23 June 2011: SH: Shogo Maeda (Schroders) discusses the impact of the disaster

Positive forecasts have been influenced by the expedient recovery of the supply chain” ....

Shogo Maeda (Schroders) discusses the impact of the disaster     

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Saturday 18th June marked 100 days after the devastating earthquake and tsunami in Japan. Much of the region is still struggling, but, there are strong signs of improvement. Japanese corporate earnings are likely to show a strong rebound in October to December, and finish the current fiscal year with only a modest drop in underlying earnings. We believe this will be followed by a meaningful recovery of over 20% in the following fiscal year.
The auto and utilities sectors have been particularly weak, affected most by the disaster. Most other sectors are expected to show earnings improvement soon, and we expect a rebound in the auto sector towards the end of this year.  
Positive forecasts have been influenced by the expedient recovery of the supply chain. Many factories have re-opened earlier than expected, and several firms have announced that the impact on supply chains, or sales, would not be as bad as first thought. In particular, Japan’s leading auto makers should resume production to pre-earthquake levels in the July to September quarter.  
There are a few issues which remain unresolved, and one of them is Japan’s energy policy. The nuclear power plants which provide electricity to households and power industries have been subject to regular maintenance checks since the disaster. They have not been able to resume normal operations as a result of the greater safety assurance demanded by the local communities, in order to prevent a recurrence of accidents similar to the Fukushima plant. If this situation is prolonged, it may lead to electricity shortages in the areas not affected by the earthquake.


Important Information:

The views and opinions contained herein are those of Azad Zangana, European economist, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. For professional investors and advisers only. This document is not suitable for retail clients. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Schroders has expressed its own views and opinions in this document and these may change. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Services Authority. For your security, communications may be taped or monitored.

Source: ETFWorld – Schroders

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