Chinese Commodity Producers Slide While Real Estate Shares Climb

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In Asia Friday Hong Kong's Hang Seng Index was virtually unchanged, ending the day at 19,780. China's Shanghai Composite Index also held steady at 2,554. In Japan the Nikkei 225 Index dipped 0.1% to 9,901.

Hong Kong is preparing for tonight's candlelight vigil in Victoria Park in commemoration of the 21st anniversary of the crackdown in Tianamen Square. Over 100,000 people are expected to attend. Hong Kong is a semi-autonomous region, but last week authorities confiscated a Goddess of Democracy statue (pictured) from the Times Square shopping area and arrested a group of pro-democracy activists. While the territory is much less restrictive than China, its ties with the People's Republic are visible everywhere, especially where business is concerned.

Today, Hong Kong commodity shares took a tumble in a direct reaction to China's moves to slow the over-heated economy. Maanshan Iron & Steel plunged 2.4%, Chalco, or Aluminum Corp. of China, fell 1.7% and Jiangxi Copper slid 0.7%.

Foxconn, a major maker of mobile phones including the iPhone and products for Dell and Hewlett-Packard, advanced 0.7% today after the company said it will increase wages at Chinese plants where a number of employees have committed suicide.

In China, building material producers also lost value with Xinjiang Ba Yi Iron & Steel, a maker of concrete and metal building products diving 2.9% and Baoshan Iron & Steel slipping 1.1%. Gold miners were also down with Shandong Gold Mining losing 2.5% in China and Real Gold Mining falling 2.7% in Hong Kong.

But positive words from China's Banking Regulatory Commission propped up Chinese property developer's stocks today. Bloomberg reports that an official told reporters, "Real estate in China is far from being at the end of its development," indicating that the government will continue to pump money into the industry. Gemdale shot up 2.2%, China Vanke rallied 3% and Poly Real Estate rose 1.8%.

In Japan many stocks slid lower after Naoto Kan was elected as the country's new prime minister -- the fifth in four years. Many fear he could raise taxes and restructure public finances. Fast Retailing, operator of the super-popular Uniqlo shops, tumbled 2% and building and engineering companies also closed lower. Sumitomo Osaka Cement sank 3.8% and Taiheiyo Cement dived 3.1%. General contractor Obayashi slumped 1.9% and engineering company Taisei slid 1.6%. Japanese real estate companies closed lower with Mitsubishi Estate losing 1.4% and Sumitomo Realty dropping 0.5%.

Among today's winners on Tokyo's big board, Fuji Heavy Industry, maker of the Subaru car, racked up a 7% gain after reporting record operating profits. According to autoevolution.com, Subaru's May sales were the best in the company's history. The company's U.S. division sold nearly 24,000 cars -- 35% more than it sold during May last year. Expect to see trustworthy Subaru Outbacks replacing those gas guzzling SUVs in suburban America, reflecting a post-crisis shift to utilitarianism over flashy consumerism.
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