September 13, 2017 7:07 pm JST

Chinese banks drag Hong Kong stocks from near two-week high

Property developers fall for second day on rise in US bond yields

HONG KONG (Nikkei Markets) -- Hong Kong shares retreated from their highest level in nearly two weeks on Wednesday, paced by losses for property developers and Chinese banks listed in the city.

The Hang Seng Index lost 0.3% to 27,894.08, coming off its highest close so far in September. Hang Lung Properties was the top decliner on the gauge, giving up 2%, and Sino Land shed 1.4%, after the yield on 10-year U.S. Treasury bonds rose to a two-week high on Tuesday. The four largest Chinese banks -- Industrial & Commercial Bank of China (ICBC), China Construction Bank (CCB), Agricultural Bank of China (ABC) and Bank of China (BOC) -- all declined to drag down a gauge of large mainland companies by 0.5%, its steepest fall in a week.

While some investors likely locked in recent gains, the day's losses were probably also influenced by some medium-term headwinds facing Hong Kong's real-estate sector, said Louis Tse, a director at VC Brokerage in Hong Kong.

Tse said the local market was affected by Hong Kong Chief Executive Carrie Lam's "advocation to build cheaper property units for young couples who can't afford to buy houses at the current market rate -- but that is in the medium term."

Lam recently pledged to help the city's residents buy their own homes amid climbing prices. Private home prices in Hong Kong are currently at record highs, according to government data, amid strong demand for housing and low interest rates. Borrowing costs in the city move in tandem with the U.S. because of the local currency's peg to the dollar.

Wednesday's equity losses in Hong Kong, as well as other regional markets, came despite positive overnight cues from Wall Street, where waning concerns over North Korea and the lower-than-expected impact from Hurricane Irma helped lift the S&P 500 to a record high. North Korea refrained from conducting a missile test over the weekend, as many had feared.

Still, geopolitical tensions were likely to persist, Tse said.

"We have to incorporate North Korea into our formula for investment" returns, he said. "Every time we have to bear in mind that it could be a pain in the neck."

The Nikkei Asia300 Index of some of the region's most influential companies outside Japan slipped 0.1%. Mainland equities edged higher, sending the Shanghai Composite up 0.2%, while its Shenzhen counterpart added 0.4%.

Apple suppliers listed in Hong Kong were mixed after the U.S. company unveiled three new versions of the iPhone on Tuesday to mark the smartphone's 10th anniversary. Acoustic components supplier AAC Technologies Holdings rose 1.3%, while Cowell E Holdings, a camera-module maker, tumbled 8.3%, paring gains this month to 18%.

Ourgame International Holdings surged 20% to HK$2.30 after the online cards-and-board-game developer said it will conditionally issue 89.2 million shares at HK$1.85 each to Total Victory Global, a company collectively owned by three of Ourgame's executives.

Truly International Holdings jumped 12.1% to HK$2.60 after saying it has signed agreements to raise more than HK$430 million ($55 million) by issuing new shares at HK$2.02 apiece.

Hopson Development Holdings fell 0.7% after reporting a 16.9% drop in contracted sales for the eight months to August from a year earlier.

-- Suzannah Benjamin and V. Phani Kumar

Asia300

Hang Lung Properties Ltd.

Hong Kong

Market(Ticker): HKG(101)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 10,201.87M
Shares: 4,497.57M
Asia300

Industrial & Commercial Bank of China Ltd.

China

Market(Ticker): HKG(1398)
Sector:
Industry:
Finance
Major Banks
Market cap(USD): 318,086.54M
Shares: 356,406.25M
Asia300

China Construction Bank Corp.

China

Market(Ticker): HKG(939)
Sector:
Industry:
Finance
Major Banks
Market cap(USD): 222,652.72M
Shares: 250,010.98M
Asia300

Agricultural Bank of China

China

Market(Ticker): HKG(1288)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 176,728.16M
Shares: 324,794.10M
Asia300

Bank of China Ltd.

China

Market(Ticker): HKG(3988)
Sector:
Industry:
Finance
Major Banks
Market cap(USD): 165,504.20M
Shares: 294,387.78M

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