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=ASIA MARKETS: Hong Kong Stocks Slip Amid Concerns About US Yields And North Korea

HONG KONG (May 16) -- Hong Kong shares fell on Wednesday morning, tracking losses across Asian equity markets, as U.S. Treasury yields climbed to seven-year highs.

The Hang Seng Index slipped 0.1% to 31,116.35, after dropping as much as 1.1% in the early minutes of the trading day. Internet major Tencent Holdings, which is due to report first-quarter earnings late in the day, lost 0.5%, adding to a 3.4% slide on Tuesday.

Hong Kong-based lenders Bank of East Asia and Hang Seng Bank fell 1.5% and 1.1%, respectively. Apple supplier AAC Technologies Holdings added 1.5% while heavyweight Ping An Insurance Group rose 0.5%.

Sun Hung Kai Properties dropped 1%. The property developer on Tuesday said it had won a land auction in Hong Kong with a HK$25.16 billion ($3.20 billion) bid.

All three Wall Street equity indexes retreated on Tuesday after a string of recent advances as the yield on 10-year U.S. Treasury bonds climbed to 3.07%. Data released overnight showed U.S. retail sales rose 0.3% in April while numbers for March were revised higher, feeding speculation that the Federal Reserve may accelerate interest rate increases.

Ben Kwong, executive director of KGI Asia in Hong Kong, said the pullback in Hong Kong was normal following the Hang Seng Index’s recent six-day rising streak. “Since Hong Kong is more sensitive to changes in U.S. interest rates, the rising 10-year Treasury yield as well as the Hong Kong Monetary Association’s intervention yesterday has resulted in investors being more cautious,” he said.

The Hong Kong dollar hit 7.85 against the greenback on Tuesday, the lower end of a band within which it trades, prompting intervention by the city’s de facto central bank. The currency was last at 7.8498 against the U.S. dollar on Wednesday.

The Nikkei Asia300 Index was down 0.5% on Wednesday morning while the Shanghai Composite lost 0.3%. Risk sentiment was affected by North Korea’s cancellation of planned talks on Wednesday with South Korea, which raised doubts about a planned summit with U.S. President Donald Trump in Singapore next month. Kim Kye Gwan, North Korean first vice foreign minister, said the country has no interest in a summit with the U.S. if it is based on “one-sided” demands to give up nuclear weapons.

China Gold International Resources tumbled 7% as its first-quarter net profit after income taxes fell to $2 million from $6.4 million a year earlier. Revenue for the period increased 30% to $106.7 million.

Car rental-services company CAR climbed 5.9% after it reported a 9% increase in first-quarter profit to 229 million yuan ($36 million) even as revenue for the period slipped 4% to 1.60 billion yuan.

Publishing company Media Chinese International fell 4.1% on expectations it would record a loss in the year ended March.

Perfect Shape Beauty Technology jumped 16.5% as the slimming and beauty services provider said it expects operating profit for year ended March 31 to have more than doubled.

- By Carrie Chen;; +852 39605150
- Edited by Suzannah Benjamin
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