CHINA’S stock market rout has inflicted pain on Asian firms most exposed to its mammoth economy.

    South Korean exporters, Australian miners and Japanese tourism companies and exporters have tumbled much more than their respective markets.

    Foreigners own only a tiny fraction of Chinese equities but regional companies that depend on Chinese demand, or are proxies for China risk, are vulnerable to selling.

    The regional fallout could continue, particularly if bans on sales imposed by Chinese regulators to stem the losses remain in place, or the relisting of suspended stocks leads to further falls in Chinese shares.

    “If people can’t sell in China, the risk is of course that they go elsewhere,” said Herald Van Der Linde, head of Asian equity strategy at HSBC.

    “The anticipation is that they will sell in Hong Kong, in countries where they have large positions, and in markets that have direct exposure to China.”

    Bernard Aw, market strategist at IG in Singapore, noted that Australian mining stocks and the broader Hong Kong market were especially vulnerable.

    In South Korea, companies that export to China were especially hard hit with LG Electronics and semiconductor manufacturer SK Hynix both sliding 13 percent since the Chinese crash began June 12, compared with a 2 percent decline in the benchmark KOSPI.

    In Australia, which sells much of what it mines to China, Fortescue Metals has slumped 26 percent, Rio Tinto 9 percent and BHP Billiton 5 percent, versus a retreat of just 0.7 percent in Australia’s S&P/ASX 200.

    The yen’s traditional status as a safe-haven currency during times of uncertainty has also had a knock-on effect on Japanese companies. The currency has gained 3 percent since it hit a 13-year low in early June.

    A strong yen hurts the competitiveness of exporters, and China is a big market for Japanese manufacturers.

    More directly, Japanese firms which benefitted from record numbers of Chinese tourists are now bracing for the prospect many will now stay away.

    “There are growing concerns about whether inbound demand will be affected,” said Dairo Murata, an analyst at JP Morgan. “Shares of big brands that depend on inbound tourism for profits are seeing a relatively large depreciation.”

    Shares of tourism operators, as well as makers of electronics and cosmetics products, popular with Chinese consumers, have declined.

    Oriental Land, which operates Tokyo Disneyland, has slipped 6.2 percent since June 12, compared with a 2.4 percent drop in the benchmark Nikkei 225.

    (SD-Agencies)