Source: e company Author: Zhuo Yong

According to the reporter, affected by the depreciation of the yen, the Japanese tourism industry has gradually returned to the level of 2019 this year, especially the number of Chinese tourists to Japan, an important "buyer" in the Japanese tourism consumer market, has increased significantly.

In addition, industry insiders believe that the continuous depreciation of the yen has to some extent affected China's import and export business, and may also bring bullish to A shares and Hong Kong stocks.

Number of Chinese tourists to Japan is climbing.

"I've been waiting in line for an hour and still haven't gotten into the store." Ms. Cheng, from Wuhan, Hubei province, China, told Securities Times reporter at the door of the LV store near Tokyo Ginza that the store only opened at 11 am and she arrived at 10:30, but there was already a long line at the door.

Under the continuous depreciation of the yen, Japan has become the first choice for many consumers to buy international big brands. A domestic tourist on the scene told reporters that compared with the same LV bag in domestic, after the conversion according to the current Japan exchange rate, the price is about three or four thousand yuan cheaper than in domestic.

As a result, the Japanese tourism industry has experienced a high point after the epidemic. According to data released by the Japan National Tourism Administration, the number of tourists to Japan exceeded 11 million from January to April this year, almost half of the total for the whole year of 2023. It is worth noting that half of these tourists came from mainland China, ranking second in all overseas areas, only after South Korea. Taking the recent May Day holiday data as an example, according to data from TravelSky Technology, the total number of civil aviation passengers from China to Japan exceeded 65,000, with a daily average of more than 13,000 passengers, restoring more than 73% of the passenger volume during the same period of 2019's May Day holiday.

Visiting luxury goods and local drugstores is one of the itineraries for many Chinese tourists to Japan. Reporters visited several luxury goods stores and drugstores in Tokyo and found that not only were there many Chinese tourists in the stores, but many stores also offered Chinese services. Some salespersons could even speak Mandarin. In addition, many shops also support WeChat and Alipay payments.

While the demand for travel to Japan is strong, costs are also rising sharply. "The Tokyo hotel we booked last year's National Day, after seeing it again recently, the price has almost doubled," said Ms. Yue, who traveled to Tokyo, Japan during last year's National Day holiday. The reporter found through several mainstream OTA platforms that the average price of hotels in busy districts such as Ginza, Shinjuku, and Shibuya in Tokyo has risen to 1,500-2,500 yuan.

China's import and export business is affected by the depreciation of the yen.

The depreciation of the yen undoubtedly has brought greater benefits in the short term to Japan's tourism, exports, and other aspects, while other economies in Asia will also be affected to varying degrees. Among them, the impact on China's foreign trade has already occurred and is especially beneficial to enterprises importing goods from Japan.

Recently, many listed companies have stated that the depreciation of the yen has reduced their procurement costs. For example, China Tourism Group Duty Free Corporation stated in response to investor questions that goods purchased in Japanese yen will help the company save some procurement costs when the yen depreciates, which has a positive impact on improving the company's gross margin. Shenzhen Textile A also stated that the depreciation of the yen is beneficial to reducing the company's procurement costs for imported raw materials. In addition, Sunnypol Optoelectronics also told investors that some of the company's raw materials are imported from Japan and are mainly settled in yen, and the depreciation of the yen has a positive impact on the company's exchange gains.

However, the depreciation of the yen may have a certain impact on China's commodity exports in the short term. Lu Gang, President of the Japan-China Association of Small and Medium Enterprises, analyzed in an interview that as a major country in the manufacturing industry, some of Japan's products and technologies have a certain competitive edge in the international market. The depreciation of the yen further enhances the export advantages of the country's products, which may exert pressure on those industries directly competing with Japanese products, such as electronics, automobiles, precision machinery, and other fields.

In the opinion of Yao Xusheng, a wealth management expert at PaiPaiWang, the depreciation of the yen has brought double-edged effects on China's imports and exports. Although China and Japan have trade competition in some areas, if the yen continues to depreciate, Japanese exported products will indeed gain price competitiveness, but the competitiveness of exported products ultimately depends on comprehensive quality and cost performance, and exchange rates will only cause temporary effects. On the other hand, the depreciation of the yen may lead to a chain reaction in global currency policies, especially in Asia. Other countries may follow Japan to take depreciation measures to protect their export industries, which may exert pressure on China's export industry.

However, from the perspective of introducing advanced Japanese technology into China, the current situation is relatively favorable. "We have received many Chinese companies this year, and they want to acquire high-tech Japanese companies in the fields of semiconductors, new energy, biomedical, and other fields. I have 10 companies on hand alone," Lu Gang told reporters. Since last year, many local governments in China have gone to Japan to attract investment and hope to introduce Japanese capital to China, but in his view, under the current Japanese economic situation, the pressure for small and medium-sized Japanese enterprises to invest in China is relatively high. A better way to cooperate is for Chinese companies to first introduce advanced Japanese technology into China through M&A, and the current depreciation of the yen is exactly bullish for Chinese companies to acquire high-quality Japanese assets and invest in setting up factories in Japan to expand overseas markets.

Or bullish for A-shares and Hong Kong stock markets.

In the past month, in order to support the exchange rate of the yen, the Japanese authorities have used funds worth about 9.79 trillion yen ($622.3 billion) to intervene in the foreign exchange market, which has prevented the yen exchange rate from hitting a new low. Some analysts believe that the recent statement by the Japanese government to intervene in the foreign exchange market is not to guide the yen to appreciate, but to contain its disorderly decline, after all, the depreciation of the yen helps Japan to get rid of the deflation that has plagued the country for 30 years. In Lu Gang's view, if the yen exchange rate breaks through the 160 level, the Japanese government will take action. For Japan, the most favorable exchange rate is one dollar to 130 to 140 yen.

For the Chinese stock market, there was a view that the surge in Hong Kong stocks from mid-April to mid-May this year was affected by the depreciation of the yen and the outflow of funds to Hong Kong stocks. In the view of Liu Yan, chairman of Anjue Asset Management, although it cannot be fully attributed to this, the depreciation of the yen may indeed push up Hong Kong stocks to some extent. "The depreciation of the yen has led to some of the profitable funds that originally invested in the Japanese stock market seeking allocation in other markets to avoid exchange rate risk. In this situation, A-shares and Hong Kong stock markets, which are relatively stable and have higher growth potential, are likely to become safe-haven options for these funds."

From the perspective of investing in the Japanese stock market, the Nikkei 225 index, which has maintained a rising trend for more than a year, started a downturn in March this year. As of the close of June 7th, the Nikkei 225 index has fallen by 5% from the highest level a month ago, and the Nikkei ETF has also followed suit. It is worth noting that due to the significant increase in the Japanese stock market at the beginning of this year, some investors purchased Nikkei ETF index funds. Although they are still profitable, due to the depreciation of the yen, the actual rate of return of some investors is lower than the increase of the Nikkei 225 index during the same period. Therefore, some institutional investors pointed out that the yen will still face significant volatility in the short term. Consequently, when investing in Japan-theme ETFs, attention should still be paid to exchange rate risk.

As for the trend of Japanese stock market investment, the Nikkei 225 index, which has maintained a rising trend for more than a year, started a downturn in March this year. As of the close of June 7th, the Nikkei 225 index has fallen by 5% from the highest level a month ago, and the Nikkei ETF has also followed suit. It is worth noting that due to the significant increase in the Japanese stock market at the beginning of this year, some investors purchased Nikkei ETF index funds. Although they are still profitable, due to the depreciation of the yen, the actual rate of return of some investors is lower than the increase of the Nikkei 225 index during the same period. Therefore, some institutional investors pointed out that the yen will still face significant volatility in the short term. Consequently, when investing in Japan-theme ETFs, attention should still be paid to exchange rate risk.

Editor/Lambor