Asian Real Estate Shares Slide as Home Prices Soar, Drought Pushes Agriculture Companies Higher


In Asia Tuesday Hong Kong's Hang Seng Index inched up 0.3% to 20,988 and China's Shanghai Composite Index fell 0.7% to 3,053. In Japan, the Nikkei 225 Index slid 0.5%, ending the day at 10,774.

The future of property prices is on the minds of investors all over Asia. In China, Beijing is considering even more strategies to cool the overheated market. Gemdale slumped 2.4% and Poly Real Estate tumbled 1.9% after officials discussed requiring developers who buy land parcels to pay 100% of the purchase price within 30 days of signing the deal, according to Bloomberg.

Other losers included Shandong Huatai Paper, which sank 6.9%, and Air China, which fell 1.4%. But food companies gained value today, with Hunan Jinjian Cereals Industry leaping to its 10% daily limit and Heilongjiang Agriculture surging 3.8%.

Severe droughts in China's farm belt could cause food prices to surge. According to CCTV, authorities are facing tough choices about whether to allocate water for home use and drinking or for irrigation. Rice growing, in particular, requires masses of water and images on the CCTV website show parched rice paddies. Rice grower Xinjiang Tlimu Agriculture climbed 3.6% and Yuan Longping High-tech Agriculture, which markets grain and vegetable seeds, rose 3.1%.

In Hong Kong, real estate shares also drifted lower as developers there face government moves, as well, such as raising stamp duty on luxury properties and increasing down payments on super-posh homes with price tags in excess of $2.58 million. Perhaps in an effort to gain kudos with the public, now left drooling over properties the average worker just can't afford, Cheung Kong has capped purchases on a new development called Festival City, reports Bloomberg. The developer is only allowing two units per buyer in an effort to curb the actions of speculators who snap up apartments and flip them for even higher prices.

But this didn't help Cheung Kong's share price, which dipped 0.2% today. Other real estate companies also closed lower with Glorious Property sinking 1.6%, Evergrande Real Estate sliding 1.3%, Henderson Land falling 1.1%, and Sun Hung Kai dropping 0.7%.

Hong Kong exporters rose today with clothing maker Li & Fung surging 4.7% and Esprit Holdings soaring 3.1%. Hong Kong-listed telecom companies that supply Internet and phone services in China gained with China Unicom rising 1.7% and Tencent gaining 1.5%.

In Japan, real estate companies also lost value with Mitsui Fudosan dropping 3.3% and Mitsubishi Estate sliding 1.5%. The country suffered a 6.1% decline in commercial land prices last year, and things don't look like they're getting any better.

All Nippon Airways dived 6% in today's trading. The company has revealed it will have a net loss of $720 million for the past year -- more than double its previous estimates.

Meanwhile, Japanese electronics firms gained, with car audio system company Clarion surging 6.3%, Toshiba and Sony both surging 3.6% and Olympus getting a 3.3% boost. Even if Japanese aren't buying at home, there's always seems to be a market somewhere for the country's affordable electronics.