Fears of Chinese backlash over missile defence hit South Korean firms

South Korean companies on Friday bore the brunt of a perceived backlash from China over the deployment of a US missile system outside Seoul, with shares tumbling on media reports of Beijing telling tour operators to stop selling trips to the country. Several of Korea's biggest news outlets cited unidentified sources as saying Chinese government officials had given the verbal guidance just days after the Seoul government secured land for the missile system from Lotte Group.
South Korea and the United States say the missile system is defence against nuclear-armed North Korea, but China says its territory is the target of the system's far-reaching radar. To protest the deployment, Chinese state-run media have called for a boycott of South Korean products. The Chinese are by far the biggest spenders in South Korea's tourism industry, propping up the world's biggest duty free market which generates about $8 billion in annual sales.
But on Friday, the price of shares in duty free retailer Hotel Shilla Co Ltd ended 13 percent lower while cosmetics maker Amorepacific Corp closed at a two-year low, as investors feared a decline in Chinese tourist dollars as well as a repeat of a backlash against Japan in 2012 over a territorial dispute and interpretations of history.
The share falls add to difficulties reported by South Korean companies in China since the Seoul and Washington governments in July agreed to deploy the Terminal High Altitude Area Defence (THAAD) system. On Thursday, an affiliate of the Lotte Group reported cyber attacks ostensibly originating from China.