Greek Crisis and China Property Curbs Send Asian Shares Lower

Asian markets down
Asian markets down

Shares in Asia closed lower Thursday. In China the Shanghai Composite Index dropped 1.1% to 2,868 and in Hong Kong the Hang Seng Index fell 0.8% to 20,779. Japan's stock exchange was closed for Showa Day, a holiday honoring the birthday of Emperor Showa, who reigned during World War Two.

Worries that the Greek debt crisis will spread instability throughout the rest of Europe, which is still in a fragile recovery period, sent shares lower. Added to this uncertainty is the enactment of new Chinese regulations on property purchases intended to cool the real estate market. Some predict that Chinese property prices will fall as much as 20% this year, according to Bloomberg Business Week.

Today small-cap stocks dragged the Shanghai Composite lower. Gree Electric Appliances, a maker of air conditioners tumbled 6.5%. The company also makes air purifiers, a popular item in Hong Kong where the pollution is again reaching record highs and worried residents attempt to improve the air they breathe in their homes. Today, readings reached the "very high" level, and the government warned those with asthma and cardiovascular disease to refrain from outdoor activity and physical exercise. Ironically, pollution like this is emitted from factories in the Guangdong region and areas like Zhuhai, where Gree is located. Qingdao Haier, which makes air conditioners and fridges, tumbled 2.8% and Hong Kong-listed Huiyin Household Appliances, which distributes electronic appliances, sank 3.7%.

Meanwhile, among China's major publicly traded real estate companies, Gemdale advanced 0.8% and China Vanke added 0.4%. Poly Real Estate dipped 0.5%. While the government attempts to curb property speculators, some bloggers are riffing that the new regulations may simply divert the cash to other locations. "Mainlanders are not only doing it in Hong Kong; they're doing it everywhere, paying in cash and pricing out locals," says the Sustainable Living Hong Kong blog.

Hong Kong-listed property with major projects in China rose today. Agile Property, which develops enormous projects including villas and condos in Guangdong, spiked 3.9%, Shimao Property climbed 1.2% and Soho China, designer of Japanese-style home office environments advanced 1.1%. On the other hand, blue chip Hong Kong developers closed lower with Henderson Land sinking 1.7%, Hang Lung dropping 0.9%, Sun Hung Kai falling 0.7% and Cheung Kong losing 0.5%.

TCL Multimedia Technology, a maker of televisions and PCs, nosedived 8.3% after announcing disappointing sales numbers, and communications company China Unicom tumbled 3.2%. Perhaps telecom investors were re-directing their funds towards newcomer O-Net Communications, which surged 38% in today's IPO.

Sijia Group, a maker of bouncy castles like the Turbo Slide and floating playgrounds like the Water Totter, gained 12% on its debut today. The company's IPO was originally set for February, but was delayed along with many others when market sentiment weakened, and according to the Financial Times, investors weren't willing to pay high enough prices for the shares. Perhaps money flowing out of property will find its way into upcoming Hong Kong IPOs.