=ASIA MARKETS: Hong Kong Shares Set To Snap Winning Streak On Trade Worries
HONG KONG (Jun 12) -- Hong Kong shares headed for their first decline in five days on Wednesday, weighed down by losses for Chinese companies amid mounting concern over Sino-American trade tensions.
The Hang Seng Index had lost 1.6% to 27,348.52 by noon after rising 3.8% over the last four trading days. Social media and gaming major Tencent Holdings declined 2.2%, while financial heavyweights AIA Group and HSBC Holdings shed 2.3% and 1.3%, respectively.
Sunny Optical Technology Group fell 6.5%. The smartphone component maker on Tuesday reported a 38.7% increase in May shipment volumes for handset lens sets. Goldman Sachs said gross margins were likely to be weighed amid rising competition and higher demand for low-end lenses. AAC Technologies Holdings, also a supplier to smartphone makers, declined 4.7%.
U.S. Commerce Secretary Wilbur Ross on Tuesday said U.S. President Donald Trump and China’s Xi Jinping will not strike a “definitive deal” on trade at a meeting expected at an upcoming G20 summit in Japan this month. His comments come a day after Trump said he would impose more tariffs on Chinese goods if a meeting between the two presidents does not take place at the summit.
“The messages are a bit confusing,” said Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai. “But it seems both sides are still in a standoff, and the market does not have hopes at all for a trade deal at the end of the month.”
The Hang Seng Index was leading losses in the region by noon, as thousands occupied streets near Hong Kong’s government offices on Wednesday morning. They were protesting a controversial bill that would allow people to be extradited to China.
The Legislative Council’s debate scheduled for 11 a.m. on Wednesday was delayed because of the protests.
The U.S. on Tuesday expressed “grave concern” over the extradition bill, and said it puts the city’s special status at risk.
The U.S. threat of revoking Hong Kong’s special status is having a “psychological effect” on equities today, said Eddie Tam, chief investment officer at Central Asset Investments. “Yet, earnings impact is limited, because there are very few big companies doing U.S.-Hong Kong trade exclusively.”
The U.S. grants Hong Kong a special status, allowing the city to be treated as a non-sovereign entity separate from China for trade and economic matters under U.S. law.
Everbright Sun Hung Kai’s Wen said the impact was “quite hard to quantify” at present.
In the mainland, the Shanghai Composite Index fell 0.6% by the midday break. The yuan traded onshore declined 0.1% to 6.9154 against the dollar. In the rest of Asia, the FTSE Bursa Malaysia KLCI shed 0.3%, while Singapore’s Straits Times Index edged 0.2% higher.
Standard Chartered fell 2.6% in Hong Kong. The lender on Wednesday said it had temporarily suspended operations at two branches in Hong Kong’s Admiralty district due to severe traffic disruption in the area.
Mainland developer China Resources Land edged 0.9% lower even as it reported a 36.3% increase in contracted sales for May.
Railway construction-related products maker Hebei Yichen Industrial Group slumped 10% despite reporting a 2.3% increase in net profit for the year ended Dec. 31.
- By Amy Lam; firstname.lastname@example.org; +852 3960 5150
- Edited By Suzannah Benjamin
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