Hong Kong shares head for third decline on Trump worries, while Tencent rallies
HONG KONG (Nikkei Markets) -- Hong Kong shares set course for a third day lower as mounting U.S. political turmoil sparked Wall Street's worst selloff in eight months and fuelled a wave of risk aversion. A rally in heavyweight Tencent Holdings after forecast-beating March quarter results helped prevent deeper losses.
The Hang Seng Index fell 0.2% to 25,234.34 by midday, after dropping as much as 1.1% earlier. HSBC Holdings fell 1% as safe-haven demand lifted U.S. bonds, sending the 10-year bond yield to a one-month low. Tencent jumped 3.9% to HK$270, a fresh record, after net profit and revenue beat the highest estimate of analysts polled by Bloomberg. The technology giant reported a 58% surge in first-quarter net profit and a 55% increase in revenues after markets closed on Wednesday. Among analysts who raised their target price for the stock after the results, HSBC increased it from HK$238 to HK$290, and Nomura from HK$260 to HK$301.
The Dow Jones Industrial Average and the S&P 500 slumped 1.8% overnight as reports about U.S. President Donald Trump's interference in a federal investigation deepened concerns about his ability to push through his economic agenda. The news followed Trump's abrupt dismissal of Federal Bureau of Investigation Director James Comey and allegations the president disclosed sensitive information to a Russian diplomat. The U.S. Justice Department on Wednesday appointed former FBI chief Robert Mueller as special counsel to probe alleged Russian interference in the 2016 presidential election and the U.S. Senate Intelligence Committee has invited Comey to testify on the Flynn investigation, according the New York Times.
"Investors are obviously a bit afraid presently. U.S. markets had seen a strong run up mainly on hopes of policy support from Trump and now that is looking more and more doubtful," said Sam Chi-yung, senior strategist at South China Financial Group. "It is still early to say that we will see an extended period of declines, and a lot will clearly depend on the extent of how much U.S. markets are worried over Trump's future."
The Nikkei Asia300 Index of more than 300 companies in the region was down 0.2%.
In the mainland, the Shanghai Composite and its Shenzhen counterpart shed at least 0.1%.
Cathay Pacific Airways rose 3.2%, adding to Wednesday's rally. Chairman John Slosar on Wednesday told shareholders the airline expects losses on fuel hedging to end in 18 months and that it had made "significant" progress in restructuring, The Standard reported.
Swire Properties, a subsidiary of Swire Pacific, rose 0.8% after saying overall occupancy for its Hong Kong offices was at about 100%.
China Unicom Hong Kong slid 2.3% after its parent China United Network Communications uncovered "widespread falsification of new business to inflate revenue" in the Shaanxi province, Caixin reported, citing multiple company sources.
Johnson Electric Holdings jumped 8.3% after reporting a 38% increase in net profit for the year ended March 31.
People's Insurance Group of China fell 0.9% amid broader market losses. The insurer said aggregate premium income for January to April rose 2.5%.
Sunac China Holdings rose 2.7% to HK$10.58 after Nomura raised its target price to HK$12.5 from HK$10.30, saying it had turned more positive on the developer after an in-depth analysis of its land bank.
Boyaa Interactive International surged 7.8% after the online card-and-board game maker's preliminary profit attributable to owners rose 13.5% in the March quarter.
TPV Technology plunged 8.2%. The television-and-monitor maker late Wednesday said it swung to a profit for the March quarter, but revenue fell 5.9%. The stock is up 45% in 2017 so far.
Dan Form Holdings slumped 10% as trading resumed for the first time in more than five months after the property investor said its public float has been restored at more than 25%.
-- 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.