China’s Holding A Grudge Against Japan

China’s Holding A Grudge Against Japan
Theodora Lee Joseph, CFA

6 months ago2 mins

Mentioned in story

What’s going on here?

China turned reactive when Japan dumped nuclear wastewater into the Pacific Ocean, and now Japanese stocks have a hazard warning.

What does this mean?

Japan started dumping treated radioactive water from the damaged Fukushima nuclear power plant into the Pacific Ocean last week. Naturally, that’s got China a little on edge. The country’s already done a hard pass on any water-based Japanese products, and Chinese citizens are taking to the web to demand a complete boycott of all Japanese goods. But even without a full blanket ban, Japan’s international companies are in hot (and possibly toxic) water: Shiseido Co., a high-end cosmetics company, watched its stock fall more than 2% to land at a nine-month low last week. To add salt to the wound, the country’s main index – full of firms less dependent on consumer demand – notched a 1.5% climb.

Japan cosmetic stocks

Why should I care?

For markets: Let’s kiss and make up.

Shiseido’s already suffering from demand drying up, and this stand-off could impact more than makeup. Plenty of Japan's major industrial brands rely on Chinese sales: including Panasonic, Uniqlo, Mitsubishi, Aeon, Nomura, Nissan, and Toyota. Mind you, China’s hardly got a track record of keeping boycotts up for long, so these share sell-offs might not stick around.

The bigger picture: Japan’s dump could just be a dip.

Japan’s had a better year than most, with changes in monetary and corporate policies enticing international investors – including the one and only Warren Buffett. All that attention pulled the country’s stock market to its highest point since the early 1990s. And even if the market stumbles in the short term, you can bet investors will pounce if they spy cheaper prices. Remember, too, that Chinese consumers are tripping up a lot of the world. China’s slow economy means the country’s shoppers are strapped for cash, and that’s an issue for other global trading partners like Australia, South Korea, and Europe.

Japan stocks
Source: Google Finance


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