Introduction
Japan’s stock exchange market was affected by the recent tsunami and this is a major investment issue because the market attracts a lot of investors. These investors are both foreign and local based on the fact that the country has one of the world’s major stock exchange markets. In this case, the stock market in Japan has not recovered from the effects of the Tsunami where billions of dollars were lost thereby scaring investors. Investors reacted to the unfolding scenario in the country because they were cautious. To avert the situation, the central bank had to inject in the market $184 billion to cushion investors (CBC 2011, p. 15). This was done because there were a lot of concerns in relation to one of the world’s major economies.
Discussion
The stock market was reported to have shed more than 634 points and this is a major concern to various investors (CBC 2011, p. 31). As far as the stock market is concerned, it is very sensitive to any developments that might occur in a given period of time and that is why this was a major issue. All sectors of the market were hit because there were concerns over the fallout from investors. The problem in Japan affected other Asian markets because of the interrelations that these markets have. As a matter of fact, Singapore and Hong Kong markets suffered drastically because of Japan’s earthquake and it was projected that they feel by 0.5 % (CBC 2011, p. 24). Various companies had to close their operations because of disruptions and this means that their stocks were affected. This was mostly done by scary investors who are always guided by speculation.
To show how important the market was to investors, the central bank had to come in and inject money in the stock exchange market to protect investments. This is based on that fact that Japans stock exchange market plays an important role in Asia. Stability of the market is very important and that is why investors are always cautious when it comes to such a disaster. Smooth settlement of funds in the stock exchange market is crucial which explains why Japans central bank had to come in and rescue it. It should be known that Nikkei fell 200 points and that is why it was important to provide liquidity to secure investors. US stock market was also affected by Japans earthquake where it experienced a big dip (CBC 2011, p. 11). Various investors have invested in Japans major companies and that is why any disaster was to have an impact on its market.
Conclusion
Utility companies stocks were the most affected and it is projected that they fell by 0.4% (CBC 2011, p. 21). In this case, we can say that the earthquake in Japan is a current issue that has affected investment aspects in the last 12 months. This earthquake will ultimately have an impact on the country’s economy and that is why investors will closely be looking at any developments in the market. It is projected that the insurance cost of the earthquake is likely to have an impact on the world’s insurance industry and that is why this is a major investment issue. The shocks are very awesome and this will ultimately assume an economic havoc to the country’s investors and others who have invested in Japan.
Reference list
CBC., 2011. Tokyo stock market plunges after quake. Web.