The BIG quake : How far has the shockwave gone

8.9 on the richter scale, that is the biggest I’ve ever heard in my life. The ground shaking tremors followed by 7m high Tsunami waves and then blasts in the nuclear plant and nuclear radiation alerts, life couldn’t be worse for the Japanese. They say, ‘the Japanese are always waiting for the big one’. It is not a coincidence that Tsunami happens to be a Japanese word. But for a quake this big, even the expecting and suspecting couldn’t be prepared.

As the stats speak , some 2000 people were reported dead on the spot and 10000 more expected to be reported, more than 5 lac displaced from their homes, more than 24000 still unreachable, some 5000 shattered houses and more than 50000 damaged. None the less, the earth shifted on its axis by around 6.5 inches and the length of day has shortened by 1.8 millionth of a second. Even the Japanese coastline has moved by around 4m. Though most of the statistics is still incomprehensible, they do project the size of impact.

With all sorts of help rushing to Japan, this is a real test for the supply chain. The quake means a lot of rework, lots of buildings to be made, roads to be put in order, basic amenities to be restored. Futile to mention, all production is completely stalled, from refineries to electronic chips and from car auto parts to electric power. Japan is broken to the bone right now with stalled production, running out resources, slipping fiscals, and dying people. Still I must say, absolutely everyone has complete faith that Japan will resurrect and come back stronger. It is just a matter of time.

With the Bank of Japan pumping $ 183 billion in the economy to support the recovery, it is still surprizing to see the Yen and Japanese shares bouncing up in the market. I think this clearly portrays that everyone believes that Japan is down but only temporarily. This is also because the Japanese firms worldwide are selling their foreign currencies to buy Yen to bring back the money home for help. As for the insurers, they are busy liquidating their holdings in equities and bonds too, it is payback time. As the money in hand rises, the Japanese economy has minimised market losses and is strong enough to bear the recovery costs. Although the recovery costs will take the whole issue far, the future still seems bright for Japan.

As for the rest of the world, the effects have been mixed. The drop in petroleum demand from Japan resulting from the quake stabilized the oil prices which had been in turmoil since the Libyan unrest. This enabled the markets to show more trust worldwide and this has enabled a scared Kingfisher to unleash a $ 300 million GDR. The rework promises a boom in construction and raw materials industry. Also an increased buyout of fuel oil and LNG is expected, since other modes of power are down in Japan. And it gets more promising with each blast in the nuclear facility!!

The growth in Japan is expected to be mildly impacted by the quake. The Japanese outside the homeland have been trying to do all they can and the government along with Bank of Japan have more flexible options to save the economy than ever available before in the past. The real impact however will come from the asset market where insurers have to liquidate their portfolios to meet heavy (very heavy) losses and liquidations aren’t that easy in assets. Let us see where this goes, we’d rather keep an optimistic view on this. Japan, ALL THE BEST !