Asian Markets Slide on EU Worries and Property Curbs
Shares plunged in Asia Monday. China's Shanghai Composite Index closed at 2,560 after plummeted 5.1% -- its biggest loss since August. In Japan the Nikkei 225 Index tumbled 2.2% to 10,236 and in Hong Kong the Hang Seng fell 2.1% to end the day at 19,715.
Chinese investors wobbled today on fears that European austerity measures will threaten economic growth in China. Commodity producers were hard hit. The recent unparalleled growth in Chinese industries that has fueled excessive demand for raw materials could now cool. Prices on the London Metal Exchange Index slumped 3.6%. Today iron ore companies plunged: Shandong Jinling Mining tumbled 8.1%, Maanshan Iron & Steel sank 6% and Baoshan Iron & Steel fell 5.7%.
Other miners also dropped with Shandong Nanshan Aluminum sliding 8.7% and Aluminum Corp. of China, otherwise known as Chalco, diving 5.6%, Yanzhou Coal Mining falling 6.9% and Jiangxi Copper down 6.3%. Gold miners continued to hold their own with Shandong Gold surging 5.6% as investors seek safety in the precious metal.
Government initiatives to curb rising property prices took their toll on property stocks. Gemdale sank 8.3%, Poly Real Estate tumbled 7.3%,China Vanke lost 5.3% and Evergrande took a 5.1% hit. Evergrande is selling off properties as fast as it can by offering a 15% discount.
Despite the release of new statistics from the China Association of Automobile Manufacturers showing a 155% increase in profits for the first three months of this year, the auto sector faltered with Beiqi Foton Motor plunging 8.8%, FAW Car spiraling 8.1% and SAIC Motor, which reported the biggest profit increase according to China Daily, dropping 6.9%.
In Hong Kong, it was the same story with Warren Buffett-backed BYD Co., a green car company, plunging 6.5%, DongFeng Motor Group falling 5.8%, and Geely, the new owner of Volvo, losing 3.5%.
Concerns over the European debt crisis threatened Hong Kong-listed exporters, sending shares in Esprit Holdings, a clothing company dependent on the enthusiasm of European shoppers nosediving 7.7%. Li & Fung, which also supplies clothes to European sellers, sank 1.3%.
Internet and communications companies were not a good bet today. Tencent, which provides telecom services including online advertising in China, plunged 4.5% and China Unicom, another company providing Internet service on the mainland, sank 4.3%. Foxconn, a major mobile phone maker that has contracts with Apple, was among Hong Kong's biggest losers, shedding 8.3% of its value.
In Japan exporters declined with electronic parts and remote control maker Mitsumi Electric losing 5.3%, Sony plunging 4.5%, Pioneer and TDK both losing 3.9% and Sanyo falling 2.8%.
Among car manufacturers, Hino Motors, a bus and truck maker that had made recent gains, tumbled 6%, Isuzu declined 4.2%, Mazda fell 3.8% and Honda slid 0.9%. Toyota was unchanged.
Shares in Japanese real estate companies closed lower with Tokyu Land losing 4.7% and Mitsubishi Estate down 2.3%. While building and engineering company Taisei plunged 5.2%, Taiheiyo Cement, which not only provides cement and limestone for projects but also has real estate business in Japan, China and the U.S. plummeted 7.3%. Japanese companies making tools and machinery also suffered huge losses with Okuma diving 4.9% and Mitsubishi Heavy Industry sinking 3.5%. A sign that investors are gambling on a significant slowdown.