Analysts: Quake's Jolt on China's Economy "Transitory"

Shanghai, China (AHN) - In spite of its catastrophic effects, analysts on Tuesday assured that the economic disruption caused by the massive earthquake would only be transitory.

"While the quake caused significant damage to human lives and infrastructure, we expect its impact on China's economic growth to be temporary and limited," Sun Mingchun, an economist at Lehman Brothers told the China Daily.

The Shanghai Composite Index fell 1.8 percent to 3,560 on Tuesday, even though trading was suspended in 66 companies in quake-affected Sichuan and Chongqing as a precautionary measure

According to the China Daily, analysts said they expect earnings of companies in infrastructure, transportation, electricity and tourism industries, such as Sichuan Minjiang Hydropower Co Ltd, to be hit mildly, while earnings of insurance companies may be affected by earthquake damage claims.

"The compensation amount won't be very big because many of the major listed insurance companies have bought sufficient re-insurances, which could disperse their burden," Zhou Guang, an analyst at China International Capital Corp Ltd.., said in the newspaper interview.

Experts warned thought that non-ferrous companies in Sichuan and Chongqing, such as Sichuan Hongda Co Ltd and Sichuan Atlantic Welding Consumable Co Ltd, would be the hardest hit, as production has so far ground to a halt.

Sun likewise noted that the quake "could exacerbate the rice supply problems and push up rice prices further, given the recent shortages in the global rice market." According to Lehman Brothers, Sichuan and Chongqing's rice output make up more than 9 percent of China's rice production.

All in all, economists noted that the quake's impact on the economy would be lighter and less felt compared with the snowstorms that ravaged south-central China earlier this year.