Warning signs that China's bull run has ended continued to mount today as investors pulled money out of the market, locking in profits. Beijing is stepping up measures to curb inflation, which has sent the price of everything from garlic to cotton sky high.
In addition to new restrictions on home buying by both locals and foreigners and caps on bank lending, China Daily reports that officials are considering placing limits on food prices and instituting punishments for those found to be speculating on agricultural products. So far this year, the price of sugar has doubled and in some places ginger prices have gone up ten-fold. "China coming back with tightening talk is making the market nervous again," one strategist told Bloomberg. "All the fears are back over China going too far." The fee for Beijing regaining control over prices, may be a steep fall in Chinese equities.
Today food and beverage companies tumbled with Chongqing Brewery diving to the maximum 10% daily limit. Guangxi Guitang, a sugar producer, slumped 5.6% and Nanning Sugar fell 4.4%.
Fears that a cooling economy will require much less in the way of raw materials sent commodities shares sliding. Jiangxi Copper sank 2.9%, PetroChina and Yanzhou Coal Mining both dropped 1.9% and Aluminum Corp. of China slumped 2.8%. Maanshan Iron & Steel plummeted 1.9% and Baoshan Iron & Steel lost 1.2%.
There were also steep falls among pharmaceutical firms with China National Medicines and Kangmei Pharmaceutical both plunging 8.4%. North China Pharmaceutical dived 8.1%.
Property developers closed lower with Sun Hung Kai nosediving 3.1%, Cheung Kong losing 3% and Sino Land falling 2.7%. Virtually no real estate firms were unscathed, having become heavily dependent on Chinese cash to fund projects and boost sales. China Resource Land slumped 2.4%, New World Development declined 1.8% and Henderson Land lost 1.3%.
As in China, commodity companies took a tumble with Jiangxi Copper giving up 8.2% and Chalco, or Aluminum Corp. of China, dropping 3.2%. Even gold miners were down despite whispers that China is considering upping it's gold reserves from the current 1,064 tons it currently holds, according to Global Times. Zijin Mining fell 5.3% and Real Gold Mining lost 3.6%.
Among the many losers in Hong Kong, Skyworth Digital, a Chinese maker of televisions, plunged 7.3% and Tencent, an Internet gaming company, lost 3.9%.
In Japan, a weaker yen led to a rise in automaker stocks. Mazda leaped 3.1%, Honda climbed 2% and Toyota inched up 0.5%. Bridgestone also had a good day, gaining 3.4%.
A sharp fall in commodity prices dragged Japanese commodity traders lower with Mitsui & Co. falling 1.3% and Mitsubishi losing 0.6%. Mitsubishi Materials, which deals in everything from copper, zinc and gold to cement and aluminum cans, skidded 4%. And as expected, companies reliant on China's growth headed downward -- Komatsu inched down 0.5% and Hitachi Construction Machinery, maker of the giant diggers in China's many mines, slipped 0.2%.