China has warned the public against traveling to Japan. Which stocks are affected?

Shares of Japan's largest tourism and retail companies plummeted after China advised its citizens to refrain from visiting and studying in Japan amid escalating diplomatic conflict. Risks of escalating political tensions with China have repeatedly caused problems in the economies of neighboring countries.

Quotes of Japanese cosmetics giant Shiseido at the opening of trading in Tokyo collapsed by 11.4%, showing the worst dynamics since April. Pan Pacific International, which operates a large chain of discount stores Don Quijote, known as Donki, fell by 9.7% - the collapse was the deepest since August 2024. Both companies are popular with Chinese tourists, Bloomberg writes.

Shares of department store operator Isetan Mitsukoshi fell in Tokyo by more than 12%, securities of Tokyo Disney Resort operator Oriental Land slipped by more than 5%. Quotes of the parent company Uniqlo - Fast Retailing - fell by 6.9%, which has not happened since mid-July. Shares of sushi chain operator Sushiro - Food & Life Companies - collapsed by 15%, the steepest drop since the company's listing in 2017, the article said.

Companies in the tourism sector also suffered: shares of air carrier ANA Holdings fell by 3.8%, hotel chain Kyoritsu Maintenance - by 8.9%. Quotes of Chinese carriers Air China, China Southern Airlines and China's largest travel agency Trip.com Group also sold off in the course of trading, the agency noted.

Investors began selling off stocks after Beijing warned students planning to study in Japan of increased risks for Chinese citizens in the country. The warning came after new Japanese Prime Minister Sanae Takaichi said that the use of military force in the conflict over Taiwan could be seen as a threat to Japan's existence, Bloomberg reported.

Beijing's directive threatens the recovery of tourism in Japan, one of the few points of growth in the country's stagnant economy. According to the Japan Tourism Agency, the Chinese were the top spenders among all foreign tourists last quarter, accounting for 28% of total spending.

Masaaki Kanai, director of the Foreign Ministry's Bureau of Asian and Oceanian Affairs, flew to China on Nov. 17 to settle the conflict, NHK reported. The diplomat intends to clarify that Takaichi's remarks about Taiwan do not deviate from Japan's official position and urge Beijing to "try to make sure that divergent positions between the countries do not harm" international exchanges.

The situation threatens the sales growth forecasts of Japanese retailers at the expense of tourism, stated Bloomberg Intelligence analyst Catherine Lim. According to her, the increased risk of boycott of Japanese goods in China may hit sales of Uniqlo, Asics and Muji in the domestic Chinese market.

Chinese consumers may continue to buy Japanese goods, including through online channels, according to Hisae Kawamoto, an analyst at Jefferies in Japan. "Investor concerns about the current travel warning may be exaggerated," she said.

It is not the first time that tensions with China have hit the economies of neighboring countries, Bloomberg recalls. About 10 years ago, Beijing reacted to South Korea's decision to deploy the U.S. THAAD missile defense system by closing some Lotte stores and banning group tours to the country. The flow of Chinese tourists to South Korea collapsed, and Korean automakers faced a collapse in sales in China. During the 2012 dispute over a group of islands in the East China Sea, the number of Chinese tourists in Japan more than halved in just four months.

This article was AI-translated and verified by a human editor