Tuesday, March 15, 2011

Japanese Stocks Plunge More Than 13% on Worries Over Radiation

March 14, 2011

Japanese Stocks Plunge More Than 13% on Worries Over Radiation

HONG KONG — Stock markets plunged in Japan and across the rest of the Asia-Pacific region on Tuesday amid fears of the impact of the nuclear disaster and resulting concerns about radiation exposure.
The Nikkei 225 index, already badly mauled on Monday, plummeted as much as 14.4 percent on Tuesday to its lowest in two years, exacerbating the 6.2 percent slump the previous day, as warnings about a potential nuclear disaster in the country aggravated the pain already felt by the quake and tsunami. The broader Topix, or Tokyo Stock Price index, sank 14 percent.
“Minute levels” of radiation have been detected in the Japanese capital, Tokyo, Kyodo news agency said, quoting the metropolitan government.
Investors were already jittery about the lack of clarity on the extent of the damage from the quake on Friday and the tsunami that hit Japan’s northeast, but their concerns intensified after an explosion at the most crippled of three reactors at the Fukushima Daiichi Nuclear Power Station damaged its crucial steel containment structure.
The worries helped send stock markets lower across the region Tuesday. The Kospi in South Korea, the Taiex in Taiwan and the Hang Seng in Hong Kong all sagged 2 percent. The key indexes in Australia and Singapore fell 1.7 percent, and in mainland China, the Shanghai composite index dropped 1.6 percent by late morning.
Prime Minister Naoto Kan, speaking in a televised news conference Tuesday, said that radioactive levels around the Fukushima Daiiichi complex were now high and urged people to remain calm.
The Japanese central bank continued pumping liquidity into the financial system on Tuesday, after it had offered on Monday to inject a record 15 trillion yen, or $183.8 billion.
At the end of a policy meeting on Monday, the Bank of Japan had also announced that it would enlarge an existing program to purchase government and corporate bonds from 5 trillion yen to 10 trillion yen.
“The damage of the earthquake has been geographically widespread,” the central bank said in a statement accompanying its decision, adding that the asset purchase extension was done “with a view to pre-empting a deterioration in business sentiment and an increase in risk aversion in financial markets from adversely affecting economic activity.”
The steps were “very appropriate in terms of dealing with the short-term impact” of the disaster, said Stephen Schwartz, an economist with the Spanish bank BBVA in Hong Kong. “It will take a long time until we can really quantify the fallout on the overall economy, but what is clear is that they are going to have to set aside fiscal consolidation plans for the moment.”
“My feeling is that the markets may be over-reacting and panicking a bit,” said Emil Wolter, head of Asian strategy at RBS in Singapore.
The authorities in Japan, he added, had already introduced substantial supportive measures, both for the disaster relief and the financial markets, and more stimulus efforts are likely to follow. “They are dealing with a disaster on an unprecedented scale; the response to date has been pretty formidable.”

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