Toyota Woes Drag Nikkei Lower, China Hotels Rise on Promise of Chinese New Year Travelers

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Major Asian indexes closed lower Thursday. In Hong Kong, the Hang Seng Index lost 1.8%, ending the day at 20,342 and in Japan, the Nikkei 225 Index fell 0.5% to 10.356. China's benchmark Shanghai Composite Index slid 0.3% to 2,995.In Hong Kong, the three-day recovery was broken as banking shares slid lower. Tightened lending restrictions mean that lenders who have depended on interest from mass loans must come up with other ways to bring in funds. Bank of Communications fell 1.7% on rumors that the Ministry of Finance may inject cash into the state-controlled bank, according to China Daily.

Hong Kong-listed shares of Industrial & Commercial Bank of China tumbled 2.4%, and Bank of China, which plans to sell bonds to cover its debt, fell 1% in today's trading. Hong Kong's most heavily weighted stock, HSBC, plunged 2.2%.

Commodity and mining companies also fell today, Jiangxi Copper and Real Gold Mining both dropped 3.9% on the Hong Kong board, Aluminum Corp. of China, otherwise known as Chalco retreated 3.7%. Gold miner Zijin Mining Group fell 1.2%. Prices on the London Metal Exchange Index slumped to their lowest levels since mid-November with the index falling 2.5%.

Also in Hong Kong, promising car companies closed lower. Geely, which plans to sign a preliminary agreement with Ford to buy Volvo sometime this month and own the unit by May, according to Reuters, fell 3.3% today. Meanwhile, Buffett-backed BYD Co., maker of electric cars and batteries, slumped 2.4%.

In Japan, Toyota plunged 4%, despite issuing a rosy third quarter earnings report, as signs of a possible Prius recall added to the company's woes over faulty accelerator pedal recalls. All these quality issues could seriously damage the carmaker's reputation for quite some time as customers lose trust in the brand. On a London radio chat show this morning, host Nick Ferrari fielded calls from fed up Toyota owners, including a man who said his Prius brakes had failed, but the dealer turned him away saying everything looked just fine. So there's evidence that Prius problems, currently only officially reported in Japan and the U.S., could be on their way to Europe as well.

Toyota parts supplier Denso Corp. tumbled 6.3% and Toyota Boshoku, which makes Toyota parts including bumpers, seats and carpets, slumped 9.1%. It seems anything associated with Toyota has been touched by the company's misfortunes.

Meanwhile, things are looking up for Honda Motor, which surged 2.5%. In light of its rival's growing setbacks, the company has raised its expected net income for the year by 110 billion yen.

In expectation of rising traveler and tourist numbers throughout China over the Chinese New Year holiday, tourism related shares rose today. China United Travel surged 7.6% adding to yesterday's 10% gain, and Shanghai Jinjiang International Hotels spiked 3.4%. Shanghai Oriental Pearl rocketed up 7.4% on the expectation that visitors will flock to see the tower's 11 spheres and view the city from its 15 observatory levels. The company also runs the tower's revolving restaurant and 20-room Space Hotel, where guests can rent telescope from reception to spy on the city from high above. the tower is one of the many jewels representing China's economic boom time.
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