Threat to Chinese Liquidity Chills Asian Markets
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Banking shares closed substantially lower: Bank of Communications plunged 3.5%, China Citic Bank dropped 3.4%, Industrial & Commercial Bank of China fell 2.4 and Bank of China Ltd retreated 1.9%. China Minsheng, a privately owned bank, was down 2.7%.
The prospect of shrinking liquidity posed a threat to Chinese carmakers who have enjoyed a surge in sales over the past year; reduced liquidity means less shopping and fewer car sales. General Motors Chinese partner SAIC dropped 4.4%, while VW partner FAW Car lost 4.1%. DongFeng Automobile, maker of cars and light trucks, tumbled 4.8%.
In Hong Kong, car companies also closed lower. Warren Buffett-backed Byd Co. (BYDDF), which makes batteries and environmentally friendly cars, closed down 3.2% and Geely Automobile (GELYF), which is finalizing the purchase of Volvo, lost 2.1%. Nissan Motors (NSANY) slumped 1.1%.
Japanese car companies also lost value, suffering from a rise in the yen against the dollar, which in turn lowers the value of overseas sales once money is brought back into Japan. Toyota Motor, which is hugely dependent on U.S. car sales, fell 1.3% today and Honda fell 1.6%.