Shares Plunge in Asia: Retail, Property and Financial Stocks Slump

Shares in Asia closed sharply lower Friday. Hong Kong's Hang Seng Index plunged 2.6% to 19,894 and Japan's Nikkei 225 Index sank 2.1%, ending the session at 10,124. Markets in China were closed for the Chinese New Year holiday.Retail stocks plummeted in Hong Kong after the U.S. Federal Reserve hiked the rates it charges banks on loans. This move came earlier than expected and could mark the beginning of the end of stimulus programs put into place in the wake of the Lehman debacle and the global financial crisis. Investors fear this could curb consumer spending, despite the central bank's statement that, "The modifications are not expected to lead to tighter financial conditions for households and businesses," reports Bloomberg.

Esprit Holdings plunged 4.7% in Hong Kong. The trendy clothier has shops in more than 40 countries and opened an enormous store in Cologne, Germany last year. But recently, the company reported dismal sales in Germany, one of its main markets, and is now setting its sights on Asia's enormous audience. With the brand already available in about 900 places in China, Esprit says it is planning to expand there even more. But for the moment, the Hong Kong company is still heavily reliant on the European market.

Li & Fung suffered a 3.6% drop today. The clothing and toy manufacturer headed by Hong Kong man-about-town Bruce Rockowitz, has enormous contracts to supply goods to Wal-Mart and Kohl's in the U.S., where already slumping sales could fall even further if news from the Fed puts more of a damper on consumer spending. Local Hong Kong brand with loads of cute kids clothes, Bossini International lost 2.1%.

Hong Kong real estate companies helped push the Hang Seng lower; Henderson Land tumbled 4.2%, Sino Land lost 3.4% and New World Development fell 3.3%. Cheung Kong dropped 3%, diluting the net worth of its 81-year-old president Li Ka-shing, whose $21.3 billion fortune makes him Hong Kong's richest man, according to Forbes.

In Japan, commodity companies slid lower: Toho Zinc plunged 4.8%, Pacific Metals which deals in nickel and stainless steel, plunged 3.4% and Nippon Steel sank 2.4%. Chemical maker Nippon Soda lost 3.1%.

Along with everything else, Japanese real estate companies lost value today, too. Mitsui Fudosan nosedived 4.3%, Sumitomo Realty & Development dropped 4.2%, Shimizu Corp. fell 3.4% and Taisei Corp. lost 3.2%.

Financial companies were among the biggest drag on the Nikkei with Shinsei Bank losing 6.5%, still reeling from the collapse of plans to merge with Aozora Bank. Aozora fell 1.7% today, Mizuho Financial fell 2.8 and Mitsubishi UFJ fell 1.3%. The declines in the Asian markets are a testament to the power of U.S. monetary policy. When Bernanke speaks, the world listens.
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