Hong Kong Property Shares Slide, Chinese Traditional Medicine Gains
In Asia Wednesday Hong Kong's Hang Seng tumbled 2.1% to 20,328 and China's Shanghai Composite Index added 0.8% after falling more than 2% during the day. The gauge ended the day at 2,857. Markets in Japan remained closed today.
In Hong Kong, property company shares again dragged the index lower. Real worries about the new restrictions on Chinese buyers are threatening what seemed like the unimpeded rise in the value of these developers. Rumor has it that many of the record-setting sales made in the territory have been sealed with Mainland buyers speculating on high-priced Hong Kong luxury residences, like the one in 39 Conduit Road that sold for about $9,200 per square foot, according to the BBC. But today, 39 Conduit Road's developer, Henderson Land, plunged 2.5% as the Chinese has government put the squeeze on lending.
Hong Kong still makes it onto Bloomberg BusinessWeek's list of the world's 100 most livable cities, helping to push housing prices higher. While the lifestyle there is truly amazing -- endless affordable foot massages, fabulous service wherever you go, great transportation -- many are beginning to question the viability of living in such a polluted environment. "The pollution is a constant worry. People are leaving because of pollution-related health issues," says resident Fernando Gros, a photographer and musician.
Today Hong Kong-listed property stocks lost value. New World Development sank 3.7%, China Overseas tumbled 2.3%, Sun Hung Kai Property fell 2.1%, Hang Lung dropped 1.8 and Cheung Kong ended the day down 1.2%. According to Gros, the frenzy is still in full swing and developers are working hard to peddle their properties. "Some days you can barely walk around the IFC for sales reps handing out flyers and trying make sales pitches," he says, referring to the glitzy mall at the International Financial Center. "Some of these developments are selling faster than tickets for a Lady Gaga concert," he adds.
Banks in Hong Kong closed lower today, reeling from a hike in the deposit ratio. HSBC slumped 1.9%, Bank of Communications nosedived 3.6% and Bank of China suffered a 2% fall.
Hong Kong's worst performers included China National Building Material, which plummeted 6.5%, and Esprit Holdings, the popular clothing chain that depends on European shoppers for about 85% of their revenue, which plunged 3.6%.
In China, commodity companies fared badly following an 8.2% slide on the London Metal Exchange Tuesday. Copper was especially hard hit, sending shares in Yunan Copper plunging 3.7% and Jiangxi Copper down 3.3%.
Losses were countered by a 10% rise in Jiangxi Zhongjiang Real Estate, which has projects all over China including tropical Hainan Province.
Pharmaceutical companies also racked up gains with Harbin Pharmaceutical Group climbing 5.1%, Guangzhou Pharmaceutical rising 4% and Shandong Dong-E E-Jiao, a traditional medicine company that specializes in products made from donkey skin, gaining 2.7%. If the relatively new real estate boom turns to bust, perhaps old-style Chinese medicine will be the next big thing.