Protests affect Japanese shares

Shares of some Japanese firms that have suspended part of their operations in China in the wake of the anti-Japan protests have fallen in Tokyo.

As tensions remain high, there are concerns about the wider impact on economic and trade ties between the two countries.

Trade between China and Japan is worth about $345 billion (£212 billion).

Nissan Motors shares dropped five percent, Uniqlo-owner Fast Retailing fell seven percent and Honda Motors was down by 2.5 percent.

The protests followed Japan’s purchase of islands in the East China Sea, over which China claims sovereignty.

Though the firms have suspended operations temporarily, there are fears the protests may escalate further.

Seijiro Takeshita, director of Mizuho International, the second largest financial group in Japan, said that both Japan and China stood to lose out from the row.

“The political situation between the two countries is cold but the trade situation is very hot,” he told the BBC.

“It is certainly not giving a very good connotation on either party,” he said.

He added: “Japanese brands are among the top noted brands in China. It is a very big issue for the Chinese to make sure that Japanese investment is perpetuated.”

On Tuesday, Japanese supermarket operator Aeon said it had closed 30 of its stores in China following the protests, and Fast Retailing said it had shut 42 of its Uniqlo clothing shops and advised all Japanese employees to stay at home.

Car maker Toyota also suspended some production, though the group did not give any details as to which of its operations were affected, while electronics giant Sony closed two of its seven factories in the country.

“This is a major concern. The worry is that if it is not dealt with properly and fast enough, the situation may get out of hand,” Martin Schulz of Fujitsu Research Institute told the BBC.

“And any such development will hurt Japanese firms even further.”

The latest stoppages followed similar moves by other Japanese firms on Monday.

Nissan Motors suspended operations at two of its factories until 18 September and said it was monitoring the situation closely.

Panasonic has said that its plant in Qingdao will also remain shut until 18 September, while Canon has temporarily suspended operations at three sites.

Canon’s affected factories are in the south-east of the country at Zhuhai and Zhongshan in the province of Guangdong, and at Suzhou, near Shanghai.—BBC