Japan Urges Russia to Return Control of Japan Tobacco Assets

what happened

Japan has filed a formal protest with Russia through diplomatic channels after President Vladimir Putin signed a decree placing all four Japan Tobacco manufacturing operations in Russia under temporary state control. Finance Minister Satsuki Katayama said on Friday that Tokyo wants the move reversed urgently and will protect the legitimate interests of Japanese citizens and companies.

According to Update, the Japanese government holds more than a third of the company. Japan Tobacco has operated in Russia since 1999, holds a market share of nearly 40% and earns roughly a quarter of group profit there. Shares were indicated 19% lower in Tokyo on Friday. Jefferies analysts said losing the Russian market would amount to losing one of the company's biggest businesses. The company said it has complied with regulations and sanctions and is weighing its options.

why it matters

For investors, the key questions are how large the losses from the Russian assets will be and whether any compensation follows. Japan Tobacco depends on this market more than many Western peers, and strained Moscow-Tokyo relations add uncertainty.

market impact

Japan Tobacco shares: losing the Russian business weighs on the stock price

• ▼Japan Tobacco shares pressure down — risk of losing the Russian market, roughly a quarter of group profit

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