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Hong Kong shares set to erase 2018 gains as sell-off deepens

Hang Seng Index tumbles below 30,000 as all 51-member stocks retreat

HONG KONG (Nikkei Markets) -- Hong Kong's Hang Seng Index on Friday fell below 30,000 for the first time this year, after indexes on Wall Street tumbled overnight as the specter of tightening monetary policy across the developed world worried investors.

The Hang Seng Index was down 3.3% to 29,436.73 by the noon lunchbreak, with all 51 constituents trading lower. Country Garden Holdings led losses on the gauge in percentage terms, dropping 6%. Tencent Holdings slid 3.3% to HK$406.20, after falling below HK$400 in the morning session for the first time since Dec. 21. Financial heavyweights Ping An Insurance Group, China Construction Bank (CCB) and HSBC Holdings shed 5.2%, 4.2% and 2.1%, respectively.

With Friday's drop, the Hang Seng Index gave up its gains for 2018, dropping 1.6% since the beginning of the year and poised to enter correction territory, generally defined as a decline of 10% from a high. The market has plunged more than 11% from its recent record closing high of 33,154.12. Losses in Hong Kong came along with other declines in Asia after the Dow Jones Industrial Average shed 4.2% overnight. The yield on 10-year U.S. Treasury notes climbed toward a four-year high after the Bank of England hinted at the need for faster rate increases. The U.S. Federal Reserve last week indicated that accelerating inflation in the world's largest economy would warrant tighter monetary policy.

"The Hong Kong equities market is suffering from losses as both U.S. equities and the A-share market are continuously weakening," said Jason Lee, vice president for stocks at investment consultancy Investment Strategy Institute in Hong Kong. "Investors should be cautious now," he said, adding that some blue chips, such as Tencent, are "a bit" attractive now.

In the mainland, the Shanghai Composite Index plunged 4.1%, heading for its worst single-day drop since February 2016. Its Shenzhen counterpart lost 2.6%. The onshore-traded yuan was little changed against the U.S. dollar at 6.3220.

Semiconductor Manufacturing International slid 3.8% after reporting a 54.1% drop in December quarter profit and a 3.4% decline in revenue.

Guangzhou R&F Properties tumbled 3.3% amid broader market losses. The developer on Thursday said it expects 2017 net profit to rise more than 190% from the previous year.

Longfor Properties fell 4.9%, trimming year-to-date gains to 8%. The developer said contracted sales for January rose 33% from a year earlier to 16.02 billion yuan ($2.54 billion).

SUNeVision Holdings, the technology arm of Hong Kong-listed developer Sun Hung Kai Properties, dropped 9.4%. The company on Thursday reported a 45% increase in profit for the six months ended Dec. 31. Sun Hung Kai Properties was down 3.1%.

Chinese property-management-services provider A-Living Services, a spinoff from Agile Group Holdings, tumbled 22.4% by the noon break as it made its trading debut in Hong Kong after raising 4.1 billion Hong Kong dollars ($524.3 million) in gross proceeds from an initial public offering. Agile shares had shed 6.9% by noon.

-- Amy Lam

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