Opinion

George Chen

Post-earthquake concept stocks

George Chen
Mar 24, 2011 04:01 UTC

By George Chen
The opinions expressed are the author’s own.

Have you had breakfast or lunch yet? In Hong Kong, I’m guessing few people are choosing sushi these days.

Many restaurants in Hong Kong, even Japanese restaurants, have been quick to distance themselves from the crisis in Japan since the earthquake as concerns about food safety are growing in many Asia-Pacific cities, including Beijing, Seoul and Sydney.

The Japanese authorities announced this week that they would widen a ban on exports of a wide range of food products from areas surrounding the earthquake-hit Fukushima Daiichi nuclear power station. In fact, even before the official ban, the health authorities in China, Hong Kong and South Korea were already monitoring all such imports from Japan.

I’ve seen a number of sell-side analysts recommend Chinese food and beverage stocks, including some fisheries, which are now expected to benefit from the Japan crisis as people turn to locally produced seafood. Australian and New Zealand seafood companies should also benefit. It sounds like a perfect time for banks such as ANZ to expand, helping Australian and New Zealand farmers and fisheries extend their reach beyond their domestic markets, turning a crisis into an opportunity.

Some Chinese brokerages called such stocks “post-earthquake concept stocks”. Have you read the story about how Chinese truck maker Sany sent to Japan their innovative truck that can shoot wet concrete several meters into the air? Sany is likely to be a typical post-earthquake star pick, as are construction companies in Japan.

Dairy and property: How Japan’s crisis is affecting China

George Chen
Mar 17, 2011 09:06 UTC
Chinese moms While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can. On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious. They were all after the same thing – baby formula from Japan. This is simply because some Chinese parents believe their babies are accustomed to drinking Japanese milk and they are concerned that radiation may affect the quality of exports from Japan in coming months Hong Kong media reported that retail prices for some Japanese baby formula have risen more than 30 percent this week. At present, the market price is about HK$250 (US$32) for a standard container and some retailers are reportedly limiting purchases to six per person to avoid angering latecomers. In this case, parents called on relatives, even elderly grandparents, to join the queue on their behalf (which works if you have many relatives and friends who are willing to help). Of course, Hong Kong parents are not alone in this concern. A fast-growing number of parents in mainland China are on a similar quest and they don’t mind paying HK$2,000 (US$256) for a round-trip ticket from major mainland cities to Hong Kong to buy made-in-Japan products. People in Hong Kong, may soon face a bigger disappointment as a result of Japan’s earthquake – the possibility of property prices rising even further and faster. Local property agents say they have noticed some landlords want to increase rents, especially in downtown areas such as Admiralty and the Mid-levels, which are within minutes of Hong Kong’s Central financial and business district, where many international banks have their regional headquarters. Global financial firms including Blackstone, BNP Paribas and Royal Bank of Scotland are relocating foreign staff, especially senior executives, from Tokyo to neighboring bases to avoid the possibility of radiation exposure. These executive typically head to Singapore, Hong Kong and Beijing, with most apparently happier to choose Hong Kong, if not Singapore. Rents in Hong Kong are already a social problem, making the city one of the most expensive places in the world in which to live. The government has been trying to cool prices since late last year. With more rich but timorous bankers being relocating to Hong Kong from Tokyo and so far no indication of when they might return to Japan, the outlook for the property market in Hong Kong looks bullish. I’m not saying this isn’t a positive  trend, but given what is happening to the lives of ordinary people in Hong Kong and China, the crisis in Japan is becoming a crisis for Asia, if not the rest of the world. If the nuclear crisis cannot be contained and people lose confidence in crisis management and post-crisis protection, a chain reaction may be seen in many areas beyond dairy and property prices.

Japan

By George Chen
The opinions expressed are the author’s own.

While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can.

On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious.

Japan, in danger and opportunity

George Chen
Mar 14, 2011 03:41 UTC

earthquake

By George Chen
The opinions expressed are the author’s own.

You might consider yourself very smart, powerful or perhaps wealthy, but after watching live coverage on TV of the devastating earthquake and tsunami in Japan on Friday afternoon, what was your reaction? We’re all nobodies in the face of the forces of nature.

On Friday afternoon before the earthquake, the benchmark Shanghai Composite Index showed unexpected signs of recovery but the rebound was unfortunately short-lived. Immediately following the news alert about Japan’s worst earthquake in decades, stock markets from Hong Kong to Shanghai all retreated quickly.

This was a very natural reaction to such a massive natural disaster. Almost the same reaction was seen after the earthquake in China’s Sichuan province in May 2008. When investors feel uncertain and then the market sentiment becomes anxious, they sell. Fair enough – who really is in the mood to trade after seeing such a horrible event?

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