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.
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.