Chinese Reserve Ratios Escape Recent Hike, Asian Markets Rise

In Asia Tuesday the Hang Seng rose 1.7% in Hong Kong to close at 23,712 and the Shanghai Composite inched up 0.1% to 3,000. In Japan the Nikkei 225 Index gained 0.2% to end the day at 10,525.

Asian markets were quick to react to a report that China has canceled its last round of reserve ratio hikes, according to Reuters. Total banking loans given out in February sank to less than 600 billion yuan, satisfying Beijing that the amount of cash swishing around the marketplace is on the decline, and will hopefully lead to a decrease in recent inflation figures. Reserve requirements for China's largest banks now stand at a record 19.5% and despite today's news, economists are expecting further increases.

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In Hong Kong banking shares climbed with HSBC jumping 2.3%, China Construction Bank soaring 1.6% and Agricultural Bank of China rising 1.2%.

Gold hit $1,434.50 in New York yesterday, giving a boost to some Hong Kong mining companies. Zhaojin Mining, which has reportedly put aside $76 million to buy gold mines, motored up 3.5%. Zijin Mining advanced 0.8% but Real Gold Mining declined 0.5%

Middle East Unrest Boosts Energy Companies

Oil companies continued on their upward trajectory as dwindling fuel output in the Middle East increased value. Sinopec rallied 3.6%, Petrochina rose 1.8% and Cnooc advanced 1.2%.

In China real estate developers surged after China Vanke reported a 37% year-on-year increase in net income for 2010, according to capitalvue.com, putting its annual takings at $1.1 billion and making it the number one commercial residential property company in Shenzhen and Beijing. Gemdale gained 1.2% and Poly Real Estate advanced 1%.

Chinese car companies closed higher with Beiqi Foton jumping 3.4%. Beiqi makes hybrid buses and SUVs and according to steelguru.com, it's signed a deal to deliver 50 Midi Pure Electricity cars to a Beijing cab company. Other car makers also rose with Anhui Jianghuai rising 1.5% and Dongfeng up 0.9%, but FAW lost 1.6%.

In Tokyo Hitachi was the talk of the trading floor, rising 1.8% after agreeing to sell its hard-disk drive unit to Western Digital for around $4.3 billion, according to Bloomberg. Let's just hope that the acquisition doesn't corrupt Western Digital's unflaggingly reliable products -- its hard drives are the only ones that never seem to let customers down.

But gains were nearly balanced by losses today. Oki Electric, a maker of ATM machines and communications equipment, plunged 6% after forecasting a net loss of about $342 million for the year ending March 31st. The firm is blaming the loss on retirement benefit payouts, job cuts and reduced payouts.

Japanese shipping lines also lost value as the price of oil threatens to force ships to slow down in order to conserve fuel. Kawasaki Kisen Kaisha slumped 2.8% and Nippon Yusen fell 2.5%.