What would happen if there is an earthquake in Tokyo?
An earthquake destroys Tokyo, including the stock exchange and all records of transactions. Abroad, Japanese shares and the yen nose dive. Foreign exchanges collapse as Western insurance companies begin dumping stocks and bonds to cover Japanese claims. Japan starts to liquidate its overseas holding in order to finance the rebuilding of Tokyo. Withdrawal of Japanese money means the bond market collapse and US interest rates to soar. High rates raise US consumer and housing prices while depressing real estate development. Another global liquidity crisis happens….
BUT this is not the case!
What really will happen?
In a sentence, Japan will need to rebuild. There will be an increase in demand for steel and cement will increase (positive for SCC, SCCC, TSTH, MCS); Japan will temporarily have to adjust its source of energy and buy finished petroleum products and import thermal coal (positive for PTTCH, PTTAR, TOP, BANPU, IRPC); Japanese banks will have to concentrate on funding the recovery and not overseas expansion of Japanese corporations (positive for BBL, SCB).
From our point of view there is no real negative impact upon the Thai Equity market from the Tsunami, and while it is callous to say this, our holdings and portfolio will benefit from it.