How To Profit From A Chinese Fiscal Finger Trap

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Sep 18th, 2012 | By | Category: Featured, Investing Strategies, Investor Education, Technology

“Smoke and flames were reported as coming from Panasonic’s electronic-parts plant in eastern Shandong province’s Qingdao city”, said a Panasonic spokesman this weekend, according to Bloomberg.

This was no burnt fuse. And Panasonic was far from the only one experiencing damages.

Across dozens of cities in China, thousands of protesters are targeting Japanese-made cars, burning Japanese flags, and putting shutters on Japanese-owned factories and stores.

Altogether, the businesses involved have billions of dollars at stake.

You remember the March 2011 earthquake and tsunami in northeastern Japan. It had a direct impact on automakers. But ripples could be felt in other industries like heavy manufacturing, clothing, and cosmetics.

So whether you simply want to protect your existing investments, or if you’re the kind of dare devil who plays options on the twists of national fates, you’ll want to learn about which companies are most affected.

But first, why on earth is this happening?

Tensions between Asia’s largest economies flared up after an announcement by Yoshihiko Noda, Japan’s Prime Minister and the projected winner of their Sept. 21st elections.

He said that Japan’s government would purchase the disputed islands from their private Japanese owner… who had previously been renting them out. Eventually, Japan would develop the archipelago, which consists of five islands and three reefs… strategically located near China… and oh yes, they happen to be resource rich. But since they’re in the East China Sea, over which China claims sovereignty, the press has indicated that some on both sides would risk a naval clash.

It makes sense when you think about all of the stuff that’s happening over there right now.

China is preparing for a once-a-decade leadership change. And Japan’s newly appointed ambassador to China, 60-year-old Shinichi Nishimiya, died after serving only 2 days… without public comments on what caused the death.

To add more fuel to the fire, today is the 81st anniversary of an ugly little chapter in the two countries’ colonial past: the Mukden Incident, or Manchurian Incident. It led to the Japanese invasion of the northeastern portions of China.

So with all that, you should know about these Japanese companies in China:

Panasonic just shut down their factory in Qingdao, and reported damage to their operations.

Damages have also been reported for Toyota Motor Corp. Toyota’s accounting for about 10 percent of its global total.

Canon suspended their operations at three plants.

Honda, Mazda and Nissan are stopping car production for two to four days.

Honda has also been damaged in recent protests, according to the company. Their China sales account for about one-fifth of its global total and Nissan Motor Co.’s for over one-quarter.

Mazda stopped production at Nanjing factory for four days.

Seven & I Holdings closed 13 supermarkets and 198 convenience stores.

Kobe Steel shut four of its plants in China from yesterday or today, according to spokesman Gary Tsuchida.

Sharp. Corp. gets about a fifth of its sales from China, and appears to be doing okay. But a company spokesman expressed that they’re taking precautions with employee travel or excursions.

Kawasaki Heavy Industries has a big shipbuilding joint venture in the Yangtze River city of Nantong, near Shanghai, and appears to be okay.

Sony Corp. made an announcement that they suspended production at two out of seven of its factories operating in China in an attempt to protect its employees.

For the time being, you should stay away from buying into any of these companies. If you’re trying to make quick profits without fearing risk, then options is the way to go.


Josh Grasmick


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