Updates on Stocks Effected by Japan’s Quake

Japan Update: Many groups on the move as assessment Japan fallout continues… (10.00 -0.80) -Update

As we’ve mentioned throughout the morning, Japan’s Nikkei fell 6.2% overnight as the fallout from Friday’s earthquake and tsunami becomes more clear. There are many groups on the move this morning as a result of the developments there, including alternative energy (uranium stocks down sharply, solar-related issues bid up), technology (DRAM supplier MU higher on shortage concerns), Japanese ADRs, insurers and other.

Nuclear Power/Alternative Energy: There was another explosion at Japan’s damaged Fukushima Daiichi nuclear plant over the weekend, which is raising concerns about the potential for a nuclear meltdown at the facility. The emergency at Japan’s nuclear plant is naturally stoking fears about nuclear power programs in other parts of the world. The highly publicized Japanese issues are causing concerns about increased scrutiny and a more negative perception of nuclear power (which already has a negative stigma). This is weighing heavily on uranium stocks (DNN -23%, URRE -23%, UEC -20%, URG -20%, CCJ -18%, USU -17%) and companies that are involved in the nuclear power business (SHAW -19%, BWC -11.4%, URS -6.0%, FLR -1.5%). The Nuclear Energy ETF (NLR) is -12%… On the other hand, solar and wind power stocks are trading higher this morning, given the safer nature of those form of alternative energy: WFR +9.7%, TSL +8.4%, JKS +6.7%, YGE +6.0%, LDK +6.0%, STP +5.0%, FSLR +4.6%, JASO +4.1%, SOL +3.6%, APWR (wind power) +3.6, SPWRA +2.3%. The U.S. Nuclear Regulation Commission said it sees no radiation at harmful levels reaching the U.S.

Insurance: There were plenty of notes on the Street this morning analyzing the impact of the Japan earthquake, many of which surrounded the insurance industry. Catastrophic (CAT) insurance companies stand to carry some of the cost of the clean up, which is now estimated at upwards to $35 bln. FSR (-3.7%) is a notable CAT bond holder. However, much of the burden will fall upon a Japanese government-sponsored catastrophe reinsurance program. Wunderlich noted this morning that the event will likely increase pricing to insure in the region, and HCC (-0.4%) could stand to benefit… AFL (-3.2%) said earlier today that its Japanese offices are fully operational, and that it sees a minimal impact on Japanese sales; AFL also affirmed its earnings guidance.

Technology: The earthquake also has implications for the tech supply chain. Some companies with larger operations in Japan include ONNN -1.7%, NTE -0.7%, FLEX +0.3%, MOLX +0.3%. On the other hand, few companies may actually benefit. Micron (MU +4.6%) is seeing early strength off the open on speculation that DRAM chip suppliers have stopped offering price quotes. Essentially, this suggests the potential for a shortage in DRAM and higher prices.

Geographic ETFs: Given the continued volatility in Japanese stocks, we’d again point out the Asian geographic ETFs: EWJ (Japan) -8.5%, EWH (Hong Kong) -0.5%, EWY (South Korea) +1.1%, EWS (Singapore) -0.7%, VNM (Vietnam) -2.8%, EWM (Malaysia) -2.3%, AAXJ (Asia excluding Japan) -0.0%, and FXY (Japanese yen) +0.0%.

Japanese ADRs: HIT -14%, MFG -9.0%, NJ -8.0%, SNE -6.6%, HMC -6.3%, MITSY -6.0%, TM -5.3%, MTU -5.0%, CAJ -4.7% and NTT -4.0%.

Oil: Japan is the world’s third largest consumer of crude oil, so its disruption is seen as a negative for crude demand. Crude oil traded as low as 98.95 overnight, but has since risen back above $100 on headlines out of the Middle East.