HONG KONG -- Cosmetic makers and hotel operators fell across the board Tuesday on the South Korean stock market on media reports that the Chinese government is sharply limiting travel to the country.
Travel agencies in mainland China have been ordered by multiple provincial governments to decrease the number of tourists to South Korea by more than 20% from year-earlier levels, according to an online article from JoongAng Daily, a South Korean newspaper. Citing sources from the South Korean Embassy in China and other people familiar with the matter, the paper says travel agents have until the end of the month to turn in plans for reducing tourism. Authorities are also reportedly seeking to curb cheap travel packages and restrict shopping trips on the peninsula to just one per day. Violators would face fines.
Analysts say this may be a retaliatory act against South Korea for its July decision to deploy Terminal High Altitude Area Defense, a U.S. anti-missile system, within its borders.
On Tuesday, shares in South Korea's two biggest cosmetic makers, Amorepacific Group and LG Household & Health Care, fell 7% and 8%, respectively. Luxury hotel operator Hotel Shilla also slipped 7%. South Korea's benchmark Kospi index dipped 0.5% to 2,037.
South Korea took in 5.98 million Chinese tourists last year, who spent approximately $13.9 billion in the country, according to data cited by JoongAng Daily. A 20% drop in tourism would equate to a loss of 3 trillion won ($2.64 billion), leading the paper to note an "impact is certain."