KUCHING: Local investors should not be overly concerned about the massive plunge seen on Japan’s Nikkei index in the aftermath of last week’s earthquake tragedy.
GIVE IT MORE TIME: A pedestrian gazes at a share prices board in Tokyo in this file photo. Ooi suggests that local investors should give more time for the market to settle down, following the instability seen in Japan’s stock index. – AFP photo
Yesterday, Japanese shares plunged for the second full-trading day, losing over 11 per cent as the island nation grappled with a crisis at an earthquake-damaged nuclear power plant stemming from the earthquake and the resultant tsunami.
At one point, the Nikkei plunged to more than 1,390 points – more than 14 per cent – nearing the island nation’s worst-ever plunge of 14.9 per cent on Oct 20, 1987; after the US stock market crash on ‘Black Monday’.
Combined, these severe declined marked a nearly 17 per cent drop in Nikkei in two days.
Regardless of this, investment adviser and managing partner of risk management firm MRR Consulting, Ooi Kok Hwa believed the local market would still be able to withstand the negative ‘reverberations’.
“By not sounding too casual, I believe that the (nuclear) plant leakeage was not too widespread, thus it does not warrant much worries. Moreover, not all of the industries in Japan are affected by the disaster.
“The market finished generally lower Monday as investors assessed the impact of the Japanese disaster on the global economy. What investors should do is to give time for the market to settle down,” said Ooi when contacted by The Borneo Post yesterday.
Yesterday at 5.10pm, benchmark FTSE Bursa Malaysia Kuala Lumpur Composite stood at 1,484.14; as there were 126 gainers and 812 losers, with 160 counters remained changed. Volume traded was over 1.4 billion lots, valued at more than RM2.11 billion.
Comparatively, the benchmark was at 1,478.28 at afternoon’s closing, down 17.07 points from yesterday’s opening trade.
On Monday, it was closed mixed at 1,495.35; with a turnover of 802.362 million worth RM1.179 billion.
Nevertheless, the series of events that befell Japan did trigger ‘aftershocks’ across the world’s stock markets. Hong Kong’s Hang Seng dived three per cent in afternoon trading Monday. In the US, Standard and Poor’s as well as Dow Jones’ futures were lower by 0.6 per cent, while Nasdaq futures declined by 0.8 per cent.
In Europe, Britain’s FTSE-100 ended down 0.9 per cent, with France’s CAC-40 and Germany’s DAX both more than one per cent lower.
In Malaysia, RAM Rating Services Bhd called a ‘negative outlook’ on the Japanese economy and banking sector.
“While it will be some time before a full assessment can be made to quantify the extent of the consequences, it is nonetheless clear that the loss of human life, destruction of key infrastructure and potential nuclear fallout will undoubtedly take a toll on the Japanese economy as well as its banking and insurance sectors, along with a multitude of other industries,” stated the ratings agency’s head of financial institution ratings, Promod Dass in an online note.
In an effort to support markets, the Bank of Japan pumped another five trillion yen (approximately RM187.85 billion, US$61 billion) into the country’s financial system, adding to a record 15 trillion yen (RM563.52 billion) to help stabilise the short term-money market, making good on an earlier pledge that it would unleash ‘massive’ funds following the disasters.
The quake and tsunami have damaged or closed down ports, although airports such as Tokyo’s Narita have reopened. Transport infrastructure such as train lines and roads have been crippled along parts of the northeast.
Notably, Japan’s top companies have halted production. Toyota was off 4.68 per cent at 3,155 yen, while Nissan fell 4.98 per cent to 686 and Honda was down 4.39 per cent at 2,959. Electronics giant Sony dived 5.45 per cent to 2,411.