Japan Fund: Market impact of earthquake should be limited

March 11, 2011

Streets are flooded after a tsunami and earthquake in Kesennuma city, Miyagi Prefecture, March 11, 2011. REUTERS/YOMIURIIn response to the March 11 disaster in Japan, managers of the Japan Equity Fund sent the following email to clients and members of the press. (The managers of the closed-end portfolio stayed  in their offices because Tokyo’s subway system shut down.)

Comments from Soichiro Monji, chief market strategist at Daiwa SBI, which manages the portfolio:

“The earthquake today attacked a broad area of the eastern part of Japan. However, we do not consider the impact of this earthquake on the Japanese economy to be too serious because the damage is concentrated in the northeastern part of the country in the Tohoku prefecture and Tohoku’s economy only accounts for around six percent of nominal GDP for all of Japan.

Meanwhile, we experienced the quake here in Tokyo, too, but the damage seems to be minimal. Although the ground shocks were bigger than any that I have experienced before, we have fortunately not seen any collapse of buildings, roads or bridges.

Looking at the Japanese stock market, the negative effects of this earthquake should be limited, as the overall economic damage caused is expected to be contained. While the Nikkei 225 declined almost 180 points on the back of today’s earthquake, we expect it to regain any lost ground early next week.

Looking at sectors and stocks, insurance companies may be the most negatively affected by the earthquake because of anticipated payments of insurance claims. In addition, banks and utilities whose businesses have higher exposure to the Tohoku prefecture might experience a sell off early next week as well.”

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

[…] Japan Fund: Market impact of earthquake should be limited […]

Posted by Japan’s TEPCO preparing to release radiation from second reactor | Reuters « Netfindings | Report as abusive