Japan Crisis Global Impact
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Moody’s Analytics: The disaster will also lead to higher energy prices and a stronger yen. The shutdown o nuclear reactors at the Fukushima power station represents an 8% loss o Japan’s electricity generation capacity, which will likely be oset by increased imports o coal, liqueied natural gas, and oil, driving up prices or these commodities. Citi Asia Macro Flash: Higher demand or ossil uels on the back o Japan’s power supply shortage and a possible longer- term bias away rom nuclear energy, coupled with Middle East and North Arica supply concerns could add to volatility in oil prices. Nomura: We believe around 4 reineries equivalen t to 20% o Japan’s capacity and demand have halted production. As long as these reineries are down, imports would need to rise, thus tightening regional reining margins Moody’s Analytics: The unolding disaster in Japan will be elt across the global economy, but growth will not be derailed. Global growth will be boosted by post-earthquake reconstruction in the second hal o 2011. Nomura: Natural disasters are local events and hence tangible implications or other regions tend to be much milder. The global sector that tends to react most to natural disasters is the insurance sector. It is the insurance companies that will bear the brunt o adjusting their provisioning. Moody’s Asia Pacific Weekly: Preliminary estimates o insured losses are $15-$35 billion, and could rise as losses rom the tsunami, which are not yet ully incorporated in the range, are reined. These losses will all to insurance and reinsurance companies in Japan and around the world. HSBC: Japan’s disaster, though incomparably tragic, is unlikely to knock emerging Asia o its current growth trajectory or provide the necessary defationary impulse to ease rapidly growing price pressures. Moody’s Analytics: In the near term, damage to Japan’ s nuclear power plants, transport system, and inrastructure will disrupt energy, water, and other production inputs, crippling activity across RBS: Toyota has postponed the opening ceremony o its second plant in Bangalore but has said the production o the Etios sedan developed or the Indian market will not be aected as engines and transmissions are shipped over a medium to long term basis. Citi Investment Research & Analysis: We see risks o delays and risks o thermal/coal costs going up and a possible over-hang on India’s existing energy challenges. Modest near-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 rom spikes in investor risk aversion. These could trigger portolio outfows rom ast-growing emerging markets, causing problems or nations that are heavily dependent on oreign capital. Yet many emerging regions still oer investors attractive undamentals, thus any capital fight should be short-lived. Citi Asia Macro Flash: Near-term, Japanese companies will likely delay overseas direct investment plans, but longer term, we could see greater demand or Japanese companies to diversiy production bases in more geologically stable countries. Nomura: With negative real interest rates in the majority o the major economies, investors are still incentivised to take on risk. Citi Asia Macro Flash: Assuming the nuclear allout is contained, growth ears in Asia may be overdone. We think this opens opportunities to re-enter paid positions in Asia rates. Eventually, we could see recovery in 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 the economic fallout of the disaster. IMPACT ON GLOBAL ECONOMY IMPACT ON EQUITIES IMPACT ON ENERGY PRICES IMPACT ON INVESTMENTS IN EMERGING MARKETS IMPACT ON INDIA June. They do not expect a slump in domestic demand but neither a V-shaped recovery due to the extensive area damaged by the earthquake. HSBC: There have been no reports that Japanese manuacturing sites have been directly damaged. We view the risk o supply chain disruption as relatively minor, and at best temporary. D&B: Even i nuclear saety concerns are resolved, we expect reconstruction to be delayed until third quarter due to the severe disturbance to supply chains and inrastructure. both the industrial and service sectors. As a result, the world’ s third largest economy will contract in the quarter ending June 30. Citi Asia Macro Flash: Impact on Asia’s growth should not be exaggerated. Looking back at the Kobe earthquake, Japan imports rom Asia only slowed or about 6 months beore rebounding with particularly strong rebound in Japan’s imports o capital equipment. Nomura: Fears that the earthquake will induce a major liquidity shortage appear to be misplaced. We expect the largest negative impact on Japanese quarterly GDP growth will emerge in April to IMPACT ON JAPAN Damir Sagolj/reuterS
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Transcript of Japan Crisis Global Impact
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
