Commodities Surge as China Slashes Rare Earth Exports

In Asia on Wednesday, Hong Kong's Hang Seng Index rose 1.5% to 22,969, and China's Shanghai Composite Index added 0.7% to close at 2,752. In Japan, the Nikkei 225 Index advanced 0.5% to 10,345.

Raw materials were the name of the game today as China announced plans to cut its exports of rare earth minerals by 35% in 2011 in order to maintain stocks for its own expanding industries. Rare earths are made up of a group of 17 elements, though they're not actually as rare as they sound. But they are necessary to produce many of the electronic goods consumers worldwide take for granted. These include PC monitors, TVs, iPods, washing machines and fluorescent light bulbs, as well as newer applications like electric motors for hybrid cars.

While this group of rare earths includes basics like zinc, as well as less well known yttrium and neodymium, all 17 are more common than gold or platinum, says the BBC. The catch is that 97% of the world's supply of rare earths is in China, leaving Beijing in control of setting prices worldwide. And with industries like TV manufacturing and eco-car production blossoming in China, local demand is growing, and higher prices for the same products abroad would certainly boost the appeal of Chinese-made items.

Not-So-Rare Rare Earth Miners Flourish

Today, Hong Kong-listed mining companies soared. Zhaojin Mining Industry shot up 3.8%, and Zijin Mining rallied 2.2%. Real Gold Mining cruised up 4.6%, and Aluminum producer Chalco, officially named Aluminum Corp. of China, jumped 2%.

Energy producers also scored today, thanks to the high seasonal demand. While the weather in Hong Kong was a balmy 71F, temperatures in northern cities like Harbin are falling as low as -11F at night. Energy company stocks are also bolstered by the rising price of crude. Oil producers gained, with Cnooc leaping 2.6%, PetroChina advancing 2.3% and Sinopec rising 2.1%. Among coal-based energy firms, China Coal zipped up 2.4%, and China Shenhua advanced 1.1%.

After recent slides, Hong Kong real estate firms regained their footing today with Cheung Kong leaping 2.8%, Hang Lung increasing 2.7% and New World Development rising 2.4%. Swire and Wharf, both with major holdings in Hong Kong's booming malls, racked up big gains: Wharf motoring up 3.8% and Swire rising 2.7%.

Appliances and Lingerie

In China, retailers selling appliances that incorporate all those rare earths made headway today. Chains are making a big push to move merchandise before the New Year holidays. Suning, the People's Republic's go-to home-appliance seller, racked up a 2.3% gain, Qingdao Haier advanced 1.2% and Gree Appliances added 1%.

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Among department store operators, Shanghai Bailian, which sells everything from food to lingerie, climbed 3.4%, GD Midea, seller of its own range of branded machines like rice cookers, microwaves and fridges, jumped 2.6%, and Beijing Wangfujing, with department stores scattered from Beijing to Guangzhou, as well as investments in property, rose 1.2%

In Japan, positive earnings reports sent shares of Aeon Credit Services up 4.6% and shares in watchmaker Citizen rising 1.1%. trendy clothing retailer Shimamura got a 1.6% boost.

Japanese commodity and oil exploration companies were top performers with Japan Petroleum Exploration rising 2% and Sumitomo Metal Mining, which produces gold and copper, gaining 0.8% and Japan Steel Work adding 0.8%.