Cosmetic, travel stocks take different paths in Seoul, Tokyo
Investors see gains for Japan amid reports of China restricting Korea travel
TOKYO -- Shares of companies trading in cosmetics and travel dropped sharply in Seoul but rose in Tokyo Friday, as investors reacted to reports that the Chinese government has told Beijing-area travel agencies to curb tourism to South Korea.
On the Korea Exchange, AmorePacific Group's stock price slumped 13% on the day and Hankook Cosmetics Manufacturing plunged 19%. Luxury hotel operator Hotel Shilla also fell 13%, and Korean Air Lines slipped 5%. The Kospi index overall ended down 23 points, or 1.1%.
The Tokyo market enjoyed a reverse effect as investors saw a potential rise in Chinese tourism. Cosmetics company Kose, with brands such as Sekkisei that are popular among Chinese, reached 5% higher on the day at one point. Prices also climbed for a number of drugstore operators, such as Matsumotokiyoshi Holdings.
Beijing seems to be retaliating against Seoul for hosting the U.S. Terminal High Altitude Area Defense anti-missile system. On top of the travel cutback, conglomerate Lotte Korea -- which agreed last month to provide land for THAAD -- suffered a hacking attack Wednesday and Thursday that briefly brought down a duty-free unit's retail site.
Chinese officials have become particularly strict on material standards for cosmetics, and in numerous cases have turned away Korean imports of the goods. "This is a big blow to South Korea's economy, since China is a major trade partner," says Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management.
Many believe that "retail investors making short-term trades were the main drivers lifting cosmetics stocks in Tokyo," in the words of a Japanese securities firm. The advances did not spread to department store operators, some of which had notably weak showings despite expected gains in tourist trade.