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Japan travel stocks dive amid Hong Kong and Korean tensions

H.I.S. suffers multiday losses and Hanatour sees red ink for the year

A passenger at Hong Kong's airport is blocked from entering the security gates by trolleys set up by protesters.   © Reuters

TOKYO -- Travel agencies have tanked during recent trading here due to the repercussions from the protests in Hong Kong and the soured relations between Japan and South Korea.

H.I.S., the leading Japanese agency, slid for a third session through Thursday, closing 1.73% lower at 2,379 yen. The stock has fallen to a roughly six-year low after touching a year-to-date high of 4,520 yen in March.

Institutional investors have been selling off H.I.S. shares after protesters staged sit-ins at Hong Kong's international airport, grounding flights. In June, the city was the fourth leading producer of tourists to Japan after Taiwan, data from Japan Tourism Agency shows.

H.I.S. maintains that the effect of the Hong Kong demonstrations on travel is minimal, and that check-ins have restarted at the airport. But "until there are signs that international affairs have stabilized, the situation is not ripe for the stock to climb," said Tomoichiro Kubota at Matsui Securities.

Hanatour Japan slumped as much as 14% to an all-time low Thursday before closing 10% off at 863 yen. After the market closed on Wednesday, the company downgraded its 2019 guidance to a group net loss of 965 million yen ($9.09 million), an about-face from the 1.3 billion yen profit previously forecast.

The reversal stems from the lack of new travel reservations from South Korea, where the parent company and domestic leader Hanatour is headquartered. Budget carriers in South Korea have canceled flights bound for Japan amid the heated trade dispute between the countries.

Travel booking sites were not immune either, with Evolable Asia dropping 13% and Tabikobo shedding 6% on Thursday.

Overall demand for travel remains relatively healthy. Nevertheless, "the stocks of companies with overseas exposure may remain top-heavy for some time," said Shun Tanaka at SBI Securities.

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