Effects of floods on market?

[tothemax6]

Hi All,
Does anyone have insight in what the likely effects of the flooding will be on the stock market? Or has anyone been in a previous flood event and seen its effects on the market?
My hunch is that it will only cause a minor 'blip' in the market, since the flood is not likely to be sustained for any length of time, and following this the market will resume an upward course. Does this sound reasonable? I did look back at a previous flood event (Feb 2008 I think it was), and did not see any significant effects on the market - although this was during a boom, so it could be different.
Cheers!

 

[vincent191]

The market overall maybe a small down trend. Certain sectors will be effected more. Insurance companies, Qld coal producers, listed primary and agriculture companies, sugar, cotton and explration companies will all be effected. ESPECIALLY insurance. Short QBE.

 

[doctorj]

The market overall maybe a small down trend. Certain sectors will be effected more. Insurance companies, Qld coal producers, listed primary and agriculture companies, sugar, cotton and explration companies will all be effected. ESPECIALLY insurance. Short QBE.

Insurance will be effected in the short term, but the estimates I've seen from folk here in London is that it's actually a relative non-event from an insurance perspective. As of Monday, loss estimates were only $150mm from about 4,300 claims (much of which will be picked up by reinsurers offshore, rather than the Aussie primary insurers). Compare this to the Perth hail storm that was north of $1bn! Unfortunately, it seems very few folks have flood cover. The next few days will be almost as crucial for the industry as the poor souls in the way of the flood - losses may rise rapidly as more populated areas flood.

In short, if it were me, I'd wait until the market cap of QBE et al take a hit and then jump on board as the actual is likely to be a lot better than feared from an insurance perspective.

 

[doctorj]

As of Monday, loss estimates were only $150mm from about 4,300 claims

Have just seen some updated numbers through for those interested, Suncorp and IAG have received 3,400 claims between them, so loss estimates probably up quite a bit from Monday given there are other insurers in the market. Fitch put out a note this morning saying that IAG should be reinsured for losses above $15mm and Suncorp is covered up to about $5.6bn of claims.

 

[GumbyLearner]

Hi All,
Does anyone have insight in what the likely effects of the flooding will be on the stock market? Or has anyone been in a previous flood event and seen its effects on the market?
My hunch is that it will only cause a minor 'blip' in the market, since the flood is not likely to be sustained for any length of time, and following this the market will resume an upward course. Does this sound reasonable? I did look back at a previous flood event (Feb 2008 I think it was), and did not see any significant effects on the market - although this was during a boom, so it could be different.
Cheers!

this may help tothemax

by Michael Smith
courtesy of Reuters

UPDATE 1-FACTBOX-Companies & industries hit by Australian floods
2011-01-12 05:21:58 GMT (Reuters)

http://www.futurespros.com/news/fut...ies-affected-by-australia's-floods-1000006220

 

[So_Cynical]

Insurance will be effected in the short term, but the estimates I've seen from folk here in London is that it's actually a relative non-event from an insurance perspective.

In short, if it were me, I'd wait until the market cap of QBE et al take a hit and then jump on board as the actual is likely to be a lot better than feared from an insurance perspective.

I jumped into Suncorp very late yesterday figuring the panic sellers etc had already bailed...the SP held up today ok.

 

[Julia]

I'd say that any temporary dip will be more than offset by the later impetus to the economy as the rebuilding starts to happen. This will push up employment and generally lend a sense of optimism to markets imo.

 

[prawn_86]

Does anyone know of any listed shopfitters or something in that sort of industry? As they will have a lot of work coming up. I did a search but couldn't find anything

 

[glenn_r]

Insurance will be effected in the short term, but the estimates I've seen from folk here in London is that it's actually a relative non-event from an insurance perspective. As of Monday, loss estimates were only $150mm from about 4,300 claims (much of which will be picked up by reinsurers offshore, rather than the Aussie primary insurers). Compare this to the Perth hail storm that was north of $1bn! Unfortunately, it seems very few folks have flood cover. The next few days will be almost as crucial for the industry as the poor souls in the way of the flood - losses may rise rapidly as more populated areas flood.

In short, if it were me, I'd wait until the market cap of QBE et al take a hit and then jump on board as the actual is likely to be a lot better than feared from an insurance perspective.

I see Suncorp offer automatic flood cover with their house insurance.

http://www.suncorpflood.com.au/

But due to the reinsurance their cost of claims is not pegged to the actual claims cost, a bit like a bookie at the races laying off bets.

 

[Vicki]

Does anyone know of any listed shopfitters or something in that sort of industry? As they will have a lot of work coming up. I did a search but couldn't find anything

On that point, I thought of 'Fleetwood'...Not sure of their ticker code?

I think they build caravans & temporary homes for the mining industry?

They might find their services in great demand, in coming months.

Vicki

 

[prawn_86]

On that point, I thought of 'Fleetwood'...Not sure of their ticker code?

I cant invest in Fleetwood for personal reasons/conflicts (cant state why) but yes its probably not a bad idea

 

[burglar]

Just to hand: ASX Report from QRN regarding weather impact on rail services.


http://www.asx.com.au/asxpdf/20110113/pdf/41w55cm8csfqjs.pdf

 

[Julia]

Does anyone know of any listed shopfitters or something in that sort of industry? As they will have a lot of work coming up. I did a search but couldn't find anything

Friends of mine have a shopfitting business. They are always flat out anyway.

I see Suncorp offer automatic flood cover with their house insurance.

http://www.suncorpflood.com.au/

But due to the reinsurance their cost of claims is not pegged to the actual claims cost, a bit like a bookie at the races laying off bets.

Interesting link. I see it states they are not writing any new business in Qld at present. Perhaps they are rethinking their policy of offering automatic flood insurance!

 

[prawn_86]

Friends of mine have a shopfitting business. They are always flat out anyway.

Do you know if they import their products? If so if you want to pass on their details i can help them out with that side of things

 

[burglar]

AIO - Asciano, owners on Pacific National rail, has been well hammered !

 

[TheAbyss]

Dont know the levels of impact however JB Hi Fi have closed 12 of their 32 Qld stores due to flooding. What of Coles and Woolies?

Centro Properties may well be in some trouble as i know a few of their Qld malls are under water. Westfield will also have some under water. This could go on and on as some wont open for months so their has to be an impact on revenues for some of these. Insurance? Unlikely as most are classed as Riverine flooding which isnt covered.

 

[Tysonboss1]

The net effect should be next to nothing,

Once the water is gone the government assistance along with insurance pay outs will be like a stimulas package in those areas.

 

[tothemax6]

Dont know the levels of impact however JB Hi Fi have closed 12 of their 32 Qld stores due to flooding. What of Coles and Woolies?
Centro Properties may well be in some trouble as i know a few of their Qld malls are under water. Westfield will also have some under water. This could go on and on as some wont open for months so their has to be an impact on revenues for some of these. Insurance? Unlikely as most are classed as Riverine flooding which isnt covered.

And yet, today the market jumped, and JB went to $19 . The market just seems to do its own thing .

The net effect should be next to nothing,
Once the water is gone the government assistance along with insurance pay outs will be like a stimulas package in those areas.

But insurance only covers the lost equipment, it doesn't cover the downtime...

 

[Tysonboss1]

Companies on the sharemarket trade at levels equal to many years of earnings, a short term what impact will this have on jbhi ten year earnings , nothing.

So it's correct that this flood should have no pricing impact, except for the insurance companies that arenot well capitalized.

If the market did soften from this flood it should be considered an over reaction. In fact a disaster of this nature should be factored in for every 5 years. Because disasters are sure to happen all over the country from time to time

 

[Gringotts Bank]

On tv just then: $5 billion in damages + $13 billion in repair work = $18 billion estimate.

I guess it comes to the taxpayer to provide the funds, similar to the Vic bush fires.

Would have been better if the insurance co.'s footed the bill, eh?

They were saying the Qld coal companies will be severely affected.