Korean boycott of Japanese products may spread further as trade tension escalates

Bloomberg

Public backlash in South Korea against Japanese products has dented some sales of tour packages, and analysts say the boycott could spread to luxury cars and retailers as a trade spat between the two countries shows no sign of abating.
While Fast Retailing Co doesn’t have a large exposure to Korea through its Uniqlo stores, the clothing chain may see a decline in annual sales growth, said Na Eun-Chae, an analyst at Korea Investment & Securities.
Some traders are betting that some low-end domestic apparel makers such as Shinsung Tongsang Co will benefit, she said.
Japanese luxury cars may also take a hit, said Kwon Soon-Woo, an analyst at SK Securities.
Toyota Motor Corp and Honda Motor Co have a combined market share of about 19 percent of the foreign car market in South Korea, according to data from Korea Automobile Importers & Distributors Association.
On the flip side, anti-Japan sentiment is already hurting some Korean travel companies. Hana Tour Service Inc, a travel agency, saw sales of tour programmes to Japan fall 30 percent in the second week of July compared with a year earlier, according to spokeswoman Song Won-Sun. Shares of Hana Tour fell 13 percent in July, while low-cost carrier Jejuair Co plunged 19 percent.
Tomoichiro Kubota, an analyst at Matsui Securities in Tokyo, said that while the impact on Japanese exporters of consumer goods appears to be limited, “there is a possibility of greater overall impact,” should relations between the two nations deteriorate.
Asahi also fell on the news it is paying $11.3 billion to buy Anheuser-Busch InBev NV’s Australian operations, in a deal that some analysts said was pricey.
Fast Retailing fell 0.1 percent, while Toyota lost 0.3 percent and Honda declined 0.4 percent.
Japanese consumer stocks were also under pressure on expectations Prime Minister Shinzo Abe will push ahead with a plan to raise the sales tax in October after his coalition secured a simple majority at yesterday’s upper house election.