Foxconn Slumps on Salary Hike, Hitachi Falls on Canceled U.K. Contract
Foxconn, the mobile phone and gadget maker that assembles Apple's iPhone and iPad, and popular products for brands like Sony and Nintendo, has recently had a rash of suicides among workers in its Chinese factory. After investigations launched by the top guns at Hewlett-Packard, Dell and other major companies that do business with Foxconn, the company has announced it will be doubling salaries for workers who pass a performance test, says the BBC. "This wage increase will reduce overtime work as a personal necessity," read a statement released by Foxconn. The wage increase is good news for employees, but today Foxconn's stock plunged 5.5% in Hong Kong.
Most Hong Kong stocks were heavily affected by disappointing jobs data out of the U.S. and more bad news about Europe's debt crisis. Esprit, which counts Europe as its main market, tumbled 2.9% and Li & Fung, which supplies Asia-sourced clothing, toys and other products to Wal-Mart and Target, sank 2.1%.
HSBC, the most heavily weighted banking stock on the Hang Seng, tumbled 3.9% and Standard Chartered slumped 4.2%. Warren Buffett-backed BYD, which is considering setting up its European headquarters in Germany, according to Bloomberg, plummeted 4.1%. The company has high hopes of breaking into the European electric car market, becoming as popular as its F6 Corolla look-alike is in China.
In Japan, where the Nikkei has risen more than 3% since Prime Minister Hatoyama's resignation, the politics of foreign countries are taking their toll. Today Hitachi was hit hard by fallout from British budget cuts. The new U.K. transport secretary may cancel a £7.5 billion deal with the Japanese company to provide and service new trains, according to Reuters. This is part of a massive overhaul of the U.K. budget under the country's new leadership. Hitachi's shares tumbled 7% in Tokyo.
Other Japanese exporters also suffered. Clarion, a maker of car audio systems, slumped 5.8%, Canon plunged 5.3%, Casio Computer dropped 5.2% and Sony slid 4.8%. Electronic component makers slumped, with Taiyo Yuden falling 5.3%.
Among Japanese car companies, Isuzu fell 5.2%, both Honda and Mazda lost 4.6% and Toyota slid 4%. Hino Motors, a maker of buses and trucks, slipped 3.6%.
In China, banks were among the big losers with Bank of Communications plunging 3.3% and Industrial & Commercial Bank falling 2.4%.
Commodity prices fell on fears that a global slowdown will reduce demand, and a drop of 4.2% on the London Metal Exchange Index quickly led to a drop in commodity stocks in China. Jiangxi Copper plunged 3.2% and Aluminum Corp. of China, better known as Chalco, retreated 1.4%. Baoshan Iron & Steel declined 1.9% and Maanshan Iron & Steel fell 1.7%. While China may have a billion of its own customers, it's still hugely dependent on selling to those of us on the outside.