Asian markets took a tumble today with China's Shanghai Composite Index plunging 5.2% to 2,985, Hong Kong's Hang Seng Index dropping 1.9% to 24,223 and Japan's Nikkei 225 Index down 1.4% to 9,725.
In Shanghai investors pulled money out of the markets, on rumors that another interest rate hike is imminent, and could be accompanied by other tightening measures. Beijing is grappling with rampant inflation, with numbers hitting 4.4% in October alone, and steadily speeding up. In September, inflation stood at 3.6%. Additionally, the Financial Times reports that banks are on track to surpass their 7,500 billion RMB ($1,130 billion) annual lending quota, unless the rate of lending slows dramatically in the last two months of the year.
Two Presidents Exchange Harsh Words
Meanwhile, harsh words are flying between Washington and Beijing as Chinese president Hu Jintao accuses President Barack Obama of creating economic turmoil by artificially flooding the market with cash, and Obama complains China is deflating its currency and driving up the trade imbalance between the two countries. In August the surplus stood at $28 billion. "Exchange rates must reflect economic realities," Obama told a news conference. "Emerging economies need to allow for currencies that are market driven."
Among the many shares that plunged, Sinopec tumbled 5% and PetroChina slid 1.6%. Gold miners fell substantially with Zijin Mining slumping 7.8%, Zhongjin Gold plummeting 7.5% and Shandong Gold Mining dropping 5.3%. Coal miners also declined steeply with China Coal Energy diving 7.1% and Yanzhou Coal Mining sliding 5.3%.
Property companies faltered even as home prices continue to climb -- higher interest rates could deter buyers already stretching their finances to purchase homes. Today Poly Real Estate slumped 7.3%, China Vanke plunged 7.1% and Gemdale sank 7%. China Shimao, which builds massive luxury homes fit for the rich and famous, nosedived 6.6%.
Chinese banks took a major hit with Bank of Communications sliding 6%, China Merchants bank down 5.2% and Bank of China off 3.4%.
Hong Kong Commodities in Dire Straits
In Hong Kong banks also fell. China Construction Bank nosedived 3.8%, Industrial & Commercial bank lost 3.1%, China Construction Bank declined 3.8% and China Citic dipped 3%. HSBC gave up 2.7% and Standard Chartered receded 2.4%.
Hong Kong-listed commodities were in dire straits with Jiangxi Copper plunging 6.5%, Oil Explorer Cnooc losing 2.3% and Chalco, officially named Aluminum Corp. of China, sinking 6.6%.
Meanwhile, Hutchison Harbour Ring, a multi-faceted subsidy of Hutchison Whampoa with businesses ranging from toy manufacturing and technology to property, shot up 15%, causing the company to issue a notice stating that they are "not aware of any reasons for such increase and none of them had any recent dealings in the shares of the Company." Hutchison Whampoa, meanwhile, edged down 0.7%.
In Japan it was exporters that fell with Fanuc, a major international distributor of factory robots sliding 3%, Komatsu, a firm specializing in heavy machinery like mining trucks that are popular in China, falling 2.3% and Canon dropping 1.9%. Sony, threatened not only by the strong yen, now has to fight off competition against its Playstation 3 from Microsoft's XBOX Kinnex, released to much fanfare this week. The system boasts an impressive hands-free system that recognizes a player's body movements through a tiny camera mounted near the screen.
Japanese carmakers also took a tumble with Isuzu plunging 2.9%, Nissan down 2.3%, Honda losing 1.8%, Mazda sinking 1.4% and Toyota off 0.6%. Even Fuji Heavy Industries, which recently announced plans to release a battery fueled car that can be charged through an ordinary household socket, slumped 2.6%. Investors clearly want to see progress that will make money today, not sometime in the future.