Japan’s markets will continue to fluctuate until the nuclear crisis is resolved
Dr George Olcott, Cambridge Judge Business School Fellow, says he has been ‘impressed’ and even ‘moved’ by the way Japanese people have responded to the crisis that has hit their country.
He said they have been calm and dignified throughout.
“It’s always been said that the Japanese are stoic by nature but I have really seen this in the unfolding of this tragedy. Basically people have been battening down and trying to help each other and that characteristic, more than any other, will help this nation through.”
Dr Olcott was in Tokyo when the earthquake and tsunami hit a week ago.
A specialist in the Japanese markets, he feels the Japanese financial markets have over-reacted to the crisis and will probably continue to remain uncertain and unstable until the nuclear crisis is resolved.
“Comparisons have been made to the 1995 earthquake that rocked Kobe which lead to a bear market that ended up losing 25 per cent. But the market in those days was much higher than it is today and it had not been able to digest in the five years since the bubble burst, the full extent of the unwinding of the bubble.
“Now we are at a much lower level than we were in 1995 and Japanese company earnings are so much greater. So I think that the initial reaction was overdone, which is why we have seen a bit of a recovery in the market. But going back again to the uncertainty caused by the current nuclear situation, it’s difficult to say where the markets are going to lead. In the short term, until there is a line drawn under the nuclear issue, further uncertainty and instability will be seen in the markets.”