Japan: Earthquake, Tsunami, Nuclear Crisis and the impact on the world - Talking Business 2011 Ep 7c

A review of the week in business, with expert analysis and commentary

Leon and Garry talk about the impact of the triple whammy in Japan – earthquake, tsunami and nuclear crisis – leaving global equity and insurance markets reeling, wiping tens of billions off exchanges worldwide. Share prices in Japan have fallen nearly 20% and are lower across the region. The impact is likely to affect trade with Australia, at least in the short term. The biggest impact in Australia has been on uranium producers, with their shares plummeting. Shares in the insurance sector are vulnerable too, with QBE confirming it has an exposure in Japan. We can also expect downgrades for insurance companies. The impact is likely to be felt with other resources too. The Yen has hit a record high against the dollar and the Aussie has fallen way below parity. The earthquake has also hit the profits of Billabong and Australia’s car industry is bracing itself for the impact with Japanese car makers shutting plants. It’s also likely to affect technology stocks with Japan accounting for 20% of the world’s semi conductor production. Prices have already risen by 20%. Downer EDI says it will suffer a $10 million hit on its profits after the Christchurch earthquake and Westpac is also expecting credit losses of up to $73.9 million from the Christchurch quake. The RBA signals that the Queensland floods could put a bigger dent in the Australian economy than was first envisaged and Australia’s growth is expected to slow over the next three to nine months as a result of the natural disasters that have gripped the globe. Still, the disasters are likely to see the RBA leaving interest rates on hold. The government’s climate change advisor Ross Garnaut says the carbon price should come in with $5.75 billion in personal income tax cuts. Concerns about rising living costs among female consumers could be responsible for the weak retail spending outlook, according to research from the Commonwealth Bank. And Myer has copped the worst of it, reporting an 8.8 per cent fall in first-half net profit and saying people are buying fewer electric goods. The number of Australian homes worth more than $1 million has surged more than 35%. Sales of new motor vehicles are up 0.2% but housing starts are down, falling 5.3%. Wesfarmers has put its Premier Coal division on the market and Chinese nd Indian interests could buy it. Mortgage delinquencies have also increased. The head of the Future Fund David Murray says Australian house prices are high by world standards and have made the economy vulnerable to overseas events that might see a decline in their value. Murray is facing challenges for his position from within the fund's own board of directors. Get ready for the hardware wars as Bunnings dedicates more than $385 million to build new warehouses in the growing scramble against Woolworths to control the $36 billion home improvement market. Chadstone remains Australia’s biggest shopping centre in terms of turnover. Metcash has gone to the Federal Court in an attempt to try and overturn the Australian Competition and Consumer Commission's (ACCC) ruling against its acquisition of 85 Franklins stores. The case will run two weeks. NAB has management changes and big changes in its banking operations in the UK, even considering an offer for the Lloyds banking group. The Commonwealth Bank says smart phones are changing the way people bank and wants to get ahead of it. Smart phones are transforming the way people bank, with an increasing number of customers accessing their accounts and making payments on their mobiles, the Commonwealth Bank says. Alinta Energy Group's shareholders have voted to pass the debt-laden company to lenders, following years of prolonged negotiations.

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Garry Barker and Leon Gettler
RMIT, Business, Economics