TOKYO -- The yuan's slide against the yen could chill spending by Chinese tourists in Japan and dent visitor traffic, spelling weaker earnings for the retail, travel and hospitality sectors.
The yen hovered around 17 to the yuan on Friday, after slipping as far as 20 in June. The yuan is 12% weaker now than then.
Because the Chinese currency was linked to the dollar, it had by June gained nearly 50% against the yen since the end of 2012, when the Japanese currency entered a slide against the U.S. currency. That in turn had effectively slashed the cost of travel in Japan for Chinese tourists, spurring a wave of visitor traffic.
But as the yuan now sheds value, the tide could turn again, knocking down both tourist numbers and visitors' retail spending. Traffic from China reached an all-time peak of 591,500 visitors in August, the Japan National Tourism Organization reports. But that figure slipped for three months straight starting in September, landing at 363,000 in November.
When compared with the year-earlier figure, November still showed a healthy 75% rise. Yet that was a far cry from August's 130% jump. The softer yuan may be partly responsible for the slump.
Visitors' ample spending in Japan could also fall as their buying power drops. A 10% softer yuan would depress tourists' spending by 149.1 billion yen ($1.25 billion) over the course of a year, SMBC Nikko Securities calculates.
Stocks linked to tourist demand are already beginning to wither. Baby product maker Pigeon and Uniqlo operator Fast Retailing have each shed more than 10% since the end of 2015, while health and beauty companies Kao and Shiseido are down 8% each. Isetan Mitsukoshi Holdings, Bic Camera and other retailers also face selling.
"If the weak yuan does in fact cause tourism figures to fall, hotels, railroad operators and other companies could lose their shine as well," Shuichi Hirukawa of Mizuho Asset Management said.