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Equities

Hong Kong stocks tumble, erasing this year's gains

Local currency trading at weakest level in at least 20 years

HONG KONG (Nikkei Markets) -- Hong Kong stocks tumbled on Monday, erasing all gains on the main index this year, as worries over trade tensions between the U.S. and China weighed on sentiment.

The benchmark Hang Seng Index slid 2.3% to 29,886.39, its steepest single-day percentage loss in more than three weeks. The gauge, which jumped nearly 10% in January, is now down 0.1% for 2018. All but one of its 50 constituents ended in the red on Monday, with Apple supplier Sunny Optical Technology Group rising 0.9% after the iPhone maker climbed in U.S. trading on Friday. 

The Hong Kong dollar, which is pegged to a range of 7.75 to 7.85 against the U.S. dollar, weakened to 7.8316 against the U.S. dollar, its weakest level in at least two decades, amid the sell-off.

Mobile-services provider China Unicom (Hong Kong) sank 5.9% and Hang Seng Bank lost 3.6%, the biggest percentage decliners on the index. Heavyweights Tencent Holdings fell 2.5% and insurer AIA Group gave up 2.9%.

Concerns that import tariffs on metals suggested by U.S. President Donald Trump might evoke a tit-for-tat response from countries including China weighed on investors' minds. Muted inflows from China over the trading links with Shanghai and Shenzhen appeared to amplify the selling pressure.

Mainland Chinese markets were more stable, with the Shanghai Composite Index gaining 0.1% and its Shenzhen counterpart adding 0.5%. Premier Li Keqiang on Monday unveiled a growth target of 6.5% for China's economy in 2018.

Mark Ng, executive director at China Demeter Financial Investment, cited speculation that authorities were trying to stabilize the mainland markets during the ongoing sessions of the National People's Congress and the Chinese People's Political Consultative Conference meetings -- the nation's parliament and the top political advisory body, respectively -- as a factor that likely led to increased selling in Hong Kong.

There is a possibility that the Hang Seng Index will only find a bottom near 28,000, he said.

Wharf Real Estate Investment Co. fell 1.8% in the weak market even as the company reported a 74% jump in 2017 net profit, driven by valuation gains amid higher property prices and an increase in rental revenue. Group company Wharf Holdings dropped 2.1% on its first trading day after being excluded from the Hang Seng Index. Wheelock, their main shareholder, lost 1.5%.

Sun Art Retail Holding, in which e-commerce major Alibaba Group Holding holds a 37% stake, plunged 9.7%, its steepest percentage drop in more than a year, despite reporting an 8.6% increase in 2017 net profit. Morgan Stanley, which has an overweight rating on the stock, wrote in a note that the company's earnings and "fundamental performance" looked weaker than its estimates.

Property developer CIFI Holdings added 2.7% after saying its contracted sales for the first two months of the year rose about 20% from the year-earlier period.

-- Carrie Chen and Amy Lam

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