In Asia Wednesday Hong Kong's Hang Seng Index sank 1.4% to 23,093 and China's Shanghai Composite Index retreated 1% to 2,849. In Japan the Nikkei 225 Index rose 0.9% to end the day at 10,232.
Predictions that Beijing may raise interest rates as soon as this weekend sent jitters through markets closely watching China's economic numbers now due to be released this Saturday. The hike, if realized, is intended to mark a shift to a "prudent" monetary policy, but investors worry that it could cast a cold spell on the country's growth spurt, threatening investments in everything from raw materials to property and consumer products.
Meanwhile China Securities Journal reports that the newly released Chinese Academy of Social Sciences' 2011 Blue Paper is forecasting GDP growth of about 10% next year saying, "If China's macroeconomic controls can be kept relatively stable, its economy will maintain relatively rapid growth in 2011." That could shore up investor confidence once again.
But today in Hong Kong most stocks headed south. Agricultural Bank of China nosedived 2.4%, HSBC and Bank of China both plunged 1.9% and Bank of Communications sank 1.2%.
Property developers lost value as fears that mortgages could become even scarcer settled in. New World Development slumped 1.8%, Sun Hung Kai tumbled 1.5% and China Resource Land fell 1%. Sino Land and Henderson Land both lost 0.9% and R&F Properties, which does most of its business on the mainland just across from Hong Kong and in Beijing, retreated 0.7%.
A fall in the price of crude oil was a rude awakening for oil and gas firms today. PetroChina declined 2.7% and Cnooc suffered a 2.4% fall. Coal-based energy companies didn't fare much better, with China Shenhua losing 1.1%.
And after a bumper day yesterday, even commodity companies and gold miners were down today. Real Gold Mining sank 2.5%, Zijin Mining fell 1.8% and Aluminum Corp of China, better known as Chalco, tumbled 1.7%.
Chinese equities mirrored their Hong Kong counterparts, with banks and commodities sliding. Industrial & Commercial Bank dropped 1.4% and China Construction Bank sank 1.2%.
Property shares were especially hard hit, having become dependent on loose lending for ever bigger mortgages. Now the housing market faces threats not only from changes in loan policies and down payment requrements, but also from new property taxes that could come into effect early in 2011. Today China Vanke dropped 2%, Gemdale fell 1.8% and Poly Real Estate edged down 0.5%.
One bright spot was the railway sector where reports that $602 billion in government investment could be made soon. China CSR Corp., a maker of railcars, skyrocketed 6% and competitor China CNR Corp. rallied 6%.
In Japan Sumco Corp. took its biggest dive in over two years, the silicon wafer maker that today announced it expected to lose about $789 million, according to Bloomberg. Credit Suisse slashed the company's rating and shares tumbled 9.6%.
Among the winners in Tokyo, game makers racked up gains. Konami, a maker of consumer video games as well as arcade systems and Pachinko machines, climbed 5.4%, Sony shot up 1.9 and Nintendo advanced 1.3%.