Hundreds of billions of dollars have been poured into Japan's finance sector since Friday's dual quake and tsunami, but stock markets around the world have nose-dived as the wider economic repercussions take shape.
The central Bank of Japan has put a record $NZ247 billion into the world's third-biggest economy - which is also already the most indebted economy in the world, owing about $NZ13.5 trillion - in an attempt to underpin market stability and ensure cash was in banks for survivors to draw on.
While there could be a medium-term boost for major New Zealand exporters in rebuilding Japan, in the short term some are already counting the cost of an immediate downturn, with Air New Zealand announcing an earnings downgrade and other export sectors, such as kiwifruit exporter Zespri, expecting disruptions.
Asian bourses were hit hard yesterday. Japan's futures market plummeted 16% yesterday, triggering a "circuit-breaker" market closure, which adjusted to a 12% fall.
The benchmark Nikkei 225 stock average closed down 10.6% after a 6% drop on Monday.
Craigs Investment Partners broker Peter McIntyre described the Nikkei as "hammered and slaughtered" by investors selling because of the "monumental" amount of cash being injected by the Government, and the ramifications of Japan's increasing debt.
Within a similar time frame, South Korea's Kospi index was down 5%, Singapore Straits Times down 3%, Shanghai Composite down 2% and Hong Kong's Hang Seng 4%.
Speculation is already mounting New Zealand timber and aluminium will be sought after by Japan shortly, and shares in New Zealand Refining (NZR) were up almost 4% yesterday.
Mr McIntyre said apart from the $274 billion, another $NZ113 billion is expected to be put into the markets this week by the central bank.
"The $274 billion is the largest ever in a single operation by Japan's central bank ... and interest rates will be kept near zero to boost economic stimulation," Mr McIntyre said.
Japan may again face being pushed into recession because of the triple effect of the quake, tsunami and nuclear accidents, Mr McIntyre said. Forsyth Barr broker Suzanne Kinnaird said United States stocks fell as the quake-tsunami prompted caution in the market.
The Chicago Board Options Exchange volatility index jumped 12.6%.
"Among shares most affected were those in the nuclear industry after explosions in Japan created doubts about the prospects of the industry."
General Electric shares, with combined nuclear joint ventures with Hitachi, dropped 3.0%, the Market Vectors uranium and nuclear energy exchange traded fund slumped 13.5% and the Global X Uranium ETF fell 18.6%. Shares in solar-powered energy were boosted.
Bourses around the world, including the US Dow Jones, S&P 500 and Nasdaq, the UK FTSE 100, Australian All Ords and New Zealand's NZX 50 were down between 0.43% to 0.92% on reopening after the tsunami.
Germany's DAX 30 and France's CAC 40 fell respectively 1.7% and 1.3%.
Ms Kinnaird said Japanese technology companies led declines, followed by automakers, electronics firms and oil refiners. Tokyo Electric Power, which owns a nuclear plant possibly close to meltdown, ended down 23.6%.
Mr Mcintyre said the kiwi was only slightly down on the Japanese yen. It had been weakening for the past two months because of tensions in the Middle East.
Mr McIntyre predicted a strengthening in the kiwi against the yen in coming months.
Japan's spending in NZ
Japanese tourists last season
• Spent $321 million here during the year ended December.
• 88,605 visitors came during year ended January.
• Visitor numbers up 11.3%.
Exports to Japan in 2010
• Aluminium - $647.2 million.
• Wood and charcoal - $414.4 million.
• Dairy and animal products - $366.2 million.
• Fruit and nuts - $307.9 million.
• Meat - $306.3 million.
• Vegetables - $122.6 million.
• Fish and crustaceans - $121.6 million.
• Wood pulp and recovered paper - $96.6 million.
• Mineral fuels, oils and products - $87.5 million.
Sources: Statistics New Zealand; Ministry of Economic Development; The New Zealand Herald.
