Chinese File for Divorce to Purchase Second Homes, Stocks Climb

Chinese real estate continues to rise in many cities
Chinese real estate continues to rise in many cities

Asian Markets rose Thursday. In Japan the Nikkei 225 Index advanced 2.2% to close at 10,621. Hong Kong's Hang Seng Index added 1% to finish at 20,422 and China's Shanghai Composite Index gained 2.1% to end the day at 2,711.

Property prices in many Chinese cities are still rising, according to some studies, and determined investors are seeking ingenious ways to get around the new regulations. According to an article in China Daily, divorce is one way to skirt the rules and reduce costs. Down payments on second homes have been raised to 50% of the value. In contrast, first-time buyers must put down a 30% down payment. "After we get divorced, my wife will claim our house, so that I can apply for a mortgage as a first-home buyer," a man told a Xinhua reporter. One real estate agent said "fake divorces" were becoming more and more common.

Today rumors abound that a property tax of as much as 8% may be levied on homes in Shanghai, according to China Daily, but it probably won't be considered nationwide. Today China Vanke surged 2.3%, Poly Real Estate edged up 0.5% and Gemdale inched up 0.3%.

Banks helped bolster the Chinese market as European debt crisis fears subsided. Today China Merchants Bank surged 2.9%, Industrial Bank soared 2.8%, Shanghai Pudong Development Bank climbed 2.7% and Bank of China gained 1.7%. With all the talk of China's market reentering bear territory, analysts say investors are heading towards stocks, according to Bloomberg. This is in part because housing price in the country have risen to record prices and now new restrictions on home sales are making them a no-go area for most individuals.

Chinese airline shares took off today with Air China soaring 4.7%, China Eastern Airlines climbing 2.8% and China Southern Airlines gaining 2.7%.

In Japan Tokyo Electron, a semiconductor company that makes equipment including flat panel displays leaped 7%. The company is predicting it will return to profit this fiscal year as demand for semiconductors surges.

Other computer-related companies also made huge gains. Alps Electric, which makes electronics for cars, computers and cell phones, rocketed 16% and CSK Holdings, a software developer and computer leasing company, surged 14% after saying it expects its operating profit to increase 139% this year.

In Hong Kong, airlines were also among the top performers, riding on the hope that an uptick in global economies will spur increased air travel, especially among top-spending business travelers, and cargo. Air China surged 6.7% and Cathay Pacific scored a 2.3% gain.

Tencent, a telecommunications company serving China with instant messaging and online games, rallied 5% today and China Unicom, which provides Internet services in the People's Republic, advanced 2.2%. Chinese enthusiasm for new communication technology is a good bet.