Nikkei plunges on radiation fears
Japanese shares have fallen for a second day as investors worry about the impact of the earthquake and tsunami.
The main Nikkei 225 index was down 6% in Tuesday trading. On Monday it finished 7% lower, the biggest one-day drop since 2008.
The broader Topix index was also lower on Tuesday, declining 7.3%.
Investors are worried the disaster may have an impact on domestic and global growth at a time when nations are recovering from the financial crisis.
Japan is the world’s third-largest economy and one of its main exporters and consumers.
According to some estimates, the devastation caused by Friday’s deadly earthquake and subsequent tsunami is expected to cost Japan $180bn (£111bn) in reconstruction and recovery.
That is 50% higher than the cost of rebuilding after the 1995 earthquake in Kobe.
There are concerns that the increasing cost of rebuilding will add further to Japan’s debt levels.
Japan has the highest public-debt levels in the industrialised world.
Last month the country’s debt rating was downgraded on concerns that it was not doing enough to address the issue.
“In the situation where the crisis appears to be worsening, foreign investors, domestic fund operators, are pulling out from Japanese shares”
Hideyuki Ishiguro Okasan Securities
At the same time, analysts have forecast that the quake could knock off as much as one percentage point from Japan’s gross domestic product.
The Fukushima Daiichi nuclear plant in Japan was hit by another explosion on Tuesday morning.
This is the third blast in four days, amid fears of a meltdown.
Nuclear power is the biggest source of electricity in Japan, accounting for 29% of national supply.
There are concerns that the problems with the nuclear reactor may cause further disruption in the country’s power supply.
Analysts say that is driving investors away from Japan.
“All focus is on the nuclear crisis,” said Hideyuki Ishiguro of Okasan Securities in Tokyo.
“In the situation where the crisis appears to be worsening, foreign investors, domestic fund operators, are pulling out from Japanese shares,” he added.
The impact of the problems in the nuclear reactor are already being felt in the stock markets.
Power companies were the biggest losers in early trading, with shares of Kansai Electric Power and Chubu Electric Power, which both own nuclear plants, down 13%.
Shares of Toshiba were untraded on Tuesday as there were no buyers for the stock.
Toshiba provided several of the reactors at Tokyo Electric Power’s Fukushima plants.
Shares of Toshiba plunged by more than 16% on Monday.
The series of explosions and radioactive leaks have spread concern that the company’s nuclear industry sales are likely to fall well short of expectations in the next few years.
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