Understandably, the Japanese stock market is nose-diving. In the aftermath of the multiple disasters of earthquake and tsunami, and the continuing threat of multiple nuclear meltdown, Japanese businesses are deeply affected one way or another. Aside from property loss, it is also the loss of manufacturing facilities, evacuation and relocation of its workforce, dislocation of distribution facilities and networks, and the impact of energy shortage within Japan. There would probably be an even heavier sell down thereafter to convert stocks to cash to support rebuilding, especially to rebuild households. There is perhaps room for a 20-40% drop.
On the other hand, the reasons for a global meltdown of the stockmarkets weigh heavily on the unstable events in MENA and the risk of a slowdown in the 2nd largest global economy (Japan). There is perhaps room for overselling and hence an opportunity to buy in for the longer term. Certainly, there will be a need in massive infrastructure reconstruction in Japan as well. But that is probably going to be on hold till the risks at the nuclear plant are brought fully under control.