In Asia Wednesday Hong Kong's Hang Seng tumbled 1.9% to 23,165 and China's Shanghai Composite Index slid 1.5% to 2,997. In Japan the Nikkei 225 Index inched up 0.1% to 9,387.
Finding it harder to flip properties for inflated prices due to new regulations, Chinese speculators have turned to commodities, sending prices soaring over the past few months. But today, fears of new trading rules sent shares tumbling. The Zhengzhou Commodity Exchange took the first step of increasing margin requirements for certain products, including rice and sugar, and according to Bloomberg, will begin to examine trends and look for "abnormal" trades.
Some warn that commodity hoarding of cotton could drive consumer prices up. "We WILL see pricing for many items increase by 20% or more because of cotton shortages and hoarding in China," says a note from an apparel worker posted on Mike Shedlock's 24hgold.com blog. The note goes on to describe how some cotton merchants aren't even filling promised orders, but holding on to the raw material hoping prices will rise further. For smaller garment factories, the price surges may be enough to put them out of business.
Today speculation, compounded by a strengthening dollar and focus on an impending U.S. Federal Reserve asset-purchase program, sent mining shares plunging as investors took profits. In Hong Kong Zhaojin Mining Industry slumped 4.7% and Jiangxi Copper tumbled 4.4%. Real Gold Mining plunged 3.7% and gold miner Zijin Mining sank 3.2%.
Oil company PetroChina dived 4.3%, China Petroleum & Chemical dropped 3.4% and Cnooc, a Hong Kong oil exploration company, fell 2.5%.
The biggest drop in the Hang Seng was scored by China Coal Energy, which nosedived 5.9% despite reporting a 14% rise in net income for the last quarter.
Warren Buffett's darling, BYD Co., a battery and car company that has held huge promise for turning out electric vehicles and already makes China's top-selling car, plunged another 8.9% after losing 10% in yesterday's trading. Investors are clearly less than impressed by the company's declining sales, late deliveries and other problems that all added up to a 99% decline in profits for the third quarter. Today JP Morgan slashed its rating of the stock.
In China it was the same story, with the commodity sector leading the index lower. In addition to dives by Zijin Mining, which slumped 4.5% and Jiangxi Copper, which slid 3.8%, Shandong Gold Mining tumbled 3.9% and Chalco, officially called Aluminum Corp. of China, declined 2.3%.
Meanwhile, Chinese property shares picked up with China Vanke seeing a 2.6% advance and Poly Real Estate racking up a 1.1% gain.
Japanese exporters saw gains today as the value of the yen sank lower, increasing the amount of cash exporters get when they repatriate their money from sales abroad. Subaru maker Fuji Heavy Industries, which also makes aircraft parts, surged 5.3% on higher profits and lower costs, Isuzu motored up 4.2%, Honda surged 1.9%, Toyota rose 1.5% and Mazda gained 1%.
Companies producing parts for the big automakers also saw gains with Jtekt rising 2.7% and Toyota Boshoku, another Toyota affiliate, rising 4%.
Arisawa Manufacturing, the company that makes the film used on some 3-D displays that allows viewers to see 3-D images using light eyeglasses rather than the heftier and more expensive ones, plunged 16.6% today. The company was hoping that its success would follow the meteoric rise in popularity of 3-D films like Avatar. But so far, no go with the company now expecting a net loss for the year.