Shares Tumble in Shanghai While Sugar Price Soars
In China things are getting massively expensive -- not just the newly built mansions nestled on the edge of freshly mowed golf courses, but also daily staples like sugar and garlic. And that has investors worried about the government's upcoming plans to cool this rampant inflation. According to China Daily, the price of sugar has doubled since the beginning of the year, ginger has gone up more than twice that amount and garlic is ten times more expensive. In a country where the minimum wage for workers in cities like Beijing is only about $140 per month, price hikes like this make a big difference.
China Raises Bank Reserve Requirements
Today investors pulled money away from Chinese banks, ahead of a move by the government to increase reserve ratios for lenders. China's Central Bank announced it would raise banks' reserve requirement ratio by half a percentage point in order to stem the excess liquidity that's wreaking havoc on prices -- both internally and from foreign capital inflows. "Capital Inflows are a serious problem facing China," one Hong Kong fund manager told Bloomberg. "To tackle the problem, tightening liquidity controls seems unavoidable." Today Bank of Communications and Agricultural Bank of China and China Minsheng Bank all tumbled 2.1% and Industrial & Commercial Bank of China plunged 0.8%.
In Hong Kong, property companies also hit the skids. Agile Property, which does loads of business on the Mainland sank 8.1%, China Resources Land slumped 3.8% and China Overseas Land suffered a 3.1% fall. Sun Hung Kai slid 2% while some Hong Kong focused developers gained. Henderson Land Climbed 1.4% and Wharf Holdings, which has had a stronghold on business along Victoria Harbour for more than 100 years added 1.3%.
Hong Kong banks closed lower with Bank of Communications and Bank of China both dropping 2.9% and HSBC falling 1%.
Japanese Bank on Exemption from New Capital Requirements
In Japan, however, banking stocks were looking up as investors pinned their hopes on Asian banks being exempt from new capital requirements. Mizuho Financial shot up 7.2%, Sumitomo Financial rocketed up 5.6% and Mitsubishi UFJ leaped 4.2%.
Electronics companies also helped push the Nikkei higher with Casio Computer climbing 3.7%, Canon rising 3.1% and Sony and Nintendo both gaining 1%.