Asian Shares Climb After Un-Pegged Yuan Gains Value
Property shares shot up in Hong Kong after the Chinese central bank decided to end the yuan's peg to the dollar. China's currency climbed higher against the dollar, making Hong Kong real estate increasingly attractive to Mainland buyers now armed with a stronger currency. The Hong Kong dollar remains fixed to the dollar, and it doesn't look like that's about to change.
Hang Lung, the developer behind Shanghai's enormous shopping malls, including the new five-level 50,000 square meter Plaza 66, skyrocketed 6% today. Sino Land climbed 5.8%. It's the company behind luxury residences in Hong Kong that hope to cash in on the aura of the British Colonial period with developments like the classy-sounding Balmoral and St. Andrew's Place. St. Andrew's Place overlooks the Jockey Club's Beas River Country Club in The New Territories, the truly dreamy setting of the Beijing Olympics' equestrian events. China Resource Land, developer of residential properties with traditional Chinese names like "Jade City" and "Phoenix Plaza," surged 5.4%.
Sun Hung Kai racked up a 4.4% gain and Henderson Land soared 3.6%, even after 20 property deals fell through last week in its glitzy 39 Conduit Road tower. Cheung Kong rose 2.6%.
China Unicom, a telecom company providing Internet and phone services in China, rallied 9.1%. The company is reported by Capital Vue to have added more than a million 3G users in May, and has plans to release new 3G phones at the end of this month priced as low as 800 yuan ($118).
Chinese Airlines got a boost today since a more valuable yuan will decrease the cost of fuel, which is charged in U.S. dollars, says Bloomberg. China Southern Airlines surged 8.2%, Air China gained 6.4% and China Eastern Airlines advanced 5.6%.
There was also good news for Chinese real estate firms, with China Vanke shooting up 10% to the daily maximum increase, Poly Real Estate soaring 5.2% and Gemdale rising 5%.
Japanese Hitachi Construction Machinery, which depends on China for a major portion of its sales, jumped 6.7%, and Fanuc, which supplies Chinese factories with industrial robots, leaped 5.5%. Fanuc has also got a boost lately from the recent demands from Chinese workers for higher salaries and better working conditions. Factory owners with cash to invest may be heading toward automation, cutting out this new breed of outspoken workers in favor of docile robots.
In Japan, hopes that Chinese consumers will be splashing out on Japanese imports with their newly strengthened assets sent shares in electronics exporters higher. Advantest, a maker of semiconductor testing equipment spiked 5.1%, Sony and Canon both rose 2.8% and Casio Computer advanced 2.5%.
Japanese car makers advanced with Isuzu climbing 5.4%, Honda rising 3.7%, Mazda adding 3.1% and Toyota inching up 1.7%. While car sales to China may increase, the stronger Yuan could make Chinese-made car parts more expensive for the Japanese to buy -- a double-edged sword for companies that have been dependent on producing cheap goods in China and selling them back to Chinese consumers.