Copper Stockpiles Grow in Asia, Commodity Shares Fall
In Asia Thursday Hong Kong's Hang Seng Index fell 1.3% to 22,669 and China's Shanghai Composite shed 0.5% to close at 2,898. In Japan the Nikkei 225 Index inched up 0.1% to end the day at 10,311.
Investors who've recently been racking up gains on the rapid rise of Chinese commodities were in for more pain today as copper slid for a third day. The metal, used around the world in the form of electrical wires, circuit boards, waterproof roofing and lighting rods, fell by as much as 1% to $9,045 on the London Metal Exchange. Stockpiles are increasing as dealers wait for demand to improve. This comes just two days after Reuters reported that copper could pass $11,000/mt in a year. "We believe that prices could spike substantially above these levels, most likely in late 2011," read a Goldman Sachs research note.
Jiangxi Copper tumbled 2.5% in Shanghai, and Yunnan Copper Industry fell 2.1%. Shares in other commodity companies also declined, with Zijin Mining plummeting 2.3% and Aluminum Corp. of China sliding 1.4%.
China Loan Clamp-Down Saps Investor Confidence
Banks retreated after reports that China has indeed clamped down on loans to companies sapped investor confidence. China Construction Bank, Bank of China and China Minsheng Bank all dived 0.6%, Bank of Communications dipped 0.4% and Industrial & Commercial Bank of China slid 0.2%.
The auto sector was also especially hard hit today with dealers expecting a sudden drop in sales once incentives like subsidies for rural car buyers and tax cuts for those buying smaller cars expire at the end of the month. Car sales have been surging of late, with would-be buyers scouring salesrooms for any car they can get their hands on. They're not only driven by the current tax savings, but also worried that the authorities will begin to limit car sales in order to help deal with the choking traffic in major cities like Beijing. Today SAIC slumped 2.7%, Beiqi Foton Motor Co dropped 0.7% and FAW Car lost 0.3%.
Warren Buffett's BYD Continues Its Descent
In Hong Kong, carmakers also lost value with Warren Buffett-backed BYD plunging 4%, adding to the beleaguered "Build Your Dreams" electric car company's massive losses this year -- the stock has nearly halved since its high in April. But despite the losses, the company is ranked 19th most valuable among the top 50 Chinese brands and still has big plans for the future, according to Gasgoo.com. Other Hong Kong-listed carmakers also fell with Dongfeng Motor Group down 2.2% and Geely losing 1.4%.
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Banks also headed south in Hong Kong with HSBC and Bank of Communications both sinking 1.1% and Industrial & Commercial Bank of China down 1%. Standard Chartered edged down 0.6%. The trend made it an inauspicious day for Chonqing Rural Commercial Bank's debut, and the company lost 1% in today's IPO.
In Japan Sapporo Holdings, maker of those great big bottles of beer shot up 5.5% on rumors that major investor, Steel Partners Japan Strategic Fund, have sold off some of their holdings in the brewery after struggling to change its management. "Individual investors are coming back to the brewer now that it can focus on its business instead of dealing with Steel Partners," a Mizuho Securities strategist told Bloomberg.
Japanese financial firms also rose today with Mizuho Financial scoring a 2.7% gain, Mizuho Trust surging 2.4%, Sumitomo Trust rising 2% and Mitsubishi UFJ up 1.4%.
