Could Japan Aftershocks Affect Other Markets and ETFs? | ETF Trends

While emerging Asia will likely maintain its phenomenal growth projections, the economic aftershocks stemming from Japan’s massive quake may dampen the performance of other Asia markets and exchange traded funds (ETFs).

Frederic Neumann, HBSC’s co-head of Asian economics research, commented that “even before the Japan disaster, there was a sense that many multinationals had become too dependent on a single source of production,” and the “trend to diversify production will not just affect Japan, it will affect China,” according to NPR.

Asian manufacturers are slowing down production as part of Japan’s economy effectively stopped overnight. Nevertheless, Asian factories need to keep operating and businesses have already started looking for replacement markets. Meanwhile, some manufacturers that use imported components have been able to run on inventory while others that relied on high-end Japanese electronics and auto parts could experience shortfalls and higher prices. [A Different ETF Investment Angle Stemming From Japan’s Tragedy.]

Most economists believe that the impact Japan has on the regional economic growth will not be very severe. Moody’s Analytics chief economist Mark Zandi remarked that “Japan is still important but it’s a much smaller piece of the global economic pie and much less important to the global supply chain than it has been historically.” In the last five years, Japan contribution to Asia’s overall growth has been close to zero.

Back stateside, billions in business dollars that flow between Midwestern states and Japan has come into question as Midwestern companies figure out how they are affected by the calamity in Japan, reports Niala Boodhoo for NPR. So far, large equipment providers and construction and rebuilding companies could to benefit from the reconstruction effort that will come underway. [Japan ETFs: Looking Forward To A Better Future.]

For more information on Japan, visit our Japan category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.