Bank of Japan Keeps Interest Rate Near Zero, Asian Markets Slide Lower

Asian markets closed lower Wednesday. Japan's Nikkei 225 Index sank 2.2% to 9,025 and Hong Kong's Hang Seng Index shed 1.5% to close at 21,089. In China the Shanghai Composite Index inched down 0.1% to end the session at 2,695.

Shares in Japanese exporters fell today after another rise in the value of the yen. Policymakers at the Bank of Japan emerged from a two-day meeting held to assess the impact of recent steps taken to prop up the ailing economy, but the decision to maintain a key interest rate of 0.1% did little to imbue the public with confidence. Investors are looking for proof that Japan is on the road to recovery, and a strengthening yen sends exactly the wrong message.

Exporters tumbled with Casio Computer diving 4.4%, Canon sinking 2.1% and Sony losing 2.2%. Pioneer plunged 4.6% and TDK slid 3.2%. Advantest, an exporter of semiconductor testing equipment nosedived 4.4%, while Alps Electronics, a maker of electronic components for the auto industry, declined 4%. Trend Micro, an antivirus computer software maker lost 3.4%.

Among car companies dependent on a beneficial exchange rate when they repatriate their earnings, Toyota plunged 3.6%, Mazda shed 3.1%, Honda slumped 2.5%, Nissan Motor fell 2.2% and Isuzu declined 2.1%.

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A plug for investors to buy shares in Japanese real estate firms by a Merrill Lynch strategist did little to immediately boost the value of Japanese developers. "We can see now that the decline in demand for real estate has pretty much bottomed out," Masatoshi Kikuchi told Bloomberg, intimating that the super-low interest rates should encourage buyers to take the plunge and strengthen the market. But today Sekisui House, a real estate company that also deals in construction materials, headed down 2.8%; Mitsubishi Estate nosedived 2.1%; and Sumitomo Realty & Development, with real estate businesses both in Japan and overseas, fell 1.9%.

In Hong Kong, Yeebo International Holdings was among the top performers. The LCD maker surged 21.2% after announcing they'd secured approval from the China Securities Regulator for the IPO of the electrolytic capacitor company, Nantong Jianghai Capacitor, of which Yeebo holds a 50% stake.

China Mobile shares tumbled after Vodafone announced plans to sell its stake in the phone carrier. According to Bloomberg, Vodafone will walk away after nearly doubling its investment. China Mobile stock dropped 3.8% and was accompanied by a slide in other telecom shares. China Unicom slumped 4.2% and Tencent declined 1.1%.

Among Hong Kong-listed retail businesses China Resources, with enterprises ranging from food production to clothing sales, sank 3.4%. Esprit slid 2.9% and Li & Fung fell 1.6%. Belle International, newcomer to the Hang Seng and operator of the Joy & Peace shoe shop chain -- a staple in just about every Hong Kong mall and shopping arcade from Admiralty to Tsim Sha Tsui, closed down 2.9%.

In Shanghai, real estate companies pulled the index lower as investors speculated that more moves to curb the property market could be on the way, and could include halting loans to property developers. Today Poly Real Estate suffered a 2.8% fall, China Vanke gave up 2.4% and Gemdale retreated 2%. While property stocks slide lower, the price of real estate just isn't coming down enough to satisfy officials.
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