HONG KONG (Nikkei Markets) -- Hong Kong shares headed for their first loss in three days on Tuesday, as concerns over a slowdown in global growth weighed on risk appetite.
The Hang Seng Index fell 1% to 26,921.49 by noon after rising 1.6% over the last two days. Internet services major Tencent Holdings declined 1.9%, setting course for its first loss in six days. China's broadcasting regulator on Tuesday approved the release of a third batch of video games after imposing a ban last year amid growing concerns over gaming addiction. A list released by the State Administration of Press, Publication, Radio, Film and Television did not include any titles from Tencent.
PetroChina slid 2.1% despite saying it expects profit for 2018 to have more than doubled to about 28 billion yuan ($4.12 billion) to 30 billion yuan. PetroChina said it disposed of certain oil and gas assets and fixed assets that met conditions to be scrapped during 2018. Excluding a nonrecurring loss, profit would increase up to 40 billion yuan, the company said.
Worries over a widespread economic slowdown grew after the International Monetary Fund on Monday trimmed its outlook for global growth in 2019 and 2020 to 3.5% and 3.6%, respectively. The forecasts were down by 0.2 and 0.3 percentage points, respectively, from the IMF's last forecast in October. The move came on a day when China reported a decline in gross domestic product for the December quarter, fueling expectations of more state support from Beijing.
While U.S. equity markets were closed on Monday for a holiday, futures pointed to a weaker opening on Wall Street on Tuesday. The Japanese yen, considered a safe-haven asset, climbed 0.2% against the dollar.
The Hang Seng Index's recent three-week rally priced in "in advance some future policy support from Beijing," said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong, adding however that "even though policy support is (rising), it is hard to say if economic data will improve soon enough."
Hong Kong's main equity gauge is up 5.2% in January as of Monday's close.
Yip expects a retreat for the Hang Seng Index over the next few days, "but it will be slow" amid hopes of policy support and optimism over U.S.-China trade talks.
The U.S. and China are in the midst of a 90-day truce during which they have agreed to hold off from imposing any further tariffs on goods they import from each other. Chinese Vice Premier Liu He will visit the U.S. over Jan. 30 and 31 for the next scheduled round of trade talks.
The two nations have so far made "little progress" on the issue of China's stance toward American intellectual property, Bloomberg reported, citing people close to the discussions. Any deal President Donald Trump strikes with China may ultimately be judged on this issue, the report said.
In the mainland, the Shanghai Composite Index lost 0.7% by midday, while the yuan traded onshore slipped 0.1% to 6.8014 against the dollar.
Information technology company New Sports Group jumped 14.3% in Hong Kong after technology products maker China Goldjoy Group said a unit has agreed to buy 1.51 billion shares, or a 37.18% stake, in New Sports. China Goldjoy, which already owns 29.26% of New Sports, plans to settle the deal by issuing 1.51 billion new China Goldjoy shares, or 5.83% of its existing share capital. China Goldjoy shares were down 8.1%.
Property investor Great Wall Pan Asia Holdings rose 1.2% after saying it expects net profit for 2018 to have increased up to 150% from a year ago.
China Strategic Holdings jumped 13% after forecasting a "significant" increase in profit for last year. The securities investor and money lender reported a profit of about HK$126.2 million ($16.1 million) in 2017.
Shanghai Fudan-Zhangjiang Bio-Pharmaceutical added 1.4%. The company on Monday said it expects profit for 2018 to have increased by more than 50% from a year ago.
-- Amy Lam