Shares Slide in Asia After China Raises Interest Rates
In a move intended to curb lending by Chinese banks, China's central bank announced an interest rate hike for the first time since 2007. While analysts expect that the increase will boost earnings at major banks by up to 7%, the news sent shivers through Asian stock markets, since it may also cool the Chinese economy, which is fueling export businesses around the region. "A slowdown in the Chinese economy may slow the speed of recovery in the global economy," a Nikko Cordial Securities equities manager in Tokyo told Bloomberg.
In Japan Toyota, dependent on overseas sales for more than half of its revenue, dived 1.3%, while Honda sank 1.6%. Fuji Heavy Industries, the maker of Subaru vehicles, plunged 2.6%, Isuzu tumbled 1.9% and Nissan lost 0.7%. Mazda managed a gain of 1.4%.
In Hong Kong it was property companies that were hardest hit today -- especially those with major interests in China. Shimao Property nosedived 5.8%, Guangzhou R&F, with many developments located just across the border from Hong Kong, sank 5.3%, China Resources Land fell 4.1% and China Overseas Land declined 3%. Among the big names in the city, Hang Lung lost 2.3%, Sun Hung Kai slumped 1.9% and Swire Pacific fell 1.8%.
Hong Kong-listed energy and oil companies also took a licking today. Oil exploration company Cnooc sank 2.6%, PetroChina dived 2.5% and China Coal lost 1.9%.
Among commodity companies, Chalco, officially named Aluminum Corp. of China, sank 3.3%. Gold companies stumbled after gold gave back some of its recent gains, sliding 2.7% in yesterday's trading. Real Gold Mining sank 3% and Zijin Mining lost 2.4%.
In China real estate companies also fell, since a hike in interest rates will surely deter some home buyers from taking on debt. Poly Real Estate plunged 7.8%, China Vanke dropped 6.1% and Gemdale lost 5.9%.
Chinese banking firms lost value, despite predictions that the rise in interest rates are expected to dramatically boost their earnings. Bank of Communications slid 1.6% and Industrial & Commercial Bank of China was down 0.9%.