April 19, 2014 5:32 am JST

Investors in Japan cheering budget-friendly retailers, eateries

TOKYO -- With this month's consumption tax hike prompting Japanese consumers to tighten their purse strings, investors are snapping up shares of companies with low-priced offerings.

     Dumpling restaurant operator Ohsho Food Service rose to a high Friday. So did Olympic Group, which runs supermarkets and discount stores. Their shares logged respective gains of 5% and 8% this week, outstripping the 4% rise of the benchmark Nikkei Stock Average. Hiday Hidaka, an operator of Chinese restaurants, climbed to a high this week as well.

     The sales tax hike will further polarize consumption, market pros say. Nomura Securities sees demand for luxury goods holding firm on improved consumer sentiment. At the same time, market observers expect consumers to step up their yen-pinching when shopping for household goods.

     Fast Retailing recently downgraded its earnings forecast, sending shock waves through the market. The cut, resulting from increased discounts at its Uniqlo and GU clothing stores, shows how consumers have grown sensitive to pricing for everyday goods.

     Businesses expected to benefit from the growing trend of frugality also include those "shuffling product lineups and working to expand customer bases to counter the tax hike's impact," says Yoshihiko Tabei of Naito Securities. Gulliver International, which deals in used cars, has opened a site specializing in minivans as it aims to lure families with young children.

     Overseas investors are increasingly taking to the sidelines in the Japanese market, and blue chip exporters are moving wildly. This is making small- and midcap stocks of companies focusing on the domestic market look more attractive, says Hideyuki Ishiguro of Okasan Securities.