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Yearly Archives: 2011

Asian Markets Mixed: U.S. Futures Lower

Australia -0.93%

Heng Seng -0.49%

India’s Sensex +0.5%

Indonesia Jakarta  +0.9%

Malaysia’s KLSE +0.06%

NIKKEI 225 -6%

Seoul -0.7%

Taiwan -1.24%

Related: WTI crude down $1.51 or 1.49%, gold/silver/copper all lower, while S&P futures are 5 points below fair value.

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Shares of Posco Surge on Japanese Rebuilding Prospects

Shares of the largest Korean steel maker, Posco, are up more than 6% in early trading, on the prospects of massive rebuilding efforts in Northeast Japan. Similarly, Japanese construction stocks are soaring, led by gains in Sumitomo Mitsui up more than 42%.

UPDATE: Posco is now up 9%.

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Economists Believe Japan May Recover Very Quickly

Reuters has an interesting take on how the earthquake and tsunamis will affect Japan’s future economic growth.

“The instinctive reaction when viewing the extensive damage and frantic efforts to secure damaged nuclear reactors is to assume economic havoc will follow.

But researchers who have studied similar disasters in rich countries reach a reassuring conclusion: human resilience and resourcefulness, allied to an ability to draw down accumulated wealth, enable economies to rebound quickly from what seem at first to be unbearable inflictions – be it the September 11, 2001, attacks on New York or Friday’s 8.9-magnitude earthquake, the worst in Japan’s history.

Japan itself provides Exhibit No. 1 in foretelling the arc of recovery. A 6.8-magnitude temblor struck the western city of Kobe on January 17, 1995, killing 6,400 people and causing damage estimated at 10 trillion yen, or 2 percent of Japan’s gross domestic product.

The importance of Kobe’s container port, then the world’s sixth-largest, and the city’s location between Osaka and western Japan made it more significant for the economy than the more sparsely populated region where the latest quake and tsunami struck. Extensive disruption ensued, yet Japan’s industrial production, after falling 2.6 percent in January 1995, rose 2.2 percent that February and another 1.0 percent in March. GDP for the whole of the first quarter of 1995 rose at an annualized rate of 3.4 percent.

“Despite the scale of the disaster, it is hard to find much evidence in the macroeconomic data of the effects of the Kobe earthquake,” said Richard Jerram, chief Asian economist at Macquarie in Singapore and a veteran Japan-watcher.

Indeed, Takuji Okubo, chief Japan economist at Societe Generale in Tokyo, noted that Japan’s economy grew by 1.9 percent in 1995 and 2.6 percent in 1996, above the country’s trend growth rate at the time of 1.5 percent. Private consumption, government spending and, especially, public fixed investment all grew above average in 1995 and 1996, Okubo said in a report. By analogy, the medium-term impact on growth from the latest quake was also likely to be positive, he said.”

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Japanese Stocks Plummet

The broader Topix is down more than 6% now, as investors sell amidst uncertainty. Toyota, Honda and many other big manufacturing companies are down mid to high double digits, due to plant closings.Some stocks, like refiners, uranium and select electronics are down mid double digits to as much as 30%. Sony has shut down 8 factories, as the Northeast part of Japan, currently afflicted by the aftermath of the quake, is vital for Japanese industry being a main hub for supplies.

Conversely, construction stocks are very strong, based on the necessity of rebuild vast parts of Northeast Japan.
Here are recent quotes, with links, to some of Japan’s biggest companies.

Japan Steelworks -18%

Hitachi -15%

Toyota -8%
Honda -4%
Cosmo Oil -27%
Toshiba -16%
JX Holdings -15%
Sony -8%

Right now exchanges are closed during lunch. And, it’s worth noting, they are off the lows.

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Gasoline Supplies Running Short in Japan

It’s being reported that gasoline lines are “being formed around the block” around Tokyo. As of latest reports, more than 1/3rd of Japan’s crude refineries are offline. Furthermore, as you could imagine, people are buying up basic necessities: rice, pasta, water and other staples. Shortages of all kinds are being reported, as residents stockpile and plan for the worst.

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Hydrogen Explosion at Fukushima

An explosion has been reported at Fukushima Daiichi unit #3. Residents, if not evacuated, are being advised to stay indoors. They’ve been trying to cool this plant down with sea water. However, earlier on today the pumps began to malfunction, making it difficult if not impossible to discern whether it was being cooled.

As of now, all residents within a 20 kilometer radius have been ordered to evacuate.

UPDATE: 7 employees of TEPCO are missing and 6 injured.

[youtube:http://www.youtube.com/watch?feature=player_embedded&v=T_N-wNFSGyQ 616 500]

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