A strong earthquake of magnitude 7.8 occurred in Wenchuan County, Sichuan at 14:28 on May 12, 2008, which was felt in Chongqing, Hunan, Hubei, Shanxi, Shanxi, Shaanxi, Hebei, Beijing, Shanghai and other places. The quake was a shallow-source earthquake and was devastating. According to the Ministry of Civil Affairs statistics, as of 7:00 on May 13, the earthquake in Wenchuan County, Sichuan has caused 9,219 deaths in 8 provinces and cities in Sichuan, Gansu, Shaanxi, Chongqing, Yunnan, Shanxi, Guizhou and Hubei ****, and more than 500,000 collapsed houses. Reports from individual parties indicate that the deaths and injuries in the epicenter of the quake may be quite serious at present, and the infrastructure damage is severe.
In view of the strong earthquake in Wenchuan County, Sichuan, the SSE could not get in touch with 45 listed companies in Sichuan and Chongqing listed on the Shanghai Stock Exchange, such as Sichuan Road and Bridge (love shares, quotes, information). According to the "stock listing rules", the SSE decided since May 13, the implementation of the suspension of trading on the shares of these 45 companies, until the company published an announcement after the resumption of trading. The Shenzhen Stock Exchange (SZSE) announced that because some listed companies in the Sichuan region are temporarily unable to disclose the impact of the earthquake, according to the "Rules for Listing of Stocks", the Exchange has suspended trading in the shares of 21 companies since May 13, until the companies publish an announcement and resume trading.
The direct economic losses from the disaster are not yet known, and are estimated to exceed the impact of the freezing temperatures at the beginning of the year. But in the short term, the impact on economic growth for the whole of 2008 will not be great. Post-disaster reconstruction work, will produce a new round of disaster relief and post-disaster reconstruction of the demand for means of production and basic consumer goods demand peak, through the conduction of the industrial chain, will have a certain pulling effect on the economy, and its role will be gradually reflected in the second half of the year.
May 12, the central bank, as expected, launched a reserve ratio increase in the regulatory policy, indicating that in the absence of a significant improvement in CPI data, the government's credit tightening policy will not change. In the implementation of tight monetary policy at the same time, sound fiscal policy is still this year's another major macro policy, the current catastrophe even more requirements of the central government in the short term to carry out large-scale fiscal spending, anti-earthquake and recovery and reconstruction of credit will also have a certain policy tilt.
The freezing disaster at the beginning of the year and this major earthquake disaster will have a greater short-term impact on the regional economy, but the demand for disaster relief and post-disaster reconstruction will drive the growth of investment, and it is very unlikely that the whole society's fixed-asset investment will fall significantly throughout the year. Demand for means of production and basic consumer goods will rise in the short term, thus driving steady growth in the performance of related industries. Serious disasters may cause concerns about price increases, especially for basic consumer goods and food prices, but the Chengdu area is not China's main food production area, and the southern Sichuan area is China's main hog production area, which may generate supply pressure in the short term due to transportation, but stability is placed in a very important position in the face of a major disaster, and it is believed that the government will apply strong measures to ensure the supply of the disaster area and will control the level of price increases in the rest of the country. The price of the means of production for disaster relief and reconstruction, the government will be more strict control, the benefit of the relevant enterprises is only a short period of time, mainly reflected in the sale of products, the price of their products will not have a big change.
Japan and Taiwan in the 1990s were hit by the Great Hanshin Earthquake of January 17, 1995, which measured 7.2 on the Richter scale, and the 921 Earthquake of September 21, 1999, which struck the central and southern regions of Taiwan. In terms of magnitude and death toll, the Wenchuan earthquake has 9,219 compatriots were killed, although from the geographical point of view of the impact of the region mainly in Sichuan, compared to Japan and Taiwan earthquake occurred in the local economic center of the region, the impact on our national surface may not be the largest, but the potential economic losses will be difficult to estimate. Earthquake and other emergencies on the economy is slow, the impact on the capital market is fast. The earthquake will have an adverse effect on the performance of listed companies and the psychological expectations of investors.
Reviewing the history of Japan, Japan on January 17, 1995 after the Great Hanshin Earthquake, Nikkei 225 index from January 17, 19241 has been down to January 23, 17785 points to stop falling, during the period of four trading days, the decline of 7.6%. And then the Japanese index and a short period of relatively large number of days rebound, and ultimately by the impact of the earthquake on the economic and financial aspects of the late continued to fall, during the period of the famous Bank of Bahrain was also affected by the bankruptcy. Individual stocks, Japan after the Great Hanshin Earthquake 4 trading days in the process of the plunge, the decline is the top of the banks, real estate, machinery stocks in the Hanshin area, such as Sumitomo Trust Bank fell 17%, securities, real estate, machinery and other stocks generally fell. Correspondingly, there were few rising stocks, only a few post-disaster reconstruction concept stocks such as Taisei Construction performed strongly, as well as Takeda Pharmaceutical Industries and other pharmaceutical stocks fell relatively little.
Revisiting the history of Taiwan, China, the stock market suspended trading after Taiwan's 921 earthquake until trading resumed on Sept. 27, and Taiwan's weighted index began to fall from 8,016 points on Sept. 20 to close at 7,599 points on Sept. 30, during which time it experienced five trading sessions of downward oscillation, with a cumulative decline of 5.2 percent. Afterwards, Taiwan's weighted index also rebounded to a certain extent before resuming its previous trend, showing a consolidation pattern. Individual stocks, in the process of the general market decline in positive returns of individual stocks are also mainly manifested in the concept of post-disaster reconstruction stocks and stocks benefited from the disaster. For example, cement, iron and steel, building materials and other companies have made positive gains, while the semiconductor industry, such as Daiyi Technology, due to Taiwan's semiconductor industry in the global market has a large proportion, so although the production was damaged, but the stock price with the chip price rose and soared. Corresponding decline in stocks mainly concentrated in banks, real estate, insurance, computers and other downstream assembly companies.
This disaster of such magnitude in China will certainly also have a major impact on the operation of the country's capital markets and various industries, with both negative and positive effects.
First of all, the demand for medicines is indispensable in the rescue of earthquake disaster. The demand for pharmaceutical products is divided into two phases, in the early stage of the earthquake, mainly for the earthquake generated trauma patients, the need for surgical drugs and trauma drugs; and with the passage of time, the later stage is mainly to prevent the occurrence of epidemics in the disaster area and the control of epidemics in terms of the demand for drugs.
Plasma and blood products (such as listed companies in the Hualan Biological and Tiantan Biological) due to the recent blood products itself is in short supply, so the relevant listed companies will not bring a direct increase in sales; antibiotic producers of uncertainty, geographically, located in Chongqing's Southwest Pharmaceuticals is the most recent antibiotic producers; I.V. manufacturers (such as listed companies in the Double Crane Pharmaceuticals and Fengyuan Pharmaceuticals) will see increased demand, with Sichuan's Kelun Pharmaceuticals likely to gain a larger share; and surgical instruments and consumables are mainly in the category of Shangshi Pharmaceuticals, Xinhua Medical and Yuyue Medical.
After a disaster, it is easy to produce an epidemic, and at present the more prone to epidemics, including cholera, typhoid, dysentery and tetanus, etc., and these diseases are mainly treated by vaccines or antibiotics. Vaccine manufacturers in domestic listed companies include Tiantan Bio and Hualan Bio. Objectively speaking, the current impact of the relevant listed companies can not be quantified, in the face of large-scale disasters, pharmaceutical companies also usually through donations of medicines and other forms of pharmaceutical companies to reflect the social responsibility, so we should also objectively look at the impact of this disaster on the pharmaceutical listed companies, do not go crazy speculation.
Secondly, the post-disaster reconstruction will generate a lot of demand for building materials in the short term, especially in the process of restoration of transportation infrastructure and housing, and there will be a greater increase in demand for cement and construction steel. There are two cement companies listed in Sichuan Province - Sichuan Jinding and ST Shuangma, respectively, from the epicenter of the region of about 180 kilometers and 100 kilometers or so, its normal production will certainly be affected by the earthquake, the vicinity of the disaster area closer to the cement enterprises are mainly Huaxin Cement, ST Qinling, Qilianshan, etc., they were affected by the earthquake relatively small, will become a part of the post-disaster reconstruction of the building materials. They are relatively less affected by the earthquake and will become the main cement supply enterprises in the post-disaster reconstruction, but the price of cement products will not have a big rise.
Third, the earthquake disaster, mobile communications and fixed telephone communications facilities were damaged more seriously, the power grid system and part of the power station also suffered greater damage. The next communication and power system restoration work, will give electrical equipment manufacturers and communication equipment manufacturers to bring new orders.
Fourth, with the post-disaster property and casualty insurance claims work, insurance companies will have a greater rise in claims expenditure, will drag down the short-term trend of insurance stocks, but in the medium and long term will stimulate the rise in the insurance enrollment rate. At the same time, the damage to the production enterprises in the disaster area may occur in the short term increase in bad loans, commercial banks will also be affected by varying degrees of negative impact.
Fifth, the normal operation of the directly affected enterprises in the disaster area will be interrupted, and the performance of the relevant listed companies affected by the disaster will be greatly affected, and the specific impact will depend on the specific circumstances of each listed company, and at present, most of the listed companies in the disaster area still do not have a clear announcement of the loss situation, and should pay close attention to the announcement of the relevant listed companies.
By the experience of the earthquake in Japan and Taiwan, we believe that the overall impact of the earthquake on the stock market for the short-term negative, the duration of about 4-5 trading days, and then the stock market may have oversold rebound; finally, the stock index will maintain the original broader operating trend.
In the performance of individual stocks, banks, insurance, securities, real estate and other financial stocks, as well as by the impact of the earthquake caused by direct losses and the inability to transfer the loss of the enterprise, by the negative impact of the larger; and the concept of post-disaster reconstruction will promote the iron and steel, building materials, pharmaceuticals, food and other stocks to achieve short-term positive returns, while those who are affected by the disaster have the ability to transfer the cost of the loss of the enterprise will be likely to obtain positive returns.