HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Wednesday morning, tracking weakness across regional stock markets, as rising bond yields in the U.S. fueled concern that the appetite for relatively riskier assets may wane.
The Hang Seng Index had shed 0.8% to 30,378.89 by the noon lunchbreak, after rising 1.3% on Tuesday. Meat processor WH Group slumped 8.9%, leading losses on the index in percentage terms, after reporting 22% growth in first-quarter net profit that missed some analysts' expectations. Nomura maintained its "buy" rating on the stock, saying expectations of strong growth of the company's packaged meat segment will likely offset weakness at its U.S. fresh pork business.
Thirty-seven of the main index's 50 constituents traded lower. Social-media and gaming major Tencent Holdings dropped 2.2%, while mainland financial heavyweights China Construction Bank (CCB), Industrial & Commercial Bank of China (ICBC) and Ping An Insurance Group shed 1.1%, 0.9% and 1.2%, respectively.
Losses in Hong Kong came alongside the rest of Asia after all three equity benchmarks on Wall Street closed lower on Tuesday, shedding 1.3% or more, as bond yields rose for a fifth consecutive day. The 10-year U.S. Treasury yield climbed to 3.003% intraday on Tuesday, its highest level since January 2014, before settling at 2.983%.
Irene Chow, senior China and Hong Kong equity analyst at Julius Baer, said investors are starting to expect more frequent rate increases from the U.S. Federal Reserve as rising oil prices push up inflation expectations. This could "change the yield curve for 2018 and 2019, which some investors worry may cause an economic slowdown in 2019, thus reducing their risk appetite," she said.
Chow said uncertainties surrounding a possible U.S. and China trade war and the global economic cycle are driving low investor participation in Hong Kong. Turnover on the city's main board, which has been weaker than usual in recent sessions, was about 51 billion Hong Kong dollars ($6.5 billion) by noon.
In the mainland, the Shanghai Composite Index fell 0.3%, while its Shenzhen counterpart edged 0.1% higher. The Nikkei Asia300 Index of regional companies dropped 0.9%.
Great Wall Motor jumped 6.6% in Hong Kong after reporting a 6.5% increase in first-quarter net profit to 2.08 billion yuan ($329.6 million) and a 14% increase in revenue. Analysts at Nomura were expecting a double-digit drop in net profit for the period.
BAIC Motor slumped 9.4% to HK$7.77 after the Chinese automaker said it is placing 420 million new H-shares with at least six parties at HK$7.89 apiece to raise a net HK$3.27 billion.
Snack maker Want Want China Holdings added 4.5% to HK$7.27. Credit Suisse raised the stock's rating to "outperform" from "neutral," and its target price to HK$9.10 from HK$6.00. The bank cited its "strong earnings rebound, which is underestimated by the market, and attractive valuation."
Wynn Macau fell 3.6% despite reporting a more than doubling of its first-quarter net profit to $227.1 million. Revenue increased 26.7% to $1.28 billion. Bernstein, which has a market-perform rating on the stock, said the company did not disappoint in the first quarter, "delivering on expectations, but not surprising on the upside."
-- Amy Lam