We warned in 2010 and updated most recently yesterday our story about APAC tensions over disputed territorial waters and islands that lay therein. Now we have confirmation of our JAL warning as shares in the airline tumble 4% today, which in reality is a very soft fall for JAL in this worrying situation.
JAL shares fell in value as the airline announced it was cutting flights to China. JAL released a statement today saying that they were to temporarily reduce flights from Japan to the Chinese cities of Beijing and Shanghai next month stating that the airline was "seeing irregular changes in travel demands".
The very serious spat over the Senkakus islands (or Diaoyu islands in China) will not go away soon. Japan has nationalized them; they cannot go back on that move and thus the likes of ANA and JAL look set to see far reduced demand for the foreseeable future if this matter is, as we think it is, a move by individuals to boycott Japanese companies and not simply another short, sharp protest.
Although if JAL shares were to fall again on Monday after a weekend of consideration then there will be a great opportunity for investors to buy-in and hold out the inevitable bounce.
The question is: Will China let the story fade now that their point is made or will they, much like Argentina with the Falklands, put pressure on neighbouring states to join a Japanese boycott? If you have any interest in Japanese business then this will be the thing to watch for over the coming days and weeks.
UPDATE TO YESTERDAYS LEAD COMMENT
