Industries That Thrive With Earthquakes

Are there industries seemingly unaffected and thriving after an earthquake?

The recent earthquake and the resulting tsunami in Japan have killed thousands, displaced hundreds of thousands, and left a nation of 100 million and the whole world—in tears. The tragedy is nothing to make light of, but in order to perceive the proverbial rainbow after the storm, we would need to move forward and see what we could learn from the disaster.

Not surprisingly, Japanese stocks fell after the catastrophe. However, it would seem that certain industries ought to thrive with earthquakes in Japan, Haiti or anywhere else. In fact, the data supports the theory that some industries boom after an earthquake hits.

One stock analyst pinpoints certain companies that develop storm and tsunami warning systems as potentially good buys. Also, businesses that deal with earthquakes, whether offering warning devices or building fortifications against such are expected to do well. In fact, the construction industry as a whole seems to be one that bounces back quickly after an earthquake. Less than a month after the incident, construction seems to be on the rise. It seems logical, as after the dust settles, people start to rebuild. However, the real winners are businesses that manufacture metal products. The industry has been doing consistently well after the calamity, registering the highest gains in the Tokyo Stock Exchange as of April 4.

Furthermore, despite the initial drop, insurance companies, even in the US, are starting to get better, as people begin looking for ways to survive financially after a disaster like in Japan. Another trade that seems to benefit from an earthquake is pharmaceutics, considering the resulting injuries. Numbers from both the TSE and Standard & Poor’s substantiate these claims.

Finally, while real estate is sure to suffer after an earthquake (would you buy a house in an area just devastated by an earthquake?), Haiti, struck by a 7.0 last year, showed how hotels, at least those that did not crumble, could benefit from such. The Haiti earthquake, one writer says, “shrank the market and jacked up occupancy rates.”

After an earthquake, not all industries are crushed to the ground. Not to be opportunistic, but some even tend to do better.

Natural Disasters and Armed Conflicts: Effects on US Economy and Overall Employment

What effects are we to expect with the current US armed conflicts?

Less than three months into 2011, a couple of major world events shocked the world. First, one of the most powerful earthquakes the world has ever seen hit Japan, bringing tsunamis 10-meters high and causing over $100 billion in damages. About a week later, western forces executed the biggest assault on an Arab regime since Iraq in 2003. While both events happened continents away, their effects on the US are not negligible.

As we have seen in a relatively smaller scale in the form of Hurricane Katrina in 2005 ($125 billion in damages), we know that a natural disaster could deal tremendous damage to a country. With the shortage of food, death and displacement of people and the damage to natural resources and infrastructure, the disaster’s effect on Japan cannot be understated. Across the world, even the United States is feeling the grunt of the tragedy. For one, Japan’s goods trade with the US adds up to almost $200 billion a year (2010) — including the thousands of cars and electronics we buy from them, and the billions of dollars worth of agricultural products we sell to them every day.

On the other hand, the armed conflict in the African country is already costing Americans: gasoline prices have reached four dollars per gallon in some cities. The unrest might be happening thousands of miles away from us, but we are feeling it in our pockets. While Libya is nowhere among our top sources for oil, it is still the world’s 18th largest oil producer — 10th, if you consider the total proven reserves. Whether or not Libya takes a large share in the world’s oil production pie, the loss of its contribution means reduced supply and the greater competition for reduced supply means higher oil prices.

While much of turmoil is happening elsewhere, we are not unaffected in our country. The extra dollars that an American spends on gasoline means a lot. The lack of Hondas an American car salesman could sell means a lot. The loss of a buyer of the corn that an American farmer produces means a lot. The laying off of an American factory worker because of halted productions in Japan means a lot. Natural disasters and armed conflicts, wherever they occur in the world, mean a lot to us.