Asian Markets Slump on Chinese Economic Worries and Japanese Unemployment

Asian markets closed lower Tuesday. In Japan the Nikkei 225 Index plunged 1.9% to 9,937 and in Hong Kong the Hang Seng Index lost 0.7% to close at 23,008. China's Shanghai Composite Index slumped 1.6% to end the day at 2,820.

Japanese investors were hit with more bad news today: unemployment and falling production, combined with continuing concern that China will take drastic measures to cool inflation. Government figures show that Japan's unemployment rose last month -- the first rise since June and a firm reminder that the country's economic recovery is extremely fragile.

Along with the 5.1% unemployment rate, industrial production tumbled a frightening 1.8% -- not exactly what the government was aiming for when it passed its new $61 billion stimulus package. Many think that stimulus package or not, the Japanese economy will be tough to jump-start. "Japan will probably remain in an economic lull until the end of March as exports are slowing," an economist at Meiji Yasuda Life Insurance told Bloomberg.

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Japanese companies dependent on big orders from China slumped today. Hitachi, a maker of the giant excavators used to mine China's wealth of natural resources, sank 3.1% Komatsu, another maker of heavy equipment, lost 2.4% and TDK, which supplies parts for disk drives, dived 3.6%.

Japanese steelmakers also saw declines, thanks to rising prices of raw materials and a slashing of ratings by analysts at Mizuho Securities. Nippon Steel slumped 4.5%, Sumitomo Metal Industries lost 3.3% and JFE Holdings slid 2.6%.

The banking sector also suffered after ratings cuts by Credit Suisse. Sumitomo Trust tumbled 2.8%, Mitsubishi UFJ declined 2.2% and Mizuho gave up 1.5%.

One bright spot was the insatiable world of video gaming. Superb Black Friday weekend sales sent shares in Nintendo, the maker of the user-friendly Wii video game consoles, rocketing up 3.4%. Square Enix Holdings, a video game producer now developing games for the latest and greatest, hands-free Xbox Kinect that's just been released in Japan, edged up 0.3%. Panasonic, meanwhile, tumbled 1.3%, despite the news that it's begun testing its own portable video-game device, according to Bloomberg. Other video-gaming companies were less lucky: Sega Sammy Holdings nosedived 1.4% and Konami slipped 1%.

Possible Interest Rate Hikes Worry Hong Kong and Chinese Investors

In Hong Kong, banking shares see-sawed on fears that Beijing will raise interest rates. Agricultural Bank and China Construction Bank both slumped 1%. Industrial & Commercial Bank of China ended the day up 1.3%, after heading down as much as 1.5% during the day. Property shares also quivered with Cheung Kong plunging 2%, China Resources Land plunging 1.4% and China Overseas sliding 1.2%. Meanwhile Sino Land racked up a 2.5% gain, New World Development advanced 1.6% and Hang Lung rose 1%.

While Esprit, which is heavily dependent on an evermore uncertain European economy, slumped 2.3%, Li & Fung continued to rise, bolstered by amazing holiday sales in the U.S. where shoppers picked up deals on all sorts of products the company sources from Asian manufacturers. Today Li & Fung added another 1.4% to yesterday's gains.

In China, banks were on the decline with Industrial & Commercial Bank down 2.1% and China Construction Bank losing 1.7%. Real estate firms also closed lower with Gemdale plunging 1.5%, Poly Real Estate falling 1.3% and China Vanke dipping 0.5%.

And even as food prices hit astronomic prices, Chinese food companies declined today. Haikou Agriculture & Industry, which produces chickens and pigs, plunged 5.3% and Chaoda Modern Agriculture declined 1.5%. Kweichow Moutai, which makes alcoholic beverages, slumped 5.4% and Wuliangye Yibin lost 4%. Perhaps they'll turn back up as investors head out for a drink after a tough trading day today.