China worries Australian market: Afternoon market insights

The Australian stock market was down slightly today despite higher commodity prices. The Hong Kong exchange was also down amid worries about  high Chinese property values and the Chinese banks exposed to them (see more under Asian Markets). Some analysts pointed to the high Australian dollar or very conservative domestic consumers and investors as the cause of the fall.

The S&P/ASX200 was up by 0.42% or 18.2 points to 4272.60. The All Ordinaries Index was also down 0.40% or 17.60 points to 4363.60.

The day’s winner

Henderson Group (ASX: HGG) was up 6.95 % to $2.00 at 3.25pm. Henderson is a London-based global investment company that also lists on the London Stock Exchange (LSE:HGG).

The day’s losers

Steelmaker, One Steel (ASX: OST) was down 4.53% to $1.16, while Evolution Mining (ASX: EVN) was down 4.59% to $1.765. Evolution Mining is an Australian gold mining company. It owns and operates four gold operations in Queensland and Western Australia. This continues a trend of gold miners losing value over the last week.

Sector movers

The strongest sector was the S&P/ASX 200 Information Technology (Sector) index which continued its gains of last week – up another 0.63% or 3.4 points to 545.3.

The biggest sector loser was the S&P/ASX 200 Industrials (Sector) index which fell 1.21% or 46.3 points to 3768.90.

Currency

The Australian dollar fell today. One Australian dollar was buying $US 1.0577 this afternoon at 3.50pm.

Asian markets

Japan – NIKKEI 225 was up slightly 0.12% or 12.16 points down to 10142.00.

Hong Kong – Hang Seng was also in the red 0.67% or 141.26 points to 20974.00.

Today, BHP Billiton told investors China’s demand for iron ore is slowing. Most Asian stock exchanges fell.

Further compounding fears about China’s economy, a specialist in banking economics and politics in China, Victor Shih, a professor from Northwestern University, told the Australian Financial Review today “we just don’t know the size of non-performing real estate loans in government-owned Chinese banks.”

“Even though the banks are making loans, a lot of smaller developers are getting into trouble because they are extremely highly leveraged. Then you have to ask yourself: Where is all the money going?” Shih says.

“A lot of new loans are going to roll over existing debt which is in fact non-performing. That is a financial black hole which eats up a sizeable share of new loans and new financing that is available in the system.”