Asian carmakers go for a ride, Buffett's BYD slips, Chinese property stocks get the jitters

In Asia Thursday, China's Shanghai Composite Index rose 0.5% to close at 3,254. In Japan, the Nikkei 225 Index fell 1.4% to 9,863 and in Hong Kong the Hang Seng Index slipped 0.2% to end the day at 21,700.

In China, news that the country's booming car industry sold more than 12 million vehicles so far this year was met by changes to taxes paid on new cars. The new policy will extend the tax breaks into next year, reports China Daily, but raise the rate from this year's 5% to 7.5%. Before the economic crisis prompted the government to enact sweeping stimulus measures, China had been charging a 10% tax on cars. Car subsidies will not apply to cars with an engine size of over 2 liters, but most of the cars sold in China are economical, compact cars.

The change in the tax rate affected the price of automakers, with Chinese investors looking on the bright side, noting that stimulus measures are still in place: Chongqing Changan Automobile rose 2%, Tianjin FAW Xiali Automobile gained 1.6% and Beiqi Foton Motor added 0.4%. Meanwhile SAIC (SAI) fell 0.4%.

Shares in Chinese property companies suffered due to a change in tax law meant to prevent a bubble in the already overheated property market. In an effort to curb the speculation that has driven the real estate market up another 5.7% in November, investors will now have to pay a tax on properties that change hands within five years of purchase. Then, beginning in January, Bloomberg reports that the taxes will apply to sales made within two years of purchase. On this news, China Vanke (CVKEF), which builds condominiums, fell 1%, Gemdale slid 1% and Poly Real Estate Group dropped 0.8%.

In Hong Kong, car companies took a hit today with investors reacting to the scaling back of tax breaks for Chinese car buyers. Geely (GELYF) plummetted 8.2% and Dongfeng Motor Group (DNFGF) plunged 6%. Even BYD Co. (BYDDF), the automobile and battery company Warren Buffett has invested in, fell 1.5% in today's trading.

In Japan, carmakers dragged the main index lower on speculation that the yen may continue its upward trend that is costing export-dependent businesses millions. Mazda Motor (MZDAF) plunged 3%, Toyota Motor (TM) fell 1.6%, Honda (HMC) sank 1.5%. Suzuki (SZKMF), which soared yesterday on an announcement that it would sell a stake in the company to VW, plunged 6.5% today. Asian car companies endured a wild ride today.


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