First views on the quake from economists and analysts we follow regularly. Here’s Deutsche Bank’s Jun Ma, greater China chief economist, and Moody’s Economy.com’s Sherman Chan, an economist who covers China for the research firm:
Deutsche Bank: “At the macroeconomic level, our current view is that the impact is limited … The equity market may be hurt by the rising uncertainties related to earnings impact and liquidity flows.”
Moody’s Economy: “Although the earthquake has caused major disruption only to the Sichuan province, which represents a relatively modest share of the country’s GDP, the economic impact of the earthquake to China as a whole is likely less severe compared to the snowstorm. Nevertheless, the earthquake has shaken market confidence.”
Sector and company view
DB: Sichuan Expressway (107.HK) will see slower traffic growth, Dongfang Electric (1072.HK) has major production bases in Sichuan. China Telecom (728.HK) is the worst hit of the telcos, the affected area represents about 10% of its fixed line network. The quake will also affect 7% of China Mobile’s relay network. Sinopec (386.HK) has a Sichuan gas project under development that will account for about 7% of FY10 revenue. Insurance firms, property companies with Sichuan and Chongqing in their portfolios. Cement makers like Shui On Cement (983.HK) and Anhui Conch (914.HK) could benefit.
ME: “The most direct impact is the disruption to economic activity due to problems with transport, communications and power supplies. In relation to business operations, the most affected by the disaster will be the manufacturing, retail, transport and tourism sectors. However, China’s construction and engineering industries will be able to take advantage of the massive reconstruction of buildings and infrastructure in coming months.