Asian Markets Reeling, New Property Buying Restrictions and Falling Euro Send Shares Tumbling

Shopping for real estate in Beijing
Shopping for real estate in Beijing

Shares in Asia fell steeply Thursday. In China the Shanghai Composite tumbled 4.1% to 2,740 and in Hong Kong the Hang Seng declined 1% to 20,133. After a three-day holiday, Japan's Nikkei slumped 3.3% today, ending the session at 10,696.

Chinese property companies sank lower today following reports that sales have declined almost 40% in the past week. Analysts are predicting that Chinese home prices may shed as much as 30% of their value this year as a result of new restrictions on investors. In addition to a ban on loans for third homes, a cap on the number of properties each family can buy and a hike in required down payments to 50% of the purchase price, the Beijing government has now ordered developers to sell unfinished properties within three days of pre-approval, according to Bloomberg. It's common for Asian properties from Phuket to Guangdong to go on the market while in the planning or building stages. Today Gemdale Corp plummeted 6.9%, Poly Real Estate Group tumbled 6.7% and Chine Vanke, which reported an increase of 48% in sales over last year, plunged 4.1%.

Chinese commodities tumbled as worries mounted that demand may fade with dwindling building projects. Jiangxi Copper sank 5.1%, Baoshan Iron & Steel lost 4.2%, Maanshan Iron & Steel declined 3.9% and Zijin Mining fell 3.1%. Chalco, or Aluminum Corp. of China, slumped 5.3% and Shandong Nanshan Aluminum sank 3.2%.

Hong Kong's developers also continued to slide as sales of massive projects across the border in China are threatened by the Chinese curbs. Today Evergrande Real Estate announced it was slashing prices by 15% on properties in its 40 projects across China. China Daily suggested that Evergrande's move may force other developers to follow suit, sparking immediate declines in property prices across the country. Evergrande's share price nosedived 10%.

China Overseas, with developments from China to Macau to India, tumbled 2.8%. China Overseas is the developer of the award-winning, super-cool Hong Kong International Airport and Steve Wynn's glitzy Wynn Resort in Macau. Cheung Kong fell 2.1%, New World Development dropped 1.7%, Sun Hung Kai retreated 1.5% and Hang Lung lost 1.3%.

Other big losers on Hong Kong's big board included Li & Fung, which fell 4.1%, and oil exploration company CNOOC, which lost 2.4%.

In Japan, a falling euro was bad news for exporters that depend on converting revenue back into yen at beneficial rates. Clarion, which makes audio equipment and navigation systems, slumped 6.7% and Alps, which makes a range of electronics including car parts, plunged 5.4%. The electronics sector was hard hit with Casio Computer diving 4.5%, Sharp falling 4.3%, Toshiba losing 3.8% and Sony dipping 3.4%.

Among retailers Fast Retailing, operator of Uniqlo shops that do brisk business in Europe, tumbled 3.5%, J. Front, operator of department stores, slumped 3.1% and UNY, which has department stores in Japan and Hong Kong, plunged 6.2%.

It was a bad day for Japanese automakers with Toyota and Honda both falling more than 3%. Meanwhile, others saw even bigger losses: Isuzu nosedived 6.9%, Suzuki Motor plunged 6.1%, Nissan declined 5.1% and Mazda fell 5%. Not what investors were hoping to return to after a week off enjoying the cherry blossoms.