Global market facing two issues now days, Japan crisis after earthquake and tsunami and geo politic crisis in the Middle East.
For Japan it’s self, it has raising the Japan Yen. Roger Morley, from MFS says that the rising yen is a consequence of insurance companies and other Japanese institutions repatriating overseas funds to pay for damage, and thinks it will have a further negative impact on the country.
The rising yen is not terribly good for the Japanese economy. It is a very export based economy and a lot of major companies still manufacture a lot there, while US companies have outsourced to lower cost areas. Japanese companies have done that too of course, but didn’t go as far down that route. So the rising yen just makes them less competitive and very hard to export. That’s the primary impact. It is particularly bad for the world-beating exporters who are still very much overweight on Japan sourcing and manufacturing, like Canon, Nissan, Toyota, and companies like that.
Roger Morley added that the impact on the global economy of trouble in the Middle East is of greater concern than the impact of the tragic events in Japan.
‘I can’t forecast what will happen with three misbehaving nuclear reactors, but I think the impact of what is happening can be absorbed by the global economy. I’m more concerned about what is happening in the Middle East, as I think oil will have a more important impact on the global economy, particularly because of its impact on China.