Asian Property Stocks Tumble as China Mulls Over New Curbs


Asian markets closed lower Tuesday. In Hong Kong the Hang Seng Index fell 1% to 24,711 and in China the Shanghai Composite Index lost 0.8% to end the day at 3,135. Japan's Nikkei 225 Index edged down 0.4% to 9,694.

Hong Kong property shares took a tumble after word got out that the Chinese government is busy formulating new rules to curb sky-high property prices. New measures could include giving local governments the power to set sales prices and limit profit margins developers are allowed to earn, reports Business Spectator. Despite the current raft of restrictions, prices in the People's Republic climbed 0.5% during October alone.

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Today Sino Land's stock plunged 7.3% after sealing deals to sell 305 million shares to about 100 investors at a mighty discount of up to 9.2%, according to Hang Lung Properties, which launched its own share sale last week, also took a 2% dive. While investors are seeking a piece of the action in the Hong Kong property market, they're now looking to buy into companies with less exposure to the heady mainland market, which could struggle under the thumb of the Communist government.

Among other Hong Kong developers New World Development tumbled 3.6%, Sun Hung Kai slumped 2.1%, Cheung Kong sank 1.9% and Henderson Land slid 1.6%. The figures were also bleak for Wharf Holdings, which plummeted 4.6% and Swire Pacific, which dropped 3.5%. Both firms' portfolios include residential property as well as major shopping malls on prime Hong Kong real estate.

Hainan Companies Buck Downward Slide

Metallurgical Corp. of China slumped 2.3% after the company's rating was downgraded by Citigroup. Metallurgical is the engineering and construction firm responsible for the impressive Beijing National Stadium known as the Bird's Nest. Bird's Nest architect Ai Weiwei told the BBC he's under house arrest in Beijing after inviting masses of friends to a party at his condemned Shanghai Studio. Supporters were warned by police not to gather, but held the party anyway, according to

In China, property stocks also slid lower with Poly Real Estate sinking 4.1%, China Vanke plunging 4%, Shahghai Shimao descended 3.7% and Gemdale slipping 0.3%.

Chinese banks performed poorly today with Agricultural Bank of China falling 2.1%, Bank of Communications losing 1.7% and China Minsheng Banking declining 1.4%.

On a brighter note, several Hainan-based companies surged. Hainan Island, China's answer to the tropical Hawaiian tourist destination, is poised to become a hub for duty-free shopping. Chinese shoppers are forever searching for deals and are not averse to traveling long distances to save a few dollars. Among those that benefited today, Hainan Airlines, Hainan Expressway and Hainan Zhenghe Industrial Group all hit the 10% daily limit.

Stronger Yen Is Tough on Exporters

In Japan, exporters suffered as the yen strengthened and blue chip electronics makers dragged the Nikkei lower. Panasonic tumbled 1.8% and Sony sank 1%. Camera companies slumped with Canon losing 1.3%, Olympus falling 4.2%, Konica Minolta dropping 1.5% and Nikon dipping 0.5%.

Among Japanese car companies, Isuzu plunged 2.1%, Mazda sank 1.9% and Nissan slid 0.5%. Toyota, maker of Japan's top-selling car, lost 0.4%. According to the International Business Times, the Prius hybrid is celebrating its 17th month in a row as the country's best seller. But don't be fooled into thinking sales have recovered: October Prius sales were down 19% as compared to the same period last year.