Decline in Japanese Machinery Orders Sends Shares Lower, Asian Real Estate Continues to Fall

Rocket building at Sumitomo Heavy Industries in Japan
Rocket building at Sumitomo Heavy Industries in Japan

Asian markets closed lower Thursday. In Japan the Nikkei 225 fell 1.1% to 11,168 and in China the Shanghai Composite Index slumped 0.9% to 3,119. Hong Kong's Hang Seng Index dipped 0.3% to end the day at 21,867.

An unexpected fall of 5.4% in machinery orders sent shares in Japan sliding. This is the second month in a row of falling numbers, according to Bloomberg, which some analysts have taken as a sign that they could be bottoming out and could turn around later this year.

Unemployment in Japan remains at about 4.9%, but locals say times are tough and you can feel it in the air -- whether you're looking for a job or window shopping in Ginza. So the country's economy is dependent on sales abroad since Japanese have learned to be frugal. It seems that no amount of government prodding will make them spend more.

Today Sumitomo Heavy Industries tumbled 3.2%, IHI Corp, which makes heavy machinery including jet engines and rocket propulsion systems, plunged 3%. Okuma, producer of machine tools like lathes and drilling machines, dropped 2.9% and Kawasaki Heavy Industries, a maker of military and commercial machinery, declined 0.8%.

Japanese real estate developers tumbled with Taisei plunging 4.6%. Taisei has worked on high-profile projects in Japan like the Roppongi Hills Grand Hyatt in Tokyo, which is connected to the Mori Art Museum and the rest of the Roppongi Hills complex packed with trendy shops and fine dining. The contractor also has a wide range of international projects in such far-flung locations as Cambodia, the Maldives, Bulgaria and London, and constructed Dubai's spiraling glass and steel Almas Tower, which houses the Diamond Exchange. Other property companies also fell with Heiwa Real Estate falling 1.7% and Tokyu Land Corp. down 1.4%.

Makers of Japanese building supplies followed with Sumitomo Osaka Cement slumping 3.6%, construction equipment maker Komatsu dropping 2.4%, Nippon Steel down 1.1% and Nisshin Steel down 1%.

Car companies closed lower with Mazda plunging 4.4%, Isuzu falling 2%, Toyota losing 1.9% and Mitsubishi Motor down 0.8%. Makers of automotive parts also lost value. Jtekt, which produces parts for Toyota, declined 3.5%; tire maker Bridgestone slid 2.7% and Denso Corp., which makes electronic parts for cars, slipped 2.4%.

Impending restrictions on property development and sales in China sent jitters through investors in Hong Kong-listed developers. Today Hang Lung, which depends on the China market for much of its profits, sank 3.2%; China Overseas Land tumbled 2.7% and China Resources Land slumped 2.5%. Other real estate companies also declined: Henderson Land fell 1%, Sun Hung Kai dropped 0.8% and Cheung Kong lost 0.3%.

In China it was the same story, with real estate companies leading declines. Poly Real Estate dived 3.1%, Gemdale tumbled 2.2% and China Vanke fell 1.3%.

Performers included airline stocks with Air China surging 5.9% after suddenly announcing a 20% discount on direct flights between Taiwan and China. This is a route that only opened up in 2005 after more than 50 years. China Southern Airlines soared 5.5% and China Eastern Airlines advanced 3.7%. Politics aside, China has become a capitalist country, happier with profits -- just like the rest of us.

Originally published