Nikkei 225: Ideal Entry or More Downside to Come?

19 Nov 2025

By Danish Lim, Senior Investment Analyst for Phillip Nova

Losses accelerated in the Nikkei 225 today, with the Index down by -3.22% as of close on 18 Nov, the biggest drop since April 9. This comes amid a diplomatic dispute between China and Japan, alongside worries about excessive fiscal spending domestically.

Japan tourism shares led losses on 17 Nov, while a tech selloff on 18 Nov further pushed the Nikkei 225 below 50,00 and towards 48,702.

CHINA TENSIONS:

Diplomats from both sides are set to meet in Beijing to discuss recent tensions around Takaichi’s recent comments on Taiwan.
Takaichi became the first sitting PM to publicly link a Taiwan Strait crisis with the possible deployment of Japanese troops.
China has demand Takaichi retract her statement and has warned its citizens and students against traveling to Japan.
Beijing has also threatened to impose a flurry of economic reprisals.
Foreign Minister Toshimitsu Motegi said Japan will “take appropriate steps” as needed, and that lawmakers have been working on multiple fronts to clarify Takaichi’s remarks.

On the ground:

State-owned travel agencies have cancelled group bookings made months in advance. Chinese airlines have offered to waive cancellation fees and allow flexible rebooking options.
Imperial Hotel Ltd said it started receiving notifications of postponements and cancellations for corporate events and stays
Kintetsu Group reported that cancellations for Nov and Dec were higher than usual.
The Japan Association of Travel Agents reported no major disruptions.
CEO of ANA Holdings Shinichi Inoue said there is no changes to booking trends from China to Japan, or vice versa.
On Xiaohongshu, users were split, some posted screenshots of cancelled itineraries while others insisted they would go ahead with their plans.
Nevertheless, tour groups make up only 11.9% of chinese tourists to Japan, independent travel makes it harder for authorities to influence outbound travel.

17 NOV:

Shiseido (-9.08%), Don Quijote parent Pan Pacific International (-5.27%), Isetan Mitsukoshi (-11.31%), J Front Retailing (-5.36%),
Takashimaya (-6.18%), ANA holdings (-3.35%), hotel chain firm Kyoritsu Maintenance (-8.14%)
ASICs (-4.01%), Muji parent Ryohin Keikaku (-9.39%), Seven & i (
Tokyo Disney Resort operator Oriental Land (-5.68%), and Uniqlo parent Fast Retailing (-5.29%) were all down
On 18 Nov, Pan Pacific (+1.76%), Oriental Land (+0.75%) were among the few who rebounded.
Opinion: popular international brands like UNIQLO, ASICs, Shiseido, Ryohin Keikaku, could see boycotts within China if tensions do not ease

FISCAL SPENDING:

40-year JGB yields jumped to 3.68%, the highest since its debut in 2007 due to rising uncertainty regarding Japan’s finances.

An upcoming economic package from PM Sanae Takaichi could strain the government’s finances.
A group of lawmakers reportedly urged Takaichi to craft an extra budget worth about ¥25 trillion to fund the stimulus, exceeding the ¥14 trillion initially reported by local media and the ¥13.9 million rolled out by former PM Ishiba a year ago.

TECH VALUATION FEARS:

Tech shares fell the most, with Softbank (-7.47%), cablemakers Furukawa Electric (-9.49%), Sumitomo Electric (-9.06%), and Fujikura (-9.90%), as well as chip-gear makers Ibiden (-8.48%) all down.

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