SOURCE: Industrial Info Resources

Industrial Info Resources

March 14, 2011 13:43 ET

Japan's Leaders Ponder Long-Term Economic Impact of Earthquake, an Industrial Info News Alert

TOKYO--(Marketwire - March 14, 2011) -  Written by Gordon Murray, Managing Director of Industrial Info Resources East Asia (Kofu, Japan) -- The Japanese stock index (the Nikkei) dropped nearly 6% on Monday morning, as the nation continues to come to terms with the scale of the recent damage.

Stocks of manufacturers such as Sony Corporation (NYSE:SNE) (Tokyo) and Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) dropped significantly (10% and 8%, respectively), as both companies have voluntarily suspended normal operations to help conserve energy and assist in electricity-rationing efforts made necessary because of the damaged electrical infrastructure.

Other companies that are voluntarily suspending operations include:

  • NEC Corporation (TYO: 6701) (Tokyo)
  • Suzuki Motor Corporation (TYO: 7269) (Hamamatsu, Japan)
  • Hino Motors Limited (TYO: 7205) (Tokyo)
  • Mitsubishi Motors Corporation (TYO: 7211) (Tokyo)
  • Fuji Heavy Industries Limited (TYO: 7270) (Tokyo)
  • Isuzu Motors Limited (TYO: 7202) (Tokyo)
  • Panasonic Corporation (TYO: 6752) (Tokyo)
  • Nippon Steel Corporation (TYO: 5401) (Tokyo)
  • Kirin Brewery Company (TYO: 2503 ) (Tokyo)

All power plants along the east coast of Japan, from northern Japan to the Shizuoka prefecture underwent automatic shutdown because of built-in failsafe devices that are triggered in the event of major earthquakes or other serious natural disaster.

Fukushima Daiichi nuclear power station and Fukushima Daini nuclear power station, which are located 110 kilometers south of Sendai, have been severely damaged. This has led Tokyo Electric Power Company Incorporated (TYO: 9501) (TEPCO) (Tokyo, Japan) to make the unprecedented decision to ration power to homes and businesses alike, with 3-hour rolling power outages scheduled for its service area.

Several oil refineries throughout Japan have been temporarily shut down, with some facing significant damage. These include three refineries owned and operated by JX Nippon Oil Corporation (TYO: 5001) (Tokyo): the 270,000-barrel-per-day (BBL/d) Negishi , Kanagawa refinery, the 252,500-BBL/d Kashima, Ibaraki, refinery, and the 145,000-BBL/d Sendai, Miyagi, refinery. The 240,000-BBL/d Ichihara, Chiba, refinery, which is owned and operated by Cosmo Oil Company Limited (TYO: 5007) (Tokyo) was also shutdown, however it and JX's Sendai refinery have suffered from fires that continue to burn today.

The Bank of Japan (JASDAQ: 8301) (Tokyo), in an effort to relieve some of the market pressure caused by the earthquake, injected approximately $85.5 billion into the money market on Monday morning, however this has failed to correct the downward trend so far.

Despite the pessimistic mood of the market, the government is more optimistic. In a televised statement on Sunday, March 13, Prime Minister Naoto Kan urged the public not to be "pessimistic" and mentioned that reconstruction efforts could stimulate demand, similar to the New Deal and other economic policies of the United States in the 1930s. Furthermore, it was stated that the government would employ strict policies against any moves to manipulate stock prices, and fight any speculative moves in national financial markets.

There are many challenges ahead for the rebuilding effort, but there are still many people who are optimistic about the future. "The core of Japanese industry remains undestroyed," stated Finance Minister Kaoru Yosano.

Although a great amount of information regarding the complete scale of the damage is still unknown, Industrial Info Resources is committed to providing information and market intelligence regarding the scale of the damage, and rebuilding efforts in the short and long terms.

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