As Japanese Companies Urge Limited Mideast Travel, Shares Witness Surge
Asia, News

As Japanese Companies Urge Limited Mideast Travel, Shares Witness Surge 

Rising tensions in the Middle East due to the US-Iran conflict have shaken the Asian markets. Hiking gold and oil prices have left Asian investors worried about the future. Sources have recently reported that the Mideast tensions are somewhat easing, following which Japanese shares spiked today.

The Nikkei index was up by 0.16 percent at 23,777.03 points, being already set for a 0.5 percent gain this week. Post an Iranian missile stroke on US-led forces in Iraq on Jan 8, the index has been full of volatility. The global equity markets stabilised right after the US and Iran announced there are no plans of a proper war.

Reports of Nikkei showed 116 advancers against 103 decliners. Most percentile gains (four percent) were showed by convenience store operator Seven & I Holdings Co Ltd. Industrial Machinery maker IHI Corp soon followed showing gains of 3.85 percent, while rival convenience store operator FamilyMart Co Ltd traded 2.43 percent high. The lowest trading on the index was Chubu Electric Power Co by 1.96 percent.

Apart from affecting the crude, oil and gold prices, the US-Iran conflict has taken a toll on the businesses, including tourism industry. Considering the dangers that the US-Iran conflict poses on the Japanese companies situated in the Middle East, several firms have put a ban on Middle East travelling. Having an office in Dubai, Hitachi Construction Machinery has banned its employees from travelling to Iran and Iraq as a general rule. Moreover, the company claims to discourage all visits to the rest of the Middle East.

Putting the countries in its list of the risky destinations, oil refiner Idemitsu Kosan has instructed employees to avoid business trips to Iran, Egypt, Saudi Arabia and Israel. Starting January 8, engineering company Chiyodha barred business trips to the Middle East, including Qatar and the UAE. Trading house, Mitsui & Co. has asked employees to stay distant from the US military facilities and embassies situated in Asia and Africa.

Other Japanese companies like material maker, Toray Industries, a producer of reverse osmosis membranes for desalination plants in Saudi Arabia, are planning to evacuate Japanese employees in case US-Iran conflict worsens. 

Tourism industry is also undergoing a dig as people are scared to travel to the MENA region. Travel agency JTB has now reported increase in cancellations to Egypt and Turkey. Since Japan Airlines does not operate flights to the Middle East, business is going good so far. However, some Asian carriers like Singapore Airlines and Malaysia Airlines are avoiding using the conflicted airspace.

Japanese companies are also worried about a strengthening yen. Chairman of Kubota, Masatoshi Kimata expressed similar concerns as the firm takes a 2.7 billion yen hit to its profit almost every time the yen gains by 1 to the dollar.

While yen is still under speculations, Chinese yuan has already reached a five-month high yesterday. Reaching its strongest since Aug 1, yuan CNY=CFXS opened at 6.9312 per dollar, rising to 6.9252 high.

Amid ebbing Mideast tensions, Japanese companies are now hoping that the signing of a Phase One trade deal between the US and China, to be conducted on Jan 15, will improve the global economic outlook.

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