Japan Could Move to Stem Rise in Yen; Asian Markets Fall


Asian markets closed lower Wednesday. In Japan the Nikkei 225 Index dropped 1.7% to 8,845 and in China the Shanghai Composite Index fell 2% to 2,597. Hong Kong's Hang Seng Index dipped 0.1% to 20,635.

As the Nikkei tumbled, Japan's Finance Minister hinted that he could move to stem the rise in the yen. "We have to take appropriate action when necessary," he told reporters. The yen was trading at 84.40 per dollar today, not far off its 15-year high. Economists warn that if the currency continues to surge, Japan could sink back into recession, having yesterday re-entered bear market territory. The hike in the currency, combined with slowing export growth, and uncertainty about the global economy is hampering the financial markets with the Nikkei falling to a 16-month low today.

Japanese exporters were again among the worst performers on the Tokyo exchange. Electronics makers suffered with Pioneer tumbling 3.8%, Canon diving 2.7% and Casio Computer losing 1.2%. Konami, which makes video game software like DanceDanceRevolution and arcade machines featuring Guitar Hero, slumped 3.3% while Sony, the maker of the Playstation 3, dropped 0.8%. Camera maker Olympus fell 2.6% and Konica Minolta lost 1.4%.

Among Japanese car companies, Honda racked up a 3.1% loss, Toyota plunged 2.4%, Mazda fell 2.1% and Nissan drifted down 1.6%.

Chinese raw materials producers sank lower today over concerns of a global slowdown and a decline in demand for both materials and goods. Aluminum Corp. of China tumbled 2.6% and Jiangxi Copper slid 1.2%. Shenhua, a coal producer, slumped 2.6%, while Baoshan Iron & Steel declined 2.5%.

Investors sold off airline shares in expectation that demand will subside along with a cooling economy. China Southern Airlines plunged 3.9% and China Eastern Airlines dropped 3.2%. Air China retreated 2.2%, after a Henan Airlines aircraft crashed in a northeastern province, leaving43 people dead and 53 hospitalized, according to Xinhua. Air China owns a controlling stake in Henan Airlines, which has canceled all flights scheduled for today, according to Flightglobal.com.

In Hong Kong, Cathay Pacific Airlines also headed south, sliding 2.4%. Things had been looking up for the carrier that many Asian business travelers favor because of its exquisite service and attention to detail, including the rich kiwi and coconut drinks served to first and business class customers. This week the company avoided a cabin crew strike and, according to Bloomberg, its shares have surged 36% so far this year.

In other sectors, shoe company Belle International jumped 4.1% after forecasting growth of more than 15%, but Yue Yuen, manufacturer of athletic shoes for the likes of Puma and Nike, dipped 1%.

Agile Property, a Hong Kong-listed company that builds villas and condo complexes in Guangdong, slumped 4.5%, developer China Resources Land tumbled 2.7%, and Henderson Land lost 0.4%. Meanwhile other Hong Kong real estate companies gained: Hang Lung rose 1.6%, China Overseas climbed 0.9%, and New World Development advanced 0.6%. A drop in the U.S. housing market is indeed worrying, and according to the International Business Times, Chinese developers could also begin slashing prices soon.