led sales-growth expectations" for Japanese retailers, said Catherine Lim, a senior analyst at Bloomberg Intelligence.

There's also "heightened risk of boycotts of Japanese goods within China," which could hurt mainland China sales of Uniqlo, Asics Corp and Ryohin Keikaku Co.'s Muji, she added.

Travel-related names were hit Monday morning too, with airline operator ANA Holdings Inc. falling 3.8% and hotel chain firm Kyoritsu Maintenance Co. down as much as 8.1%.

Source: Bloomberg Europe