Japanese retail and tourism stocks saw significant gains following the announcement of a new travel pact between Japan and China aimed at boosting bilateral tourism. The agreement, which includes measures to ease travel restrictions and foster deeper cooperation between the two nations, sent shares of key industry players rising.
Department store chain J. Front Retailing Co., benefitting from stronger-than-expected earnings, led the surge, climbing by as much as 6.9%, driving the Nikkei 225 Index upwards. Other retail giants, including Isetan Mitsukoshi Holdings Ltd. and Takashimaya Co., also saw gains, while Tokyo Disney Resort operator Oriental Land Co. rose by 2.5%.
The pact, forged during discussions between Chinese Foreign Minister Wang Yi and Japanese counterpart Takeshi Iwaya, includes not only measures to stimulate tourism but also a commitment to further collaboration in the entertainment sector. As part of the agreement, China’s top diplomat is scheduled to visit Japan in 2025.
Despite market optimism already factoring in the potential benefits of increased Chinese tourism—spurred by relaxed visa policies—strategists believe the recent developments have renewed investor interest in the sector. Chihiro Ota, senior strategist at SMBC Nikko Securities Inc., noted that earlier reports about Japan’s planned visa easing for Chinese nationals had already provided a boost to retail stocks.
Visitor numbers to Japan have been on the rise, breaking records in recent months, with the weaker yen making the country a more affordable destination. South Korea, China, and Taiwan represented the largest sources of visitors, according to the Japan National Tourism Organization.
J. Front’s earnings, particularly bolstered by strong sales among foreign tourists, have also contributed to positive sentiment within Japan’s retail sector, with anticipation building ahead of the Chinese New Year holiday.
The travel agreement between Japan and China is expected to have lasting effects on both countries’ economies, with tourism and retail industries positioned to benefit significantly from the strengthened ties.
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