japan crisis global impact
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8/7/2019 Japan Crisis Global Impact
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Moody’s Analytics: The disasterwill also lead to higher energyprices and a stronger yen. Theshutdown o nuclear reactorsat the Fukushima powerstation represents an 8% losso Japan’s electricity generationcapacity, which will likely beoset by increased imports o coal, liqueied natural gas, andoil, driving up prices or thesecommodities.
Citi Asia Macro Flash: Higher
demand or ossil uels on theback o Japan’s power supplyshortage and a possible longer-term bias away rom nuclearenergy, coupled with Middle Eastand North Arica supply concernscould add to volatility in oil prices.
Nomura: We believe around 4reineries equivalent to 20% o Japan’s capacity and demandhave halted production. As longas these reineries are down,imports would need to rise,thus tightening regional reining
margins
Moody’s Analytics: The unoldingdisaster in Japan will be elt across theglobal economy, but growth will not bederailed. Global growth will be boostedby post-earthquake reconstruction inthe second hal o 2011.
Nomura: Natural disasters are localevents and hence tangible implicationsor other regions tend to be muchmilder. The global sector that tends toreact most to natural disasters is theinsurance sector. It is the insurancecompanies that will bear the brunt o adjusting their provisioning.
Moody’s Asia Pacific Weekly: Preliminary estimates o insuredlosses are $15-$35 billion, and couldrise as losses rom the tsunami,which are not yet ully incorporatedin the range, are reined. Theselosses will all to insurance andreinsurance companies in Japanand around the world.
HSBC: Japan’s disaster, thoughincomparably tragic, is unlikely toknock emerging Asia o its currentgrowth trajectory or provide thenecessary defationary impulse toease rapidly growing price pressures.
Moody’s Analytics: In the nearterm, damage to Japan’s nuclearpower plants, transport system,and inrastructure will disrupt
energy, water, and other productioninputs, crippling activity across
RBS: Toyota has postponed theopening ceremony o its second
plant in Bangalore but has saidthe production o the Etios sedandeveloped or the Indian marketwill not be aected as engines andtransmissions are shipped over amedium to long term basis.
Citi Investment Research &Analysis: We see risks o delays andrisks o thermal/coal costs going upand a possible over-hang on India’sexisting energy challenges. Modestnear-term risks; but in longer term,India should continue to see Japanese
investments, technology and capital,with more upside than downside risk.
Moody’s Analytics: Financial markets
could suer additional losses romspikes in investor risk aversion. Thesecould trigger portolio outfows romast-growing emerging markets,causing problems or nations that areheavily dependent on oreign capital.Yet many emerging regions still oerinvestors attractive undamentals, thusany capital fight should be short-lived.
Citi Asia Macro Flash: Near-term,Japanese companies will likely delayoverseas direct investment plans,but longer term, we could see greaterdemand or Japanese companies to
diversiy production bases in moregeologically stable countries.
Nomura: With negative realinterest rates in the majority o the major economies, investors arestill incentivised to take on risk.
Citi Asia Macro Flash:Assuming the nuclear allout iscontained, growth ears in Asiamay be overdone. We think thisopens opportunities to re-enterpaid positions in Asia rates.Eventually, we could see recoveryin Asia risk assets.
HOW JAPAN’S CRISIS AFFECTS ECONOMIES AND MARKETS
Members of Japan’s Self Defence Forces walk through the snow-covered ruins of Kamaishi, Iwate Prefecture, on Wednesday.
A summary of analysts’reports evaluating theeconomic fallout of the disaster.
IMPACT ONGLOBAL ECONOMY
IMPACTON EQUITIES
IMPACT ONENERGY PRICES
IMPACT ONINVESTMENTS INEMERGING MARKETS
IMPACTON INDIA
June. They do not expect a slumpin domestic demand but neithera V-shaped recovery due to theextensive area damaged by theearthquake.
HSBC: There have been no reportsthat Japanese manuacturingsites have been directly damaged.We view the risk o supply chaindisruption as relatively minor, andat best temporary.
D&B: Even i nuclear saetyconcerns are resolved, we expectreconstruction to be delayed untilthird quarter due to the severedisturbance to supply chains andinrastructure.
both the industrial and servicesectors. As a result, the world’sthird largest economy will contractin the quarter ending June 30.
Citi Asia Macro Flash: Impacton Asia’s growth should not beexaggerated. Looking back at theKobe earthquake, Japan importsrom Asia only slowed or about6 months beore reboundingwith particularly strong reboundin Japan’s imports o capitalequipment.
Nomura: Fears that the earthquakewill induce a major liquidityshortage appear to be misplaced.We expect the largest negativeimpact on Japanese quarterly GDPgrowth will emerge in April to
IMPACTON JAPAN
Damir Sagolj/reuterS