Asian Shares Close Lower on Jitters Over Chinese Belt-Tightening

Shares closed lower in Asia on Monday. In China the Shanghai Composite fell 1.7% to 2,792 and in Hong Kong the Hang Seng Index dropped 0.7% to 23,527. Markets in Japan were closed in celebration of Coming of Age Day.

Shares across Asia slid lower on concerns that China will continue tightening measures to combat rising inflation and rampant real estate speculation. While investors are pulling money out of the markets, worrying that it could be heading towards a slump, others are applauding China's recent actions, saying the U.S. should follow China's lead. "China is doing exactly what the United States should be doing -- turning its attention toward inflation and excess lending," writes Jason Simpkins of moneymorning.com. China's central bank has recently sprung into action, raising interest rates and selling off $8.8 billion in three-month bills, says Simpkins.

Among the worries is the possibility that Chongqing may impose a tax on luxury properties. Through millions in government cash injections and investment in infrastructure, the municipality has been transformed into a modern metropolis, complete with a wealth of high-end digs for its newly made millionaires. Meanwhile, Shanghai, also the scene of non-stop building, could soon impose a tax on new homes. Shares in China's big real estate companies tumbled, with Poly Real Estate plunging 3%, Gemdale diving 2% and China Vanke dropping 1.7%.

Tough Day for Commodities

It was not a good day for commodities, with Bloomberg reporting that Chinese imports of copper slumped in December. This could signal a slowdown, and today prices for copper slipped 0.4% on the London Metal Exchange with other metals following suit. Aluminum Corp of China and Jiangxi Copper both fell 2.5%, and Zijin Mining was down 1.4%.

In Hong Kong, property companies also felt the pinch with nearly all closing lower. Hang Lung plunged 2.3%. It's been declining since its high in November -- surprising considering the exorbitant rates the company charges clients for its top-tier Hong Kong rental units. Apartments in luxury residences like Burnside Villas, located close to Repulse Bay Beach, are going for about $20,000 per month, according to one expat resident who recently moved into the development. Other real estate firms also plummeted with China Resource Land dropping 3%, New World Development slumping 2.1% and Sino Land falling 0.9%.

Sponsored Links

Hong Kong's biggest mall operators suffered with Wharf Holdings, operator of Kowloon's massive Harbour City shopping mall slipping 0.8%, and Swire Pacific, owner of Pacific Place along with a multitude of other businesses, declining 0.3%.

Banking Shares were among today's losers with Bank of China Hong Kong nosediving 3.2% and HSBC dropping 1.3%. Industrial and Commercial Bank of China fell 1% and Bank of Communications lost 0.4%.

Winners in Hong Kong today included Foxconn, contract maker of a plethora of hand-held devices including iPhones and iPads, which inched up 0.4% and Cnooc, the offshore oil exploration company, which rose 1.3%. Television Broadcasts, the owner of Hong Kong's TVB, was also on the rise after rumors that the company's executive chairman, Sir Run Run Shaw, whose money was behind the success of films like Blade Runner along with an endless catalog of kung fu films, will receive competing bids for his shares in the company, giving the buyer a controlling stake in the company. Shares in TVB spiked 4.3%.