Asian stock markets moved broadly lower Thursday, with weakness for property shares weighing on the Hong Kong bourse, though Tokyo shares rose on hopes for further policy easing.
Japan’s Nikkei Stock Average ended with a 1.2% gain, after shedding 0.9% over the past two sessions.
In China, Hong Kong’s Hang Seng Index was down 0.6% in late afternoon trading, while the Shanghai Composite Index slipped 0.1%.
Most of the other major indexes lost ground, as Australia’s S&P/ASX 200 index finished 1.2% lower, South Korea’s Kospi traded 0.3% lower just ahead of the close, and Taiwan’s Taiex dipped 0.6%.
U.S. stocks ended with small gains on Wednesday, allowing the Dow Jones Industrial Average to seal a nine-session streak of gains after stronger-than-expected retail sales data for February.
The upbeat data helped the U.S. dollar move back above ¥96 overnight, with the currency moves helping many major Japanese exporters to solid gains.
Among them, Nikon Corp. rallied 4.2%, Advantest Corp. closed 3.7% higher, and Toshiba Corp. rose 1.9%.
“There is a strong correlation between moves in the yen and the stock market, driven by the translation impact on company earnings,” said Sumitomo Mitsui Trust Bank chief Japanese-equity portfolio manager Shigeru Oshita.
Still, that doesn’t mean all exporters will benefit at the expense of domestic plays, he said.
“During the recent strong yen period, Japanese companies split into two categories: Good quality firms streamlined their operations to improve their earnings structure, while others struggled to break-even,” he said.
“The simple picture whereby all exporters are beneficiaries of a cheaper yen and all domestic firms are not, is mistaken. Bottom-up stock picking is needed to tell the difference,” he said.
On the domestic side of the Tokyo market, real estate saw particularly strong gains, with Mitsui Fudosan Co. soaring 5.3%, and Sumitomo Realty & Development Co. chalking up a 3.8% advance.
The property sector is among those that would benefit strongly if Japan manages to curb the deflation that has plagued its economy for year. And hopes for fresh deflation-fighting measures from Tokyo got a boost Thursday after Japan’s lower house approved the government’s choice for central-bank governor, Haruhiko Kuroda, who is widely seen as dovish on monetary policy.
Hong Kong property mauled
But most of the other Asia markets traded in the red Thursday, with real-estate stocks falling sharply in Hong Kong. The losses came as Deutsche Bank warned of sharp property-price drops ahead, and as the state-run China Securities Journal reported that the city of Beijing may hike taxes for home resales, among other curbs.
Among the decliners, Henderson Land Development Co. tumbled 4%, New World Development Co. fell 3.1% and Sun Hung Kai Properties Ltd. lost 3.3%.
Also weighing on the sector was news that lenders HSBC Holdings PLC and Standard Chartered PLC were hiking their mortgage borrowing rates in Hong Kong, with the move expected to weigh on the local real-estate market. Shares of HSBC gained 0.4% in Hong Kong, while those of Standard Chartered traded 0.6% lower late in the afternoon session.
The Deutsche Bank analysts said following the HSBC move that “mortgage interest rates in Hong Kong could go up, even in the absence of increases in the U.S. interest rates.”
Hong Kong rates generally follow those in the U.S., as the Hong Kong dollar is pegged to the U.S. currency.
“With the new government measures, the potential further rises in mortgage rates, and the expected increases in new supply in the medium term, we expect property prices to show larger corrections, and we expect Hong Kong home prices to fall by 15%-20% in the next 24 months,” the analysts said.
In mainland Chinese trading, the real-estate sector saw less extreme losses, as the nation’s top property developer China Vanke Co. fell 1.9% in Shenzhen, and rival Poly Real Estate Group Co. rose 0.8% in Shanghai.
Meanwhile, major Hang Seng Index component China Mobile Ltd. managed to gain 0.1% in late trading after posting a modest 2.7% rise in 2012 profit, but also hiking its dividend.
Australian investors welcomed first-half results from department-store retailer Myer Holdings Ltd. , sending the firm’s shares soaring 5.9%.
The Sydney benchmark index turned briefly positive after Australian employment data surprised to the upside, but losses for miners worked to drag it back to negative territory.
Among the big mining names, Rio Tinto Ltd. and BHP Billiton Ltd. each closed the day with a 2.3% loss, while Fortescue Metals Group Ltd. plunged 6.2%.