Shares Slide in Asia as China's Economy Slows
Concern over the state of the global economy continues to loom over Asian markets, even as the gargantuan IPO of Agricultural Bank of China holds the possibility of lifting the economy. But many analysts fear that next week's IPO just won't meet expectations. Arnab Das, managing director of market research and strategy at Roubini Global Economics, this morning told CNBC, "There's been a lot of hype about China and a lot of it is well deserved, but even China can't defy gravity. There's going to be a slowdown in the Chinese economy."
And a Chinese slowdown affects markets all over Asia. Today Hong Kong real estate shares slid lower, especially those with major holdings on the Mainland. New World Development plunged 2.6%, China Overseas tumbled 1.6% and China Resource Land was down 1.1%. Hang Lung, the name behind Shanghai's sparkly Plaza 66 development, which includes a five-level mall with a glass atrium and two office towers, sank 1.6%, Cheung Kong fell 1.6% and Henderson Land slipped 1%.
Foxconn declined another 2.2% today. The company is seeking to relocate its production operations from Shenzhen toward the north at considerable cost. According to China Daily, the mobile phone maker plans to invest $5 billion in operations in Chengdu where it could hire as many as 100,000 workers. Minimum salaries there would be $234.55 per month. At the same time, it's discussing building a brand new factory in Henan province, which would employ 300,000 at wages matching those now paid in Shenzhen where the company has been forced to dole out pay rises.
Hong Kong banks closed lower as funds are diverted towards Agricultural Bank's IPO. Bank of Communications slumped 1.2%, Bank of China dropped 1% and HSBC was down 0.6%.
In China, banks also headed south. Industrial & Commercial Bank of China, which may be planning it's own stock offering, dipped 0.5% and Shanghai Pudong Development Bank also lost 0.5%.
Among the gainers in China were Changsha Zoomlion Heavy Industry, which surged to the 10% daily limit. The company makes construction machinery for concrete installation as well as satellite navigation products. Another construction company, Xinjiang West Construction, also hit the 10% limit and Xinjiang Urban Construction leaped 4.8%.
More gloomy news about the U.S. economy negatively affected Japanese exporting companies. Car makers were hard hit with Isuzu diving 3%, Nissan plunging 2.5% and Honda sinking 1.6%. Toyota fell 0.8%.
Computer parts maker Oki Electric suffered a 5.1% plunge and G.S. Yuasa, a maker of batteries for everything from cars to computers and lights, slumped 2.5%. And among electronics makers, Casio Computer tumbled 2.7% and Sony declined 1.7%.
Thing were not looking good for international cargo companies dependent on a steady stream of merchandise bound for distant locations. Today the Baltic Dry Index, which tracks the price of moving commodities around the world, tumbled 4%. Shipping companies followed suit with Kawasaki Kisen Kaisha sinking 3%, Nippon Yusen K.K. falling 2.2% and Mitsui O.S.K. Lines dropping 2.1%. With wages low and jobs scarce, shopping for imported goods is losing its appeal.