(Bloomberg) -- With the decision made to postpone the 2020 Tokyo Olympics by as much as a year, investors are piling into Olympics-related stocks as the threat of an outright cancellation of the games has been taken off the table.
Shares in sponsors, real estate companies, hotels and security providers surged in Tokyo Wednesday, amid a broader gain in the Japanese market. Dentsu Inc., the advertising giant responsible for assembling the richest sponsorship pool in the history of the games, rose the most in more than five years.
“Investors had priced in the worst-case scenario that the Olympics could get canceled entirely,” said Shoichi Arisawa, senior analyst at Iwai Cosmo Securities Co. “Postponement is better than cancellation. Uncertainty has been cleared, which is bringing investors back.”
Tokyo Olympics Delayed a Year as Virus Wipes Out 2020 Plans
With the spread of the coronavirus making holding the games in July all but impossible, Japanese Prime Minister Shinzo Abe and International Olympic Committee President Thomas Bach agreed to the unprecedented move to delay the Olympics in a telephone call Tuesday.
Among the stocks that have gained is sneaker maker and key Olympics sponsor Asics Inc., which jumped by its daily limit of 17% and was untraded as of the morning close in Tokyo on a surfeit of buy orders. Asics had lost half its value since the start of the year though to Tuesday.
Japan's real estate sector, which has been on a roller-coaster ride in recent weeks, also benefited from the decision. Sumitomo Realty and Development Co., which will redevelop the site of the Olympic Village into more than 5,000 apartments, surged the most since 2014. The games have helped create buzz in the Harumi area where the village will be located, with concern property values could plummet if the games were canceled. The Topix Real Estate Index surged the most since 2016 with the broader Topix up 5.2%
“A postpontment as opposed to a cancellation could be called the silver lining in this cloud,” said Masahiro Fukuda, investment director at Fidelity International. “If the games can be held in their complete form next year, we can expect a mild recovery in consumer spending leading to that.”
Abe made holding the games in their “complete form” a must-have, dismissing any notions the games could be held behind closed doors or in a reduced form.
Secom Co., which will provide security for the games, gained the most since 2009. Imperial Hotel Ltd., which runs the Tokyo hotel of the same name, touched its daily limit of 19%, and Panasonic Corp., another key Olympics sponsor, surged 14%, the most since 2014.
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