Asian Markets Down as Inflation Rises and Property Shares Fall

In Asia Monday Hong Kong's Hang Seng Index slid 0.4% to 23,328 and China's Shanghai Composite Index slumped 0.5% to close at 2,857. In Japan the Nikkei 225 Index inched 0.1% lower to end the day at 10,167.

While the Chinese government wrestles over the raging inflation that's gauging deep holes in household budgets, it's now facing a call from experts to increase the income of Chinese residents. Su Hainan of the Ministry of Human Resources and Social Security explains that residents' income is out of whack with the country's skyrocketing GDP. "The annual growth rate of residents' income should not be lower than 8% in the next five years, so as to be in step with the GDP growth rate," he told China Daily. In a country where the wealthiest 10% are said to earn 65 times the average income of the bottom 10%, it's no wonder that the recent surge in inflation has hit the poorest the hardest.

Hong Kong property shares, many with massive investments in China, dragged the Hang Seng lower as investors worry that Beijing is on the brink of further moves to reign in the overheated property market in order to slow the bustling economy and make home ownership more affordable for working people. New World Development and Sino Land both sank 1.8%, Cheung Kong tumbled 1.4%, Henderson Land fell 1.1% and Hang Lung lost 1%.

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Banks, many based on the mainland, also retreated with Bank of China diving 2.6%, International & Commercial Bank losing 1.3% and Bank of Communications was down 0.7%. Meanwhile, BOC Hong Kong, a holding company that provides financial products to both retail and corporate clients, nosedived 4.2%.

In China there were losses among carmakers after news broke that cars with smaller sized engines won't be eligible for a reduced tax next year. FAW Car, a partner of Volkswagon, fell 2.6% and SAIC Motor plunged 1.3%. But these losses were countered by big gains among oil and gas companies: PetroChina rallied 4.7% and China Oilfield Services, an expert in oil drilling and transport advanced 3.7%.

Another winner was Dalian Port. which racked up a 37.9% gain on its Shanghai debut today, raising $856 million. Dalian is based in the Yellow Sea where an explosion in a pipeline resulted in a massive oil spill this summer. But the port is back in action, shipping fuel around the world.

In Japan a hike in oil and commodity prices sent shares in trading companies higher. Mitsui & Co., which deals in metals, energy, chemicals and foods, posted a 1.5% gain. Sumitomo Metal Mining surged 3.4%. The company is Japan's largest gold producer and today bullion hovered near record levels at $1,414.68 per ounce. Good news for those who've been socking away gold bars as a safe haven.