Japan’s travel shares drop after government suspension of subsidy program

TOKYO, Dec.15 (Reuters) – Travel-related shares in Japan fell on Tuesday after the country’s Prime Minister Yoshihide Suga said the travel subsidy program would be suspended nationwide around New Years for contain an increase in cases of the novel coronavirus.

In a coronavirus meeting on Monday, Suga said he would temporarily halt the program from December 28 to January 11.

The move comes at a time when Japan has seen an increase in COVID-19 infections. The country reported a record high of more than 3,000 new cases daily on Saturday and its capital Tokyo confirmed 621 new cases.

“There is a feeling among people that (Suga’s) suspension measure was a bit too late. This is because this nationwide suspension would, in the long run, help Japan contain coronavirus infections, ”said Takashi Hiroki, chief strategist at Monex Securities.

“So the suspension of the travel program is not necessarily a negative catalyst for the whole market. But it’s inevitable that travel-related stocks will be sold, ”he said.

The benchmark Nikkei stock average fell 0.27% to 26,659.91 at 0153 GMT, while the larger TOPIX fell 0.44% to 1,782.61.

The airline industry led the main stock market declines. ANA Holdings was the index’s biggest percentage loser, slipping more than 6.7% after investors flipped some of its newly issued shares. Meanwhile, Japan Airlines shares lost 2.8%.

Railways were also hit hard, with the West Japan Railway and Central Japan Railway falling 1.07% and 0.21% respectively.

Elsewhere, the HIS travel reservation service lost nearly 2.5% as its profits provided additional headwind as it reported a net loss of 25.04 billion yen for the fiscal year ended Oct. 31 on Friday. (Reporting by Eimi Yamamitsu; editing by Uttaresh.V)

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