Japan Falls into Bear Market as Nikkei Slides
Fears of a double-dip recession in the U.S. combined with a rising yen helped drive Japan into bear market territory. Today's fall in the Nikkei 225 brought the index more than 20% below its 18-month high in April. Many analysts define a bear market as a decline of 20% or more over a period of at least two months. The mood darkened among investors in expectation of reports that are predicted to show that U.S. home sales are faltering, rather than improving. July sales of existing homes took a 13.4% dive from June, according to Bloomberg -- the lowest level since March last year. Not good news for the global economy.
Low home sales also mean fewer families are out shopping for new flat screen televisions and other large appliances to fill new residences, and the pain was felt among Japanese electronics exporters. Today Sony tumbled 3.7%, Hitachi plunged 2.8%, Casio Computer fell 3.4% and Pioneer dropped 2.6%.
Japanese department stores took a hit today since a general mood of economic despair rarely sends people shopping. Aeon, which operates a range of stores from Ministop convenience shops to major shopping malls like the Aeon Narita Shopping Center, dived 2.5% in today's trading. Marui Group, which runs department stores, tumbled 2.9%; upscale Takashimaya sank 1.4% and utilitarian UNY, which sells everything from funky Japanese-designed shoes to salad tongs and rice cookers, lost 1.2%.
In Hong Kong Aluminum Corp. of China slid 4.4% after announcing a second-quarter net loss, calculated at $14 million by Bloomberg. PetroChina lost 1.2% and oil exploration company Cnooc fell 0.8%.
Hong Kong developers continued to drag the index lower with Cheung Kong sliding 2.3%, Sun Hung Kai losing 1.2% and Henderson Land declining 1%. New World Development slumped 2%.
Tencent, a Hong Kong-listed Internet company providing services in China, tumbled 4.5% and China Mobile suffered a 2% loss. Meanwhile Hutchison Telecommunications, an integrated mobile and fixed-line service provider surged 3.6% after Hong Kong's richest man, Li Ka-shing, who's chairman of both parent company Hutchison Whampoa and Cheung Kong Holdings, purchased an additional stake in the telecom company, according to Bloomberg.
In China raw materials producers rose with Maanshan Iron & Steel climbing 2.9% and Baoshan Iron & Steel rising 1.7%. Inner Mongolia Yitai Coal jumped 3.7% and Jiangxi Copper advanced 1.6%.
Chinese developers helped push the index higher. China Vanke soared 4.2% after reports of a spike in new home sales in Shenzhen. Poly Real Estate shot up 2.3% and Gemdale rose 1.5%. COFCO Property, a real estate management firm scored a 2.1% gain. Some say a big drop in home prices is a major incentive among buyers -- it's a formula that's served China well in selling low-priced goods to the likes of Wal-Mart, and it seems to be working just as well at home.