Asian Markets Rise on Gold and Property


In Asia Monday, China's Shanghai Composite Index surged 2.5% to 2,807 and Hong Kong's Hang Seng Index rose 1.1% to 22,207. The Tokyo Stock Exchange was closed for Physical Fitness Day.

Commodities were the talk of the town in Shanghai today. In London and New York, the price of copper has soared and gold and silver are trading at near record highs. Investors are gambling that the U.S. government will soon have no alternative than to announce more stimulus moves to jump start the sluggish economy and stem the loss of jobs. This could weaken the dollar and send investors flocking to valuable commodities as a place to park their cash. Reuters reports that UBS is already recommending that their richest clients put 7% to 10% of assets in precious metals like gold.

In China, mining companies led gains with Jiangxi Copper surging 10% and Yunnan Copper Industry climbing 4.7%. Gold mining specialist Zijin Mining rallied 7.6%, with gold trading at $1,355.65 -- just off last week's record high. Steel producers also made headway with Baoshan Iron & steel shooting up 4.7% and Maanshan Iron & Steel advancing 3.2%, and Yanzhou Coal Mining gained 10%, hitting the daily limit.

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The Chinese airline sector saw big gains with Air China shooting up 4.5%, China Eastern Airlines rising 2.9% and China Southern Airlines gaining 2.7%.

Chinese banks gained value today, even after the central bank announced it was temporarily raising the reserve ratio for some of the large commercial banks to 17.5% from the current 17%. One Morgan Stanley economist told Reuters, "I don't think this is a tightening move. It's just part of liquidity management." Today Industrial & Commercial Bank of China rose 2.2%, Bank of Communications climbed 2%, China Construction Bank advanced 1.9% and Agricultural Bank of China added 1.1%.

Even while the government clamps down on banks and liquidity, Chinese developers continue to rise. Today Poly Real Estate shrugged off the new banking policies rocketing up 5.5%, Gemdale racked up a 3.9% gain and China Vanke climbed 4.7%.

Hong Kong-listed commodities shares boosted the Hang Seng with China Coal rallying 4.5% and Aluminum Corp. of China, affectionately known as Chalco, surging 4.3%. Cnooc, Hong Kong's oil exploration darling, shot up 4.5% on news of a deal with Chesapeake Energy, and PetroChina soared 3.6%. Real Gold Mining followed gold prices higher, advancing 2.7%.

An upcoming property auction spurred gains among developers, with Hang Lung rising 2.8%, China Overseas gaining 1.4% and Sino Land up 1%. Henderson Land and Sun Hung Kai both added 0.8%. Property companies are expected to bid as much as HK$1.5 billion ($193 million) for a plot of land in Kowloon Tong. A popular area that boasts the Festival Walk shopping center and is located only eight stops away from Central on the city's MTR subway system. Kerry Properties, which already owns the property next door, is also expected to bid for the land, according to China Knowledge. Today Kerry rose 2.4%.

The opening bid for the property will be HK$1.053 billion ($136 million), but judging from the astronomical prices at last week's Southeby's jewelry auction in Hong Kong, where Bloomberg reports that a buyer paid $7.7 million for a pink diamond Van Cleef & Arpels ring, it doesn't seem like there's a shortage of cash among the ultra-rich in Hong Kong.