The death toll from earthquakes that struck southern Japan rose to 42 and the economic impact began to reverberate Monday as companies surveyed damage and the potential effects on production from supply-chain disruptions.
The quakes may add to the case for Prime Minister Shinzo Abe to increase fiscal stimulus and postpone a planned increase in the nation's sales tax. Abe has said only an economic shock on the scale of the 2008 global financial crisis or the 2011 quake and tsunami in the country's northeast would justify delaying the levy hike. Even before this latest disaster, advisers and influential economists had been calling on to Abe hold off raising the tax. Abe hinted Monday at compiling a stimulus package
The series of quakes that struck the island of Kyushu since Thursday evening are the nation's most devastating earthquakes since March 2011. There are 201 people seriously injured, 838 have light injuries, and 110,816 have been evacuated to shelters, according to Kumamoto Prefecture's disaster countermeasures office. There has been additional damage in neighboring prefectures including Oita.
The Topix index slumped 2.9 per cent to 1,321.98 as of the close of the morning session, with all but one of its 33 industry groups falling, after rising last week by the most in two months. The Nikkei 225 Stock Average dropped 3 per cent to 16,344.09.
Toyota Motor Corp. fell 5.1 per cent, the most in two months. An analyst's report said operating profit may be reduced by about 30 billion yen ($277 million) for the quarter ending in June as the earthquakes disrupted parts supplies. Halts in production that began late last week at Toyota's Kyushu factories will extend to other assembly lines in stages throughout this week, Toyota said. The yen strengthened to 108.23 per dollar as of 4:39 pm in Tokyo as a plunge in oil spurred a flight to safety assets. Investors also are speculating that Japan's government and central bank will need to consider more stimulus for an economy that is already struggling.
Intensity map of Kumamoto earthquake on Saturday April 16, 2016, at 1:25 am JST Intensity map of Kumamoto earthquake on Saturday April 16, 2016, at 1:25 am JST
Prime Minister Shinzo Abe increased the number of rescue workers to 25,000 in the earthquake-stricken south of the country. An initial earthquake came on Thursday night, followed by more shocks that caused intense shaking. A magnitude-7.3 quake occurred at 1:25 am local time Saturday and was most powerfully felt close to Mount Aso, an active volcano and popular tourist site. Television footage showed houses flattened and landslides that had swallowed up roads and railway lines in the village of Minamiaso.
Dai-Ichi Life Insurance Co tumbled 5.4 per cent, the most since February 12, while Tokio Marine Holdings Inc lost 5.3 per cent. Other stocks fell on earthquake concerns with TDK Corp, which provides battery parts, down 4.5 per cent. Kyushu Electric, which runs Japan's only operating nuclear plants, was down 7.3 per cent.
the Sendai reactors in neighboring Kagoshima remain in operation, and Environment Minister Tamayo Marukawa said over the weekend that the plant doesn't need to be shut down at this point.
Taiheiyo Cement Corp. finished the morning 3.4 per cent higher on expectations that demand will rise with the rebuilding effort.
Other stocks affected included Japanese insurance companies, with MS&AD falling 6.3 per cent and the Topix insurance index down 5.4 per cent. HIS, which operates the Huis Ten Bosch theme park in Kyushu, fell as much 10 per cent, and is the fourth biggest decliner on the Topix index.
Nomura said in a report that the focus for automakers is on whether disruption will occur in the supply of chips, saying that even if output is affected for several weeks it will quickly return to normal, minimizing the impact on this fiscal year's earnings.
Abe, in parliament Monday, said "we will take all necessary measures," in response to a question about the possibility of an extra budget to finance disaster relief measures.
Surveying Damage
Companies in the region halted operations as they looked into the extent of the damage and were in contact with employees. Takeshi Hagiwara, a spokesman for Sony Semiconductor Manufacturing, said Monday that all operations in the area have been suspended. He said it has been difficult to check damage to facilities because of the concern about further aftershocks from the quake. Sony has five plants in the area that produce image sensors, with the Kumamoto factory the primary facility.
Honda Motor Co. has suspended production at its motorcycle plant in Kumamoto through Monday. Nissan Motor Co. stopped output at its plant in Fukuoka after the latest quake as it assesses the impact on the facility and its supply chain.
Fujifilm Holdings Corp. halted production of electronic-display devices at its Kumamoto plant, according to spokesman Takahiro Taguchi. Nippon Steel & Sumitomo Metal Corp. has suspended some of its facilities in nearby Oita prefecture for safety checks.
Tens of thousands of homes in Kumamoto prefecture were still without power, according to the economy ministry.
Delivering Food
Relief workers were dispatched to the region from throughout Japan and have been delivering food and supplies at evacuation sites. Teruko Maejima, 80, said she ran out of her apartment and to a parking lot after the earthquake early Saturday, bringing only a blanket with her. She has been moving between shelters since then -- she returned once to her sixth-floor apartment to find it was badly damaged.
"I've hardly slept. Today we've got water, rice balls and bananas here," she said at a shelter set up at City Hall. "I feel so lucky and thankful that I'm here. I could take cover from the rain."
Hiroyuki Umeda, a shop manager, said he has been offering free food to area residents. He said his staff prepared 250 servings of rice balls and miso soup -- and they were gone in 15 minutes.
"I'm hoping to offer help even if it's trivial," he said. "It's the toughest thing that you can't find food."
Transportation to the region continues to be affected, with ANA and Japan Airlines canceling all Kumamoto-related flights Monday, and most local trains not running. Kyushu Railway said it may resume rail service to the region as early as Monday afternoon after safety checks, broadcaster NHK reported, citing the company.
