China Considers Fuel-Efficiency Taxes and Hikes Gas Prices, Asian Markets Close Lower
The Chinese government is tackling pollution and oil dependence by considering a new law that will raise taxes on cars with larger engines and reduce taxes on fuel efficient vehicles and those that use clean energy.
While the proposed law has all the right intentions, critics told China Daily that it could just raise the cost of owning a car without having much of an effect on anything else. "Engines with a smaller capacity do not mean lower emissions," said one independent auto analyst. And as for the wealthy buyers of luxury vehicles, with taxes currently standing at about $54 per year, they are extremely unlikely to be affected by any price increase. Still, Beijing is right to tackle these issues, since traffic and pollution are out of control. Last month travelers endured a 60-mile traffic jam that lasted more than 10 days.
Today Chinese carmakers took a hit with DongFeng Motor slumping 3.4%, FAW Car tumbling 2.5% and Tianjin FAW Xiali Automobile down 0.8%.
The real estate sector recovered from yesterday's losses, which followed fears that the government could begin levying new trial taxes. Today Poly Real Estate surged 3.3%, China Vanke climbed 2.1% and Gemdale rose 0.9%.
In Hong Kong, BYD Co, the Warren Buffett-backed car company plunged 10.3% after third-quarter profits fell 99%. Despite manufacturing China's most popular vehicle, the F3, the company is facing a myriad of problems including a drop of 25% in September sales, delays in exporting much-hyped fleet of electric cars to the U.S, and accusations that several factories had been built illegally. In fact, earlier this month, the company was forced to surrender seven of its facilities, according to Bloomberg.
Geely, another Hong Kong car maker, soared 2.2% and Great Wall Motor added 0.4% and Hong Kong-listed shares of DongFeng Motor Group slipped 0.6%.
Hong Kong-listed oil and gas companies also gained today on China's price increases. Refiner China Petroleum & Chemical surged 1.9%, PetroChina advanced 0.9% and Shengli Oil & Gas Pipe Holdings, which supplies oil pipelines, soared 5.6%. Cnooc, an oil exploration company, inched up 0.1%.
Other losers today included Chalco, or Aluminum Corp. of China, which tumbled 3.9% and China Railway Construction Corp., which sank 13.7%. China Railway has admitted it's about to take a $623 million loss on a light rail project designed to transport passengers around religious sites in Mecca and Medina. According to arabianbusiness.com, plans for the 11-mile train system have suffered multiple changes and delays, forcing the contractor to add resources in order to get the project finished this month.
In Japan the yen hit its highest level since April 1995, trading at 80.41 to the dollar. Exporters suffered with Mazda tumbling 1.9%, Isuzu losing 1% and Toyota and Honda both sinking 0.5%. Nissan, which just launched it's Fuga luxury hybrid, lost 1%. The Fuga is said to get 41 miles to the gallon and priced at an eye-popping $71,500. It's sold as the Infiniti M in the U.S., and the hybrid will soon be available in the U.S.
Other exporters also sank with Komatsu, a maker of construction equipment, falling 1.5%, Canon sinking 1.1% and Fanuc, Japan's leading industrial robot maker, losing 0.9%.