Asian Real Estate and Commodity Shares Slide as Chinese Bank Loans Wane

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Key Asian markets sank lower Tuesday. Both China's Shanghai Composite Index and Hong Kong's Hang Seng Index tumbled 2.4%. The Shanghai Composite closed at 3,019 and the Hang Seng ended the day at 20,109. In Japan, the Nikkei 225 Index fell 1.8% to 10,325.Chinese developers and commodity producers were among the worst hit sectors today as fears that the Chinese government's moves to curb bank lending will dramatically slow the building frenzy. Gemdale, which builds townhouse communities and apartment buildings with shopping and lifestyle facilities in many up-and-coming business areas like Shenzhen, Xi'An and Tianjin, plunged 6.2%. Poly Real Estate fell 4.8% and China Vanke lost 3.2%.

A slowdown in Chinese development would spell a sharp decrease in demand for raw materials. Prices on the London Metal Exchange closed lower and Chinese mining companies went with them. Baoshan Iron & Steel dropped 3%, Jiangxi Copper slid 2.6% and Angang Steel was down 2.3%.

In Hong Kong, Bank of China and Industrial & Commercial Bank of China Ltd. both slumped 3.4% and developers with major interests on the Mainland lost value. Soho China plunged 3.7%, China Overseas Land fell 3.3% and Shimao Property lost 3.2%. Local developers also fared badly today, just as a report by Centaline Property forecast that a record number of new homes will be completed in 2010, according to Bloomberg. The agency predicts 14,159 private residences will be ready for occupancy. Today Glorious property tumbled 4.4%, Sun Hung Kai plummeted 3.2% Hang Lung fell 2.6% and Sino Land dropped 2.5%. Bloomberg reported last week that a Cheung Kong executive was predicting a price increase of 10% to 15% for luxury homes in the territory; shares in Cheung Kong dropped 1.9% today.

Cheung Kong owner and self-made billionaire Li Ka-shing has agreed to buy a $38 million stake in Jia Sheng Holdings, maker of electric car batteries, according to Bloomberg, which describes the move as similar to Warren Buffett's backing of BYD Co. Li Ka-shing's investment sent Jia Sheng shares soaring 62%.

Hong Kong-listed Chinese banks declined today. Industrial & Commercial Bank of China sank 3.4%, Bank of Communications fell 3.8%, Bank Of China sank 3.2% and China Construction Bank lost 2.9%.

In Japan, electronics makers plunged today as the yen strengthened, shrinking profits for Japanese-based companies. Hitachi lost 5.9%, Panasonic shed 5.3% and TDK fell 3.5%. Playstation 3 maker Sony fell 4.8% today and rival Nintendo slipped 0.5%. With share prices sliding, perhaps fewer people are in the mood for games.
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