Shares in China fell Tuesday, with the Shanghai Composite Index hitting a two-week low of 2,898 – a 2.3 percent drop.
Chinese stocks may be suffering from the overwhelming number of recent and upcoming Asian IPOs. Analysts say the new listings may be luring assets away from some stocks, as investors withdraw funds from existing portfolios to invest in the newly listed companies. Since June, when government regulators ended a nine-month ban on IPOs, 96.1 billion yuan has poured into Chinese IPOs, according to Bloomberg.
Yesterday saw the debut of Metallurgical Corporation of China Ltd., this year's second-largest IPO, and tomorrow, highly touted Sinopharm Group Co. will open in Hong Kong. In addition, word is out that Chinese regulators have approved the IPOs of four more companies, while another 10 companies will begin taking subscriptions this Friday for their listings on the new NASDAQ-style Growth Enterprise Market, or GEM board, which will soon launch in Shenzhen.
After rising 28 percent on its first day of trading in Shanghai, Metallurgical plunged 8.5 percent today. The company is best known for its work on Beijing's "Bird's Nest" stadium. Meanwhile, it was a bad day for Chinese steel stocks, with Tangshan Steel plummeting 7.5 percent, Handan Iron & Steel Co. falling 5.9 percent, Handan Steel dropping 5.9 percent and Chengde Zinxin losing 6.7 percent. Other steel companies also lost value.
Also in China, brokerage company Guoyuan Securities, slumped 6.7 percent and engine manufacturer Harbin Dongan Auto Engine Co. shed 5.5 percent. But there was good news for Jiangsu Hongbao Hardware Co. Ltd., which gained its 10 percent daily limit cashing in on the news that it owns .9 percent of Shanghai Xinpeng Industrial Shareholding Co., which has been approved for a public offering. Hotel and Department store operator Quinhuangdao Physical Distribution Holding Co. also hit its 10 percent limit.
In Hong Kong, the Hang Seng rose 1 percent to close at 21,701. Clothing retailer Esprit Holdings Ltd gained 3.9 percent, while clothing company Bossini International Hldg. rose 1.2 percent. Major toy and clothing exporter Li & Fung remained flat, ending the day down .3 percent.
Shares in Hong Kong-listed Cathay Pacific Airways were actively traded today with prices rising as much as 3.5 percent in intraday trading as the price of crude oil fluctuated. The airline's stock ended the day in positive territory, racking up a 3.5 percent gain.
While many Asian markets, including Japan, were closed Tuesday, Korea's KOSPI hit a one-year high of 1719, with shares closing above 1700 for the first time in 15 months. Foreign investment has been pouring into local stocks, according to Korea's Yonhap News. Shares in Korean blue-chip auto and electronic companies have been surging; today Hyundai Motor Co. leaped 5.2 percent Kia Motors Corp. gained 4.4 percent Samsung Electronics Co. Ltd. climbed 3.4 percent and LG Electronics Inc. was up 1.6 percent.
With so many countries on holiday, Korean stocks seem to have stolen the show.