Some of Japan’s top tourism and retail stocks suffered deep losses in intraday tard on Monday, even as the key index Nikkei declined by almost a per cent after China warned its citizens against travelling to the country amid escalating diplomatic tensions between the two Asian nations.
Shares of Shiseido Co., a major cosmetics company, crashed 11.4 per cent during the session, while those of Pan Pacific International Holdings, a major Japanese retail company which operates Don Quijote retail stores, plunged almost 10 per cent.
Meanwhile, the Nikkei, CSI 300, and SSE Composite Index declined by almost 1 per cent during the session, underscoring weak market sentiment.
Why are the stock markets in China and Japan falling?
Stock market sentiment in Japan and China weakened after Beijing warned Chinese students about heightened safety risks in Japan.
Beijing’s directive has come after Japanese Prime Minister Sanae Takaichi earlier this month said a Chinese attack on Taiwan could be a survival-threatening situation for Japan.
Beijing’s warning could be a serious risk for Japan’s tourism sector. A Bloomberg report, quoting the Japan Tourism Agency, stated that Chinese tourists were the top spenders among all foreign visitors during the last quarter, accounting for around 27 per cent of ¥2.1 trillion ($13.6 billion) in total inbound consumption.
The Japanese Prime Minister’s comment mentioning Taiwan is seen as a major shift in strategic policy, as, according to Reuters, Japanese leaders have so far avoided mentioning Taiwan when publicly discussing such scenarios.
Meanwhile, year-to-date, Nikkei has surged nearly 28 per cent and is one of the top-performing major indices globally. China’s SSE Composite Index has risen by nearly 22 per cent this year so far.
(With inputs from Reuters and Bloomberg)
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