JAL makes modest stock market return Shares of Japan Airlines saw a modest lift on their Tokyo trading debut, rising 3 per cent from their initial public offering price to finish the morning session at Y3,905. JAL relisted on the Tokyo Stock Exchange on Wednesday in the second-biggest IPO this year after Facebook's, less than three years after filing for bankruptcy. The IPO drew strong demand due to the low offer price and the shares had been expected to attract solid buying on their listing. Despite being priced at the top end of the indicative range, JAL's offering price gave it a valuation of five times forward earnings, or less than half the valuation of rival All Nippon Airways. However, demand for JAL shares was not as strong as expected, in part due to a wait-and-see attitude prevailing in Tokyo ahead of the close of the Bank of Japan's monetary policy meeting. Sentiment was also damped by tensions between Japan and China over a group of disputed islands, which have sparked widespread anti-Japan protests in China and calls for a boycott of Japanese goods and services. The listing "has been soggy and damp," said Peter Eadon-Clarke, director of strategy at Macquarie in Tokyo. Traders were talking about geopolitical tensions between Japan and China, which will result in weak traffic between the two countries for some time. JAL's main Japanese rival, ANA, said it had suffered cancellations of bookings by Chinese visitors planning trips to Japan and Japanese travellers going to China. Instability in the oil market was another factor that unsettled investors, Mr Clarke said. That combined with strained relations between China and Japan and Middle Eastern uncertainties "probably does make it hard to focus on the fundamentals" of JAL, he said. The carrier reported record operating profits in the first two years after bankruptcy, backed by massive cost cuts, tax breaks and debt waivers. In the coming years, JAL faces the challenge of balancing its costs with plans to expand its international network. It also faces political pressure over the tax benefits it enjoys as a result of its bankruptcy rehabilitation, which have been criticised as giving it an unfair advantage. ANA and some opposition politicians are calling for restrictions on new airport slot allocations to JAL at Haneda, one of two airports serving Tokyo, in order to level the playing field. Nevertheless, analysts believe JAL's share price has considerable room to rise given the low price to earnings multiple.