March 14, 2017 7:50 pm JST

Hong Kong flat as Fed caution eats into China cheer

HONG KONG (NewsRise) -- Hong Kong shares ended flat on Tuesday after loitering around a two-week closing high in a choppy trading session as concern about rising U.S. borrowing costs offset gains for mainland companies in the wake of upbeat Chinese data.

The Hang Seng Index ended almost unchanged at 23,827.95 after changing direction multiple times. With members of the U.S. Federal Reserve's rate-setting committee set to go into a two-day meeting on policy rates later Tuesday, New World Development, Hang Lung Properties and Sun Hung Kai Properties each fell at least 1%. Separately, Bloomberg reported that Hong Kong's securities regulator is investigating whether realtors marketing overseas property are violating restrictions on the sale of investment plans.

The Federal Reserve is widely expected to raise interest rates by 25 basis points at its second policy review for 2017 as upbeat U.S. data and hopes of generous fiscal spending by President Donald Trump have improved the growth outlook for the world's largest economy. Interest rates in the U.S. influence the housing market in Hong Kong because of the city's currency peg to the dollar.

"What we have to watch out for is what Janet Yellen says at the press conference. If she adopts a very hawkish tone, it won't be good for equities, especially Hong Kong, and property stocks will be the most vulnerable," said Louis Tse, director at Hong Kong-based VC Brokerage. "I think anything which suggests more than three rate hikes this year may lead to a selloff."

The U.S. central bank last raised rates in December and has hinted at three increases in 2017.

The Hang Seng China Enterprises Index rose 0.6% Tuesday. In the mainland, the Shanghai Composite added less than 0.1% after data showing industrial production in the January-February period grew at a faster-than-expected clip. The onshore traded yuan slipped 0.03% to 6.9134 against the dollar.

Standard Chartered Bank expects the People's Bank of China to raise benchmark money-market rates by another 10 basis points shortly after the expected Fed funds rate hike.

Want Want China Holdings slid 1.4% after the snackmaker reported a 4% increase in 2016 net profit and a 7% decline in revenue.

Wynn Macau advanced 3.3%, leading other casino operators. Morgan Stanley reiterated its buy rating on U.S.-listed parent Wynn Resorts, saying Macau's casino revenues have started recovering after shrinking for years, according to Reuters. Galaxy Entertainment Group and Sands China, two of the gaming enclave's biggest casino operators, rose about 2% each.

Sunny Optical Technology Group slid 4% after an 11% two-day rally. The electronics component maker reported a 67% jump in 2016 net profit late Monday.

Belle International Holdings rose 1.5% to HK$5.36. Nomura upgraded the shoe retailer to "buy" and raised its price target to HK$7.50 on expectations that improved sentiment in China will help narrow a decline in fiscal fourth-quarter same-store sales.

China Pacific Insurance advanced 0.4% after reporting premium income of 70.7 billion yuan ($10.2 billion) in the January-February period.

Zhong An Real Estate slumped 5.8% after warning late Monday that net profit for 2016 likely decreased substantially.

Guangdong Yueyun Transportation tumbled 6.3%, clipping gains for the year to 41%. After markets closed Monday, the company said net profit for 2016 rose 27% to 336.6 million yuan.

--V. Phani Kumar and Nimesh Vora

Asia300

New World Development Co. Ltd.

Hong Kong

Market(Ticker): HKG(17)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 12,372.68M
Shares: 9,687.38M
Asia300

Hang Lung Properties Ltd.

Hong Kong

Market(Ticker): HKG(101)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 11,957.60M
Shares: 4,497.57M
Asia300

Sun Hung Kai Properties Ltd.

Hong Kong

Market(Ticker): HKG(16)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 42,833.79M
Shares: 2,895.48M
Asia300

Want Want China Holdings Ltd.

China

Market(Ticker): HKG(151)
Sector:
Industry:
Consumer Non-Durables
Food: Major Diversified
Market cap(USD): 8,217.06M
Shares: 12,514.12M
Asia300

Galaxy Entertainment Group Ltd.

Hong Kong

Market(Ticker): HKG(27)
Sector:
Industry:
Consumer Services
Casinos/Gaming
Market cap(USD): 22,954.85M
Shares: 4,275.55M

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