Real Estate Companies Slump in China, but Continue to Rise in HK
Fears that the Chinese government might raise interest this quarter sent real estate shares lower. Poly Real Estate tumbled 2.5%, Gemdale slumped 1.9% and China Vanke fell 1.5%. Even Jiangsu Phoenix Property Investment, which recently restructured its business in a shift away from glass and plastics and into high-yielding property, plunged 2.9% today.
Raw material makers also slid, with Datong Coal Industry falling 1.5%, Yanzhou Coal Mining dipping 1.4% and China Coal Energy losing 1.1%. Iron producer Baoshan Iron & Steel lost 1.7% and Jiangxi Copper dropped 1.1%. Gold miners, however, continued their upward trajectory with Shandong Gold Mining rising 1.5% and Zijin added 0.3%. According to the World Gold Council, Chinese appetite for gold is expected to double over the next decade.
Herbal medicine makers were on the rise with Shandong Dong-E E-Jiao surging 3.7% on first quarter profits. The company makes popular products from donkey skin, such as Shandong Donkey-Skin Glue, which heal blood ailments and apparently have a sweet taste. Yunnan Baiyao Group climbed 3.5% and another traditional medicine company, Guangzhou Parmaceutical, soared 4.7%.
In Hong Kong, commodity producers also headed north with oil company CNOOC rocketing up 6.4% on increasing oil prices. Yesterday oil topped $87 per barrel for the first time in nearly a year and a half. Chalco, or Aluminum Corp. of China, gained 4.1% and China Shenhua, which provides coal-based energy, advanced 4.1%.
In Hong Kong, property companies were still a sure bet with companies doing business in China rising on the exchange. Soho China, which specializes in Japanese home-office environments, spiked up 3.7%, New World Development surged 3.4% and Cheung Kong was up 1.4%. Blue chip Hong Kong property companies also posted gains, with Hang Lung rising 2.5%, Sun Hung Kai gaining 1.8% and Henderson Land advancing 0.5%.
In Japan, banking stocks boosted the Nikkei with Sumitomo Mitsui gaining 4.2% and Mitsubishi UFJ rising 3.3%. Real estate also fared well with Heiwa Real Estate climbing 2.4% and Tokyu Land Corp. up 1.9%.
Japanese railroad companies added to yesterday's gains with West Japan Railway surging 2.5% and Central Japan Railway and East Japan Railway both gaining 1.8%. All good signs that after more than a decade of stagnation, things might actually be looking up in Japan.