Shares of Nintendo Co., the maker of Mario Kart and Switch, dropped sharply by as much as 9.8% in Tokyo, marking the biggest intraday decline in seven months. The plunge comes amid investor concerns that Donald Trump’s new tariffs on Chinese imports will increase console prices in the U.S., the world’s largest gaming market.
Nintendo’s shares had reached an all-time high last month, and the company had surged 23% this year before the sharp drop on Friday. Analysts pointed to the possibility that higher tariffs could make consoles, including the upcoming Switch 2, more expensive due to higher import costs, as most gaming consoles are either made in China or rely on Chinese suppliers for parts.
Trump’s decision to raise tariffs on Chinese imports from 10% to 20% on March 4 has stoked fears that it could impact major gaming companies. Nathan Naidu, an analyst at Bloomberg Intelligence, noted that this could lead to higher prices for consoles in the U.S., which would have a significant impact on sales.
Along with Nintendo, Sony Group Corp., the creator of PlayStation, also saw its shares fall by as much as 6%, marking its largest drop since August. Investors are likely reacting to concerns about tariff risks, which were amplified by gaming-related media reports.
Another factor contributing to the decline in gaming stocks is a retreat by global funds from Japanese stocks amid broader market jitters. Around half of Nintendo’s shares are held by foreign investors, and the retreat from Japanese equities has added to the selling pressure on gaming stocks.
“Global investors are reducing their positions in Japanese stocks, and they now can’t even help selling the most attractive stocks they have so far held on to,” said Ikuo Mitsui, a fund manager at Aizawa Securities Co.
Despite the concerns, gaming stocks had been among the best performers in Japan’s stock market this year. The Solactive Japan Games & Animation Index, which includes Nintendo, Sony, and Bandai Namco Holdings, had risen 14% through Thursday, compared to a 1.2% fall in the broader Topix index. However, with the new tariff fears and a retreat from Japanese stocks, even top-performing gaming stocks are facing pressure.
“There is a shift where tactical investors are unwinding positions as the sector had become crowded and expensive,” said Robin Zhu, an analyst at Sanford C. Bernstein.
Before the tariff hike, gaming companies were viewed as relatively insulated from tariffs, with investors flocking to them as safer bets within the tech sector. However, this latest development has put even the most resilient gaming stocks, like Bandai Namco, Capcom, and Konami, under pressure. Bandai Namco saw a drop of as much as 3.6%, while Capcom and Konami each fell by over 4%.
“Even gaming stocks that have performed well this year are now coming under pressure,” said Yasuo Sakuma, president at Libra Investments. “Some investors are likely being forced to sell these stocks to cover losses elsewhere.”
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