Friday, October 18, 2013
China-Related Stocks Split More Sharply Between Winners, Losers
TOKYO (Nikkei)--The divide between winners and losers is increasing among Japanese companies doing significant businesses in China. With the Chinese government moving away from its excessive dependence on infrastructure investment, stocks of large-scale heavy-industry firms are struggling to rise while those of consumption-related companies are surging upward.
As the government's new consumption-oriented stance becomes more evident, machinery and related demand is expected to fall. Shares in large-scale heavy equipment maker Komatsu Ltd. (6301) fell about 30% from the price logged at the end of May 2008, before the collapse of Lehman Brothers, while JFE Holdings Inc. (5411) fell more than 50%. Komatsu slid about 2% from its price at the end of January.
Meanwhile, there is a clear uptrend among consumption-related companies, including Ryohin Keikaku Co. (7453), Fast Retailing Co. (9983), Asahi Group Holdings Ltd. (2502), Ajinomoto Co. (2802) and Unicharm Corp. (8113).
Consumer spending is expected to continue rising as China's middle-income population grows, said Masayuki Kubota at Daiwa SB Investments Ltd.
Ryohin Keikaku, operator of the Muji chain store, is gaining popularity in China among young people for its simple yet trendy clothing and cosmetics. In this year, the company's average same-store sales in China logged double-digit growth on the year.
Many companies seeing success in China are also expanding elsewhere in Asia. Unicharm's disposable diapers are popular in China, where they are seen as highly safe, but the company's profitability there is falling slightly due to fierce competition from U.S. companies.
With the battle for China's consumers growing even more intense, Unicharm is increasing its diaper sales in other growing markets, including Vietnam and Indonesia.
(The Nikkei, Oct. 18 evening edition)