HK Real Estate Shares Tumble, Chinese Subway Car Makers Advance

In Asia Monday Hong Kong's Hang Seng Index fell 2% to 20,933 and China's Shanghai Composite index inched up 0.2% to 3,075. In Japan the Nikkei 225 Index rose 0.8% to end the day at 10,825.

Hong Kong property companies slumped in today's trading. Prices in Hong Kong surged more than 30% last year and have continued to rise, but the specter of an interest rate hike could have a huge impact on the frothy market.

Bloomberg reported that a 2,182 square foot, free-standing house on the Peak sold for HK$52,700 ($6,792) per square foot this month, making it the second most expensive home ever sold in Asia. This is a hefty price tag for any house, and granted the Peak is a beautiful area with homes nestled in the lush jungle terrain with sweeping views of the city and Victoria Harbor. That is, when you can see the view -- Hong Kong is cursed with such extreme pollution problems that this week school children were forced to stay indoors to avoid the record-setting smog.

Today Hang Lung sank 4.6%, Sino Land tumbled 3.2%, New World Development fell 2.6 and Sun Hung Kai slipped 2%. Cheung Kong and Henderson Land both dropped 1.7%.

Retail companies also plunged. Li & Fung, which relies in large part on demand for goods in the U.S., where it has major contracts to provide clothing and toys to the likes of Wal-Mart and Target, sank 3.6%. On Friday Reuters reported that unemployment in U.S. metropolitan areas is much higher than the 9.7% national average, reaching 12.5% in January, surely sapping buyer enthusiasm for this season's lime green ruffled tops and silver shoes. Esprit, which makes much of its profit in Germany, fell 2.7%. Chinese-listed Dalian Dayang Trands, Warren Buffett's favorite suit maker, lost 1.7% today.

Chinese railroad shares surged with China South Locomotive and Rolling Stock Corp. rallying 3.3%. The company makes and exports subway cars, and has just completed an order that will be sent to India. Qinghai Huading Industrial, maker of tools needed by the railway industry, spiked to its 10% daily limit and China CNR, which makes rail and subway cars, added 2.4%

In Japan, camera makers Canon and Konica Minolta rose 2.4% while Nikon took a dive, falling 3%. Sony, maker of the PS3, gained, advancing 2.6%, and the game maker's rival, Nintendo, also added 2.6%.

It was a bright day for Japanese car companies with JD Power claiming that a raft of incentives, such as no-interest financing, will drive Toyota sales up 23% this month, says MSNBC. Mazda surged 2.5%, Toyota gained 2% and Honda climbed 1.9%. The big question is whether all these great deals will leave any profits for investors.