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Equities

Hong Kong stocks waver by midday amid global trade concerns

Samsonite jumps as trading resumes after response to short-seller's allegations

HONG KONG (Nikkei Markets) -- Hong Kong shares fell in the morning session on Friday, after swinging between gains and losses a few times, as investors weighed the consequences of global trade frictions.

The Hang Seng Index was down 0.2% to 30,417.36 by noon after changing directions at least six times during the morning session. Financial majors AIA Group and HSBC Holdings declined 1.3% and 0.7%, respectively. Internet major Tencent Holdings added 0.4%, while Ping An Insurance Group increased 0.7%.

The U.S. government on Thursday imposed import tariffs on steel and aluminum imports from Canada, Mexico and the European Union, triggering responses from those major trading partners. Canada and Mexico retaliated with duties of their own on shipments from the U.S., while the EU threatened to tax imports. The U.S., which also said recently it is pushing ahead with proposed tariffs on Chinese imports, has yet to resolve differences on trade terms with Beijing. U.S. Commerce Secretary Wilbur Ross will arrive in China for bilateral talks starting on Saturday.

"This is the first time that the Trump administration has imposed meaningful tariffs on imports from these major trading partners. Consequently, today's announcement marks a notable shift in policy," analysts at Nomura wrote in a report. "Moreover, this comes at a time of increased U.S.-China trade tensions with Commerce Secretary Ross' upcoming trip to Beijing."

While markets were on edge over the prospect that the moves and countermoves might escalate into a global trade war, some said any economic impact could potentially push back interest-rate increases by the U.S. Federal Reserve, helping riskier assets.

"Investors are getting used to Trump's decisions," said Steven Leung, executive director at UOB Kay Hian in Hong Kong. "If the Fed will have a more dovish attitude, it will be more positive to the stock market in the second half of June."

There is a more than 86% probability that the Fed will lift its benchmark interest rates by 0.25 percentage point at its policy meeting later this month, according to the CME's FedWatch tool.

The Shanghai Composite Index fell 0.5% and the Shenzhen Composite Index lost 0.9% in their morning sessions on Friday. The inclusion of yuan-denominated A-shares in MSCI's global indexes took effect on Friday.

Leung said it was unlikely that a large amount of foreign capital will flow into A-shares in the short-term, and that money flows over the longer term will depend on "China's fundamental factors."

Lifestyle International Holdings, which was included in MSCI's global small-cap indexes, was the biggest decliner on the Hong Kong stock exchange's main board on Friday, plunging 28.7%. The tumble follows a 43.3% surge on Thursday.

China First Capital Group, which has been added to the MSCI Global Standard Indexes and the MSCI China All Shares Index, plummeted 27.6%. The stock is still up more than 88% this year.

Luggage maker Samsonite International jumped 9.3% as trading resumed after it responded to recent allegations by short-seller Blue Orca Capital. The company said on Friday that the charges were one-sided and misleading. Furthermore, it said Chief Executive Officer Ramesh Tainwala had resigned and will be replaced by Executive Director Kyle Francis Gendreau.

China Grand Pharmaceutical & Healthcare Holdings added 3.7%, after a unit agreed to acquire Shanghai Winguide Huangpu Pharmaceutical for about 1.55 billion yuan ($241.8 million).

-- Carrie Chen

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