HONG KONG (Nikkei Markets) -- Hong Kong shares extended losses on Thursday as the U.S. moved closer to enacting a bill that seeks to re-examine the city's autonomy from time to time, threatening to upset Sino-American trade talks.
The Hang Seng Index fell 1.6% to 26,456.23 by noon, with forty-seven of the gauge's 50 constituents trading lower.
Internet services company Tencent Holdings declined 1.9% while insurer AIA Group dropped 1.7%. Both stocks contributed nearly quarter of the index's losses by points. China Unicom (Hong Kong) shed 1.9% after saying it lost 2.61 million mobile billing subscribers in October.
The U.S. House of Representatives on Wednesday passed the Hong Kong Human Rights and Democracy Act. The legislation, if enacted, will require Washington to assess annually whether the former British colony enjoyed sufficient autonomy to warrant its special status under American laws. The Senate had unanimously passed the bill on Tuesday, a decision that prompted Beijing to say Washington should stop interfering with Hong Kong and China's affairs.
President Donald Trump is likely to sign the bill into a law, Bloomberg and Reuters reported, citing persons familiar with the matter.
"Sentiment has changed," said Steven Wong, an investment analyst at Harris Fraser Group. "The market now thinks there is a chance the U.S. and China will not reach an agreement."
In the mainland, the Shanghai Composite Index slipped 0.4%, while the yuan traded onshore shed 0.1% against the dollar to 7.0383.
Shares of Kasen International Holdings plunged 90.1% in Hong Kong after short-seller Blue Orca Capital issued a report on Thursday on the upholstered furniture maker and property developer. Blue Orca said it had gone short on the stock, adding that an "extensive investigation" into the company suggested financial impropriety. The short-seller described the stock as "simply uninvestable."
Meanwhile, trading in the shares of marble processing company ArtGo Holdings was halted after they slumped 98%. The plunge followed index compiler MSCI's decision to reverse a plan to include the company in its equity bench marks.
Property developer China South City Holdings declined 3.2% following a 25.9% drop in profit for the six months ended in September.
Truly International Holdings climbed 6.9% after the liquid-crystal display products maker said it expects consolidated net profit for the January-to-September period to have increased more than tenfold.