Japan’s Tourism Shares Drop After China Warning On Travel

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Economic

Summary:

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

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Justin

Forex

Political

Economic

President Donald Trump said proposed Senate legislation to sanction countries conducting business with Russia would be "okay with me," his strongest indication yet that he would support a monthslong push to strangle Moscow's funding.

"The Republicans are putting in legislation that is very tough sanctioning, etcetera, on any country doing business with Russia," Trump told reporters before leaving Florida on Sunday to return to the White House.

Senate Majority Leader John Thune said in October that he was ready to bring legislation long championed by Senator Lindsey Graham of South Carolina that sanctions Russia to a vote, but didn't "want to commit to a hard deadline."

The bill would allow Trump to impose tariffs of up to 500% on imports from countries that buy Russian energy products and are not actively supporting Ukraine. This specifically targets major consumers of Russian energy, such as China and India.

"We may add Iran to that," Trump said Sunday, without elaborating.

Democrats and some Republicans in Congress have pushed for legislation to punish Russia for its continued war on Ukraine. Trump had been reluctant to support it as he tried to bring Russian President Vladimir Putin to peace talks with Ukrainian President Volodymyr Zelenskiy.

Putin is showing no sign of letting up in his military campaign after almost four years of war in Ukraine, with Trump failing to sway Putin even after hosting the Russian leader for a summit in Alaska.

While Ukraine is increasingly striking Russian oil targets, Russia has intensified its air strikes on Ukraine and is pushing to capture the rail hub of Pokrovsk.

Source: Bloomberg Europe

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Isaac Bennett

Japan's economy sank at an annualized rate of 1.8% in the July-September period, government data showed Monday, as President Donald Trump's tariffs sent the nation's exports spiraling.

On a quarter-by-quarter basis, Japan's gross domestic product, or GDP, or the sum value of a nation's goods and services, slipped 0.4%, in the first contraction in six quarters, the Cabinet Office said.

The annualized rate shows what the economy would have done if the same rate were to continue for a year. The fall was still smaller than the 0.6% drop the market had expected.

A big decline during the quarter came in exports, which were 1.2% down from the previous quarter.

Some businesses had sped up exports, when they could, to beat the tariffs kicking in, inflating some of the earlier data for exports.

On an annualized basis, exports dropped 4.5% in the three months through September.

Imports for the third quarter slipped 0.1%. Private consumption edged up 0.1% during the quarter.

Tariffs are a major blow to Japan's export-reliant economy, led by powerful automakers like Toyota Motor Corp., although such manufacturers have over the years moved production abroad to avert the blunt of tariffs.

The U.S. now slaps a 15% tariff on nearly all Japanese imports.

Japan also faced political uncertainty recently, until Sanae Takaichi became prime minister in October.

Source: Yahoo Finance

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Daniel Carter

Economic

Japan's economy contracted an annualised 1.8% in the July-September quarter, the first fall in six quarters, due to a hit to exports ‌from U.S. tariffs, government data showed on Monday.

The decline, while not as steep as expected, could complicate ‌the Bank of Japan's plans to raise interest rates further. Analysts are now focusing on how soon the world's fourth-largest economy will overcome the tariff impact and rebound.

The decrease in gross domestic product was narrower than a median market estimate of a 2.5% fall in a Reuters poll.

It ⁠followed revised growth of 2.3%‌ in the previous quarter, when the economy got an extra boost from solid exports that reflected front-loading shipments to the U.S. as ‍Japan's tariffs negotiations lingered.

Washington formalised a trade agreement with Tokyo in September, implementing a baseline 15% tariff on nearly all Japanese imports, down from the initial 27.5% on autos and a 25% duty threatened for most other goods.

The third-quarter reading translated into a quarterly fall of 0.4%‌, better than the median estimate of a 0.6% contraction.

Private consumption, which accounts for more than half of economic output, rose 0.1%, matching a market estimate.

But that cooled from the 0.4% rise in the second quarter, indicating that high food costs kept households reluctant to spend.

Net external demand, or exports minus imports, knocked 0.2 of ⁠a percentage point off growth, versus a 0.2 point positive contribution in the April-June period.

Capital spending, a key driver of private demand-led growth, rose 1.0% in the third quarter, versus a rise of 0.3% in the Reuters poll.

The ‍weak GDP data comes ⁠as new Prime Minister Sanae Takaichi's government is compiling a stimulus package to cushion the blow to households from the rising living costs.

Close economic advisers to Takaichi have cited a likely ⁠sharp GDP contraction as a reason for aggressive stimulus measures.

The latest data could embolden those advisers to call for the BOJ ‌to go slow in raising interest rates, analysts say.

Source: Yahoo Finance

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Daniel Carter

Political

The US State Department said Sunday it plans to designate a Venezuelan drug cartel as a foreign terrorist organization and cited the country's president, Nicolas Maduro, as its leader.

The designation would take effect on Nov. 24 and ban entry to the US and allow the US to seize the organization's funds.

"Based in Venezuela, the Cartel de los Soles is headed by Nicolás Maduro and other high-ranking individuals of the illegitimate Maduro regime who have corrupted Venezuela's military, intelligence, legislature, and judiciary," Secretary of State Marco Rubio said in a statement. "Neither Maduro nor his cronies represent Venezuela's legitimate government."

The Treasury Department in July deemed the cartel as a specially designated global terrorist group, which imposed some penalties.

The US since September has been carrying out a campaign of airstrikes against alleged drug trafficking boats in the Caribbean and eastern Pacific Ocean, killing dozens, in a bid to halt South American drug cartels from exporting illegal narcotics.

Earlier Sunday, the USS Gerald R. Ford aircraft carrier entered the Caribbean Sea in a mission the Pentagon said was aimed at supporting President Donald Trump's goals of countering narco-terrorism.

Trump said Friday he had "sort of made up my mind" when asked if he had come to a decision on next steps with Venezuela. "I can't tell you what it is, but we made a lot of progress with Venezuela in terms of stopping drugs from pouring in," he told reporters aboard Air Force One.

Trump has repeatedly threatened to expand those attacks to land, fueling speculation about US strikes on Venezuela.

Source: Bloomberg Europe

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Gerik

Economic

India emerges as Japan’s new production powerhouse

In one of the most pivotal industrial shifts of the decade, leading Japanese carmakers Toyota, Honda, and Suzuki are dramatically pivoting away from China and pouring investments into India. According to Autoblog, these companies have committed more than $11 billion to building and expanding their manufacturing capabilities across India. The goal: to transform India into a global manufacturing and export hub for affordable vehicles, especially as geopolitical and market dynamics make China a less favorable option.

Toyota alone is investing over $3 billion to expand its southern India factory and build a new facility, boosting annual capacity to over one million vehicles. Suzuki, meanwhile, is deploying $8 billion to raise its production from 2.5 million to 4 million cars annually. Honda has also announced plans to begin electric vehicle (EV) production in India by 2027.

FDI flows shift dramatically from China to India

This strategic relocation is backed by a striking realignment in foreign direct investment (FDI). Japanese FDI into India surged from under $300 million in 2021 to nearly $1.92 billion in 2024 a more than sevenfold increase. In stark contrast, Japanese investment in China has plunged 83% over the same period, now standing at roughly $300 million.

The reasons are clear: India offers cost-effective manufacturing, abundant labor, and a policy environment that restricts Chinese EV competitors, shielding Japanese firms in one of the world’s fastest-growing automotive markets.

India’s export growth and tariff advantage

India’s rise as a vehicle exporter is accelerating. In FY2024, it produced five million passenger vehicles, exporting around 800,000 of them a 19% year-on-year increase. With exports to Latin America and Africa expanding rapidly, India is positioning itself as a key global supplier of low-cost vehicles and parts.

Critically, passenger cars and components exported from India currently enjoy tariff-free access to the U.S., giving Japanese firms an edge amid rising protectionism and global supply chain recalibration. This contrasts sharply with Chinese-made cars, which continue to face mounting trade barriers in Western markets.

Rising domestic potential: Demographics, not saturation

India surpassed Japan in 2023 to become the world’s third-largest auto market, selling 4.27 million vehicles versus Japan’s 4.25 million. Yet, India’s vehicle ownership remains low only 44 cars per 1,000 people compared to 251 in China and 502 in Japan. This underscores immense room for domestic expansion, particularly in the affordable segment where Japanese firms are strongest.

The Indian auto industry has grown 60% since 2015 and is supported by favorable demographics, rising incomes, and government incentives for local manufacturing. For Japanese automakers aiming to dominate the global low-cost vehicle space, India represents both a vast domestic opportunity and a scalable base for exports.

The shift by Japan’s automotive giants to India is not just a geographic realignment it’s a strategic repositioning in a post-China world. While China remains a manufacturing giant, India’s demographic profile, cost competitiveness, and growing global connectivity make it an increasingly attractive long-term bet. If current trends continue, India could soon rival traditional industrial centers not just in scale, but in strategic value across global automotive supply chains.

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Gerik

Political

Budapest challenges EU’s legal basis for energy sanctions

On November 14, Hungarian Prime Minister Viktor Orbán declared that his government will take legal action against the European Union at the European Court of Justice. The move follows the EU’s recently adopted plan to phase out all Russian gas imports by January 1, 2028, a step Hungary deems both unlawful and economically harmful.

Orbán claims that the decision, endorsed on October 20 by EU energy ministers, violated the EU’s own legal protocols. Instead of requiring unanimous consent from all 27 member states, the policy was passed via “qualified majority”, a method that mandates only 55% of member states representing at least 65% of the EU population. Orbán argues this procedural choice is valid only for trade policy decisions, not for sanctions, which traditionally require full consensus.

Policy distinction at the heart of the legal dispute

According to Orbán, the EU’s classification of the gas ban as a trade measure is a legal maneuver designed to circumvent the requirement for unanimity. He insists that the gas phase-out carries the hallmarks of a sanctions regime, particularly given its roots in geopolitical tensions following the Russia–Ukraine conflict. As such, he asserts that it should have required approval from all member states, including Hungary and Slovakia both of which openly opposed the plan.

Speaking on national radio, Orbán called the decision a violation of European values and insisted that energy security cannot be sacrificed for political signaling. He also hinted that Budapest is exploring additional countermeasures to block or delay implementation of the gas ban.

The EU’s broader energy diversification agenda

The gas ban is part of the EU’s broader strategy to eliminate dependence on Russian fossil fuels, first outlined in the 2022 Versailles Declaration following the invasion of Ukraine. While Russian oil imports to the EU have dropped to below 3% of total supply, Russian natural gas still accounted for roughly 13% of the bloc’s gas imports in 2025 valued at more than €15 billion annually, according to Council data.

Under the current EU plan, new contracts for Russian gas will be banned starting January 1, 2026. Short-term contracts must end by mid-2026, and long-term contracts will be terminated by January 1, 2028. These measures aim to reduce the EU’s geopolitical vulnerability and further isolate Moscow economically.

Energy security vs political cohesion

Hungary and Slovakia have both warned that the gas ban could significantly raise energy prices and undermine supply stability in Central Europe. Orbán argues that energy policy should remain outside of partisan or ideological conflicts and emphasized that economic stability is a prerequisite for political unity and security.

Hungary continues to import Russian gas, alongside countries like Slovakia and Belgium, making it one of the last holdouts as most EU members diversify their energy sources. Orbán’s stance underscores the tension between collective EU goals and national energy interests, especially for member states still deeply tied to Russian infrastructure.

Hungary’s decision to legally challenge the EU’s Russian gas embargo could test the limits of EU procedural law and unity on foreign policy. As Brussels accelerates its decoupling from Russian energy, resistance from Orbán’s government reflects deeper fractures within the bloc over how to balance legal legitimacy, energy security, and geopolitical strategy. The outcome of this dispute at the European Court of Justice may set a precedent for future EU decision-making in crisis contexts.

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