Tencent boosts Hong Kong shares to weekly gain amid Trump turmoil
HONG KONG (Nikkei Markets) -- Hong Kong shares edged higher this week after heavyweight Tencent Holdings clinched its longest weekly winning streak in four years on better-than-expected earnings, overshadowing a global selloff sparked by political turmoil in the U.S.
The Hang Seng Index ended 0.2% higher at 25,174.87 Friday, squeezing out a less than 0.1% advance for the week. Internet major Tencent advanced 1.9% to new life-time highs, extending gains for the week to 4% after March quarter results beat estimates. Cathay Pacific Airways rallied 3.9% this week after saying it is making "significant progress" on its restructuring and saying it saw an end to fuel hedging losses that have weighed on earnings in the past two years. The week's gains came even as MSCI said it plans to drop the airline from its Hong Kong index at the end of this month. The Hang Seng Index is up 14% for the year so far and is hovering close to 22-month highs.
Apple supplier AAC Technologies Holdings had its worst week in over a year, slumping 14% before trading was halted on Thursday. Short-seller Gotham City Research elaborated further on its doubts about the company's accounting practices and profit margins. The stock is down 27% in May so far, heading for its worst month since November 2008.
Investor sentiment was rattled this week as U.S. President Donald Trump's ability to push through his economic agenda came into question again after reports that he interfered with a federal investigation. The reports were another blow to the president who is already under fire for abruptly dismissing the nation's top law enforcement official, prompting Wall Street's worst single-session selloff in eight months and a spike in volatility.
"Tencent supported the index and I expect the stock to continue its trend," said Linus Yip, chief strategist at First Shanghai Securities. "For Hong Kong stocks, the Trump news is providing an excuse for consolidation. On the whole, Hong Kong stocks are still leaning higher."
In the mainland, the Shanghai Composite halted a five-week losing streak to end the week 0.2% higher.
BOCOM International Holdings, a unit of Bank of Communications, rose 1.9% from its initial public offering price to HK$2.73 in its maiden trading session. Bank of Communications fell 0.2%.
China Evergrande Group led a rally by mainland developers listed in Hong Kong on Friday, rising 9.1%. Standard & Poor's on Thursday raised its credit rating to B from B- and revised the outlook to stable from negative, citing the developer's improved liquidity. Country Garden Holdings jumped 6.1% Friday, while China Overseas Land & Investment and China Vanke added 1.4% each.
The rally, which came after a series of curbs by mainland policy makers to cool speculative activity, surprised some market participants.
The policy environment "still remains quite negative for China developers," said Steven Leung, executive director of institutional sales at UOB Kay Hian. "The only positive I see today is the Evergrande upgrade but I doubt that is leading to such a move."
Meanwhile, the Hong Kong Monetary Authority announced a set of rules further tightening mortgage financing in the city at the end of Friday's trading. The measures include an increase in the risk weighting by banks on new mortgages as well as a reduction in the loan-to-value amount that those with an existing mortgage can borrow.
"The risk of overheating in the property market in Hong Kong continues to increase," Norman Chan, Chief Executive of the HKMA, said in the statement. "The keen competition for mortgage business in the banking sector has heightened the risk of overheating in the property market, and weakened the resilience of banks to cope with a downturn in the market. Given these developments, the HKMA considers that there is a need to introduce new measures to strengthen the risk management of banks."
Insurer Prudential rose 2.6% on Friday in Hong Kong after reporting a 25% rise in first-quarter new business profit. The British company said the head of its Asian business Tony Wilkey is stepping down in July and will be replaced by group finance director Nic Nicandrou.
Glencore added 2.6%. The commodity trader has hired Standard Chartered to sell its stake in a coal terminal and coking coal mine in Australia, according to the Australian Business Review.
Logan Property Holdings climbed 2.4%. Its Singapore unit and Nanshan Group Singapore have together submitted the highest bid for a residential plot in the city-state of S$1 billion ($718 million), according to a statement from the country's Urban Redevelopment Authority.
Greenland Hong Kong Holdings, a Hong Kong-listed unit of Greenland Holdings, advanced 2.6% after saying its unit bought a 99% stake in Wujiang Shenying Real Estate Development.
Alibaba Health Information Technology surged 11% after saying it will buy nutritional supplement seller Ali JK Nutritional Products from its parent Alibaba Group Holding for HK$3.8 billion ($488 million).
The Nikkei Asia300 Index of more than 300 regional companies fell 0.2% on Friday.
-- 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.