Rising Chinese Property Prices Carry Hang Seng Higher


Hong Kong's Hang Seng Index advanced 1.3% Friday, ending the week at 23,595 and China's Shanghai Composite Index fell 0.9% to close at 2,900. In Japan the Nikkei 225 Index inched up 0.1% to 10,843.

Chinese policy makers are scratching their heads after a raft of measures meant to cool the country's red-hot real estate market seem to have done little to accomplish their aim. New home prices rose in 68 out of 70 Chinese cities last month, according to the Statistics Bureau. Buying a home in Beijing last month will cost 6.8% more than it would have last January, and a place in Shanghai is worth 1.5% more than last year, according to the Wall Street Journal.

That's not good news for workers struggling to afford a place to sleep, many of whom have resorted to renting lower-cost space below ground in Beijing's basements and air defense bunkers (pictured), according to areport in the Telegraph. But the rise in prices is good news for investors betting that the market will continue to climb.

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In Hong Kong, Chinese property shares soared with Guangzhou R&F, which last month purchased a sprawling parcel of land in Jiangning District's technology development zone that it will convert into homes, office buildings and hotels, shooting up 3.8%. Sino Land gained 2.4%, Glorious Property jumped 1.8%, New World Development rose 1.9% and China Resource Land advanced 1.1%. Wharf Holdings, owner and operator of many of the properties and businesses along Hong Kong's waterfront, climbed 3.7%.

Insurance and financial companies surged with Ping An Insurance shooting up 3.6%, Bank of Communications jumping 2.2%, Bank of China rising 2% and Industrial & Commercial Bank of China advancing 1.9%. HSBC, the most heavily weighted bank on the exchange, rose 1.1%.

In China, a slowdown in January car sales dragged on the automotive sector. Bloomberg reports that 1.5 million vehicles were sold last month, marking a slowdown in growth as compared with data for last year's monthly increase. Obvious reasons for the decline include the reinstatement of a 10% sales tax and new limits on the number of cars allowed to be licensed in cities like Beijing where the choking traffic is making travel nearly impossible. Beiqi Foton dived 3%, FAW Car, Volkswagon's Chinese partner, plunged 2.5% and Jianghui Automobile sagged 2.4%.

In Japan there were losses for real estate companies with Heiwa Real Estate diving 5.7%, Mitsubishi Estate slumping 1.6% and Sumitomo Realty sliding 1.1%. Japanese insurance companies were also out of favor, with Tokio Marine tumbling 1.9% and T&D Holdings falling 1.1%.

But there were some bright spots for Japan investors as well. CSK, a computer leasing and systems firm, rocketed up 7.1%, Pioneer racked up a 4% gain and Shionogi & Company, a pharmaceutical company, gained 2.4%.