Hong Kong shares fall as Trump anxiety saps risk appetite
HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower for a second day as reports of interference by U.S. President Donald Trump with a federal investigation raised concerns that his economic agenda may be eclipsed.
The Hang Seng Index had fallen 0.3% to 25,268.11 by midday. HSBC Holdings lost 0.9% after U.S. 10-year bond yields declined to two-week lows. The lender is one of seven banks being probed by Mexican authorities for manipulating bond prices, according to a Bloomberg report.
Real estate companies broadly advanced, with Wharf Holdings adding 1.8% and Cheung Kong Property Holdings rising 0.6%. Henderson Land Development fell 1.3% after the developer paid a record HK$23.3 billion ($3 billion) for a redevelopment site in Hong Kong's Central financial district with a maximum gross floor area of about 465,000 square feet.
U.S. equity futures pointed to a weaker opening on Wall Street Wednesday and the dollar index fell to six-month lows following reports that Trump tried to stop a probe into former national security advisor Michael Flynn's links with Russia. Trump in February asked James Comey, then director of the Federal Bureau of Investigation, to close the Flynn investigation, according to the Financial Times. The report cited a memo written by Comey, who was abruptly fired by the president last week.
The Japanese yen and gold, considered to be safe-haven assets, rose as investors turned risk averse.
"The rally in global equity markets this year has been riding on hopes of Trump's policies, especially tax reforms, and now I think we could have a bit of adjustment in those expectations," said Francis Lun, chief executive officer at Geo Securities. "The risk is that the focus moves away from the economy on account of all this chaos."
In the mainland, the Shanghai Composite slipped 0.1% and the onshore traded yuan lost almost 0.1% to reach 6.8871 against the dollar.
China's central bank and the Hong Kong Monetary Authority on Tuesday approved a bond trading link between the city and the mainland, providing overseas investors new access to China's $9.4 trillion debt market. Mainland investors will gain access to Hong Kong bonds on a later date.
Tencent Holdings added 0.3% ahead of its earnings release later Wednesday. The Chinese internet company on Tuesday said U.S.-based Universal Music Group and Tencent Music Entertainment Group reached an agreement to distribute content in China.
Lenovo Group rose 1.4% after falling as much as 0.8% earlier. The personal computer-maker's chairman late Tuesday said the company plans to restructure its China business, reorganizing itself into a PC-and-smart devices unit and a data center group.
Alibaba Health Information Technology, a unit of U.S.-listed Alibaba Group Holding, jumped 8.3% in Hong Kong after the group's adjusted net loss for the year ended March 31 narrowed 39% from a year earlier.
Shanghai Fosun Pharmaceutical Group, a unit of Fosun International, sank 6.4% to HK$29.05 after it announced plans to sell 55 million shares at HK$28.80 apiece.
Cosco Shipping Holdings rose 2.1% in Hong Kong after saying it received notice that China Cosco Shipping is proposing "certain material matters" which may involve the company. Trading in Cosco Shipping's A-shares was halted.
People's Insurance Group of China added 2.8% after announcing plans to file for an initial public offering of up to 4.6 billion shares on the Shanghai Stock Exchange.
Texwinca Holdings slumped almost 8% in a second day of losses after saying it expects profit after tax to fall about 60% for the year that ended March 31.
-- Nimesh Vora and V.Phani Kumar
--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.