Earthquake Won't Shake Tech Stocks

By Eric Jackson
RealMoney Contributor
3/14/2011 8:00 AM EDT
Click here for more stories by Eric Jackson

With the frantic headlines and devastating imagery over the weekend of the Japanese earthquake and tsunami, what are the implications to your portfolio of tech stocks and Chinese stocks?

I believe we are nearing the end of the uncertainty weighing on the markets over the current nuclear concerns. If we were focused on rebuilding, the markets would be having an easier time moving forward. As it is, we are still not sure of the situation with the nuclear reactors. Every time the word "nuclear meltdown" is used in describing the event unfolding, the market jitters.

But this is not the '80s in Chernobyl. This is modern-day Japan. The fears are outpacing the reality of the situation. By the end of the week, I suspect our fears will have subsided and our full attention will be focused on the improving American economy, not Japan.

I listened in on a conference call of BAML Capital Partners' top Japan and Asian analysts last night. One of their key messages was that the Japan crisis would have little if any impact on the rest of Asia. Yes, China exports a lot to Japan, and the Japanese consumer is going to be in hunker-down mode for a while. Yet this headwind will likely be more than offset by Japan's need for stuff in order to rebuild.

Electronics, basic materials, food, energy. Japan needs them. China will sell them a lot.

It's been interesting to watch over the past week (especially Friday) how a number of Chinese tech names have been performing well. On Friday, there were big gains in Baidu (BIDU - commentary - Trade Now),Sohu (SOHU - commentary - Trade Now), Sina (SINA - commentary - Trade Now), Shanda Interactive(SNDA - commentary - Trade Now), Perfect World (PWRD - commentary - Trade Now), Changyou.com(CYOU - commentary - Trade Now), SouFun (SFUN - commentary - Trade Now), and Shanda Games(GAME - commentary - Trade Now).

NetEase.com (NTES - commentary - Trade Now) was down on Friday but has had a strong couple of weeks since its earnings came out.

Why have these Chinese Web and gaming companies been doing so well, even after the massive earthquake hit at midnight last Thursday night? Despite the jitters about energy in North Africa in the last month, most investors are seeing the strength in all these names with rising advertising revenues and increased game usage from a confident Chinese consumer. Those local factors will trump tragic events next door in Japan.

These companies will continue to see their stock prices rise and fall solely on their own performance and the continued strength of the Chinese economy.

...

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

Sphere: Related Content

Sounding the Alarm About Japan

By Eric Jackson, Senior Contributor

05/26/10 - 11:35 AM EDT

Europe has captivated the headlines the past six weeks with concerns about whether Greece will be able to pay back its debts given the required austerity measures it has been forced to take and its already slow-growing economy. Investors also have worried about the ramifications this thorny situation could have on richer countries in the European Union like Germany and France if they decide they no longer want to be on the hook to bail out Greece or another weak sister country such as Portugal, Spain, or Italy.

We know this situation has been brewing in Europe for some time. We've known about the fiscal situations in these southern European countries, yet the problems have always been off in the future so that we could ignore them. It wasn't really until there were riots in the streets of Athens that the markets really got awakened to the gravity of the situation.

The drop in the euro has been so severe that the other members of the EU have been forced to look into the abyss which those of us in America did in September 2008. Nothing focuses a man's mind like knowing he's going to be hung in the morning, said Samuel Johnson. That's exactly right. The situation in 2008 forced America to act and Europe is now forced to do the same.

I suspect the rescue package, which still has to be formally ratified by all the countries, will take hold. Frayed nerves will calm over Europe with time, just as they did following the Troubled Assets Relief Program in the U.S. and the Federal Reserve's quantitative easing campaign. The can of Europe's problems has been effectively kicked down the road so that we'll be able to go back to collectively forgetting about Greece for a while.

However, there is potentially a bigger and more dangerous sleeping giant out there for world markets: Japan. Despite a few hedge fund managers sounding the alarm about Japan last year, little attention has been paid to it of late because -- just as with Greece -- nothing bad or newsworthy (like violent street riots) have occurred there yet.

........

[This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.]

Sphere: Related Content

Get Used to Volatility

"Part of the new normal for investors is getting used to more volatility," Eric Jackson from Ironfire Capital told CNBC Monday. Piers Curran from Amplify Trading joined the discussion.

Sphere: Related Content