No-spectator Olympics produces winners and losers for Japanese stocks

Japan Times -- Jul 21
Tokyo’s delayed Olympics is flipping conventional wisdom on its head, with Japan’s stay-at-home stocks expected to emerge as winners rather than once-favored advertisers, real-estate firms and travel operators.

Thanks to the resurgent pandemic, shares in the likes of fried-chicken chains, food-delivery operators and electronics stores selling TVs are seen as more likely to get a boost from the Games, according to analysts.

“Purchases of food and TVs will be expected to increase, as people seek to make the Olympics more fulfilling,” Naoya Kumagai, a strategist from Okasan Securities, wrote in a recent report. “Even though the Games will be held in an irregular fashion, it can still provide a tailwind for many companies.”

Among the stocks on the Okasan watchlist are KFC Holdings Japan Ltd., which runs the fried-chicken empire in Japan. It saw sales increase in May and June amid increased stay-home demand. Its shares have risen about 3% over the past month, handily outperforming both the benchmark Topix Index and the Olympics’ official marketing agency Dentsu Group Inc.

The run-up to Tokyo’s year-delayed Olympics has been a fraught one as COVID-19 cases jump in the city and visiting athletes test positive for the virus. Japanese public support is mixed at best, raising questions over the merits of marketing the competition.

Still, success on the field might translate to gains for certain stocks if Japan can retain its home-field advantage in the absence of fans. Entertainment researcher Gracenote Inc. predicts the country could take a record haul of 61 medals, nearly 50% more than five years ago in Rio, including 26 golds.

That could benefit the likes of sponsors and supports including Mizuno Corp., the swimwear supplier for Japan’s closely watched swim team, which includes leukemia survivor Rikako Ikee. Shares in Asics Corp., a key sponsor and supplier of the Japan team’s sportswear, have nearly doubled over the past year, though have dipped almost 15% so far in July.

Demae-Can Co., the nation’s main listed food-delivery operator whose stock has fallen 56% this year, may also see a boost, according to Okasan. And makers of 4K televisions may also benefit, with the Olympics expected to be an ideal time to upgrade old TV sets.

- Japan Times