China’s Fukushima backlash is starting to weigh on Japan stocks
SHARES of Japanese companies that are especially reliant on China demand plunged after users online in Asia’s biggest economy called for a boycott over the release of treated wastewater from the wrecked Fukushima nuclear plant.
Tokyo-based cosmetics firm Shiseido fell 2.6 per cent to a nine-month low, on a day when the broader Topix Index gained 1.5 per cent. Its revenue from China accounts for 30 per cent of the total, according to Bloomberg-compiled data. Shiseido’s local competitors including Pola Orbis Holdings and Kose also declined. Department store Takashimaya dropped over 3 per cent, and Don Quijote operator Pan Pacific Holdings fell more than 4 per cent.
China said last week that it will suspend seafood imports from the country, with its foreign ministry saying in a statement that it has asked Japan to “stop this wrongdoing.” Chinese chat pages have been flooded with posts about boycotting Japanese products, including on Weibo, one of the country’s largest social media platforms.
“The Chinese government’s reaction to the treated water has been surprisingly severe,” said Hajime Sakai, chief fund manager at Mito Securities. “Local media reports of cancellations of Japan tours and boycotts have raised concerns that the impact on inbound business may spread unexpectedly as China prepares for the travel demand season.”
The reaction from investors reflects public worries, even though the International Atomic Energy Agency said the move is in line with global safety standards and would have a negligible impact on people and the environment.
Signs that consumers are steering clear of Japanese products are especially disappointing for companies that had expected their sales to be bolstered by China’s resumption of group tours to its neighbouring nation earlier this month. But the share sell-off may be short-lived considering that China’s boycotts have not lasted long in the past, according to Asymmetric Advisors strategist Amir Anvarzadeh.
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For now, the boycott is a hot topic online in China. One post on Weibo lists dozens of Japanese brands to avoid buying, including Shiseido, Panasonic, Uniqlo, Mitsubishi, Aeon and Nomura. The post has received more than 10,000 “likes” since it was published on Aug 24.
“I’ll never buy Japanese cosmetics again, not to mention seafood,” one Weibo user identified with a nickname posted on Monday (Aug 28). “I won’t touch anything where the water source might be tainted.”
But despite the online protests, some analysts say that demand for Japanese products will return after a while, especially when foreign exchange moves have made those goods cheaper for Chinese shoppers.
“Japan’s products are highly sought after by the Chinese tourists and the weak yen is only going to make them more attractive,” said Charu Chanana, a market strategist at Saxo Capital Markets.
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