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Japan Tobacco's stock dampened by tax hike talk

Proposal threatens profitability of fledgling heated tobacco market

A smoking area in Japan. Besides increasing widespread restrictions on smoking, JT must also contend with a possibility of a higher tax on heated tobacco products.   © Reuters

TOKYO -- Despite a string of well-received acquisitions in Southeast Asia, Japan Tobacco shares are trading around 10% lower than their high for the year in May as investors weigh the possibility of a domestic tax increase on a promising new money maker.  

"The market has its eyes on domestic business risks," said Satoshi Fujiwara, an analyst at Nomura Securities. JT's domestic operations still account for about 40% of operating profit despite faster expansion overseas.

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