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Nikkei Markets

Hong Kong shares pull back as Chinese banks slide

CCB and BOC fall amid private-sector lending push, as all HSI constituents retreat

HONG KONG (Nikkei Markets) -- Hong Kong shares set course for their first decline in four days on Friday, driven by weakness in Chinese lenders after a push to boost private-sector lending in the mainland raised asset quality concerns.

The Hang Seng Index slid 2.4% to 25,601.15 by noon. All 50 of the gauge's constituents traded lower, with heavyweight Tencent Holdings contributing most to its losses by points with a 4% decline. Apple supplier AAC Technologies Holdings shed 4.8%, extending Thursday's 7% decline in the wake of weak third-quarter earnings. Analysts at Jefferies and Daiwa cut their price targets for the stock. AIA Group slid 1.2% amid broad market losses despite reporting a 17% increase in the value of new business for the third quarter.

China Construction Bank and Bank of China fell 2.4% and 2.3%, respectively. China Banking and Insurance Regulatory Commission Chairman Guo Shuqing called for an increase in credit support for China's private sector, suggesting that at least 50% of new corporate loans go to private companies in the next three years, according to an interview published on the Financial News website.

"Putting restrictions and a quantitative target is worrying, because it puts huge risk management challenges to banks. The market is worried that such an administrative order will have a negative impact on asset quality," said Eric Yuen, chief research analyst at Mason Securities. "I believe, though, the reaction may be overdone."

He said concerns over Sino-American trade relations, the U.S. Federal Reserve's increase rate outlook and a strengthening dollar continue to "haunt" the Hong Kong stock market.

All other equity benchmarks in the region retreated and the Nikkei Asia300 lost 1.7% after the U.S. dollar index jumped 0.8% overnight and the yield on 10-year U.S. Treasury notes climbed to 3.232%. The Fed maintained its outlook for further gradual rate increases even as it stood pat on rates. The central bank is widely expected to increase rates for a fourth time this year at its December meeting.

In the mainland, the Shanghai Composite lost 1.3%, while its Shenzhen counterpart fell 0.4%. The yuan traded onshore declined 0.2% to 6.9462 against the dollar. Data released Friday showed China's retail inflation came in at 2.5% for October, unchanged from September. Producer prices rose 3.3%, slowing from September's 3.6% increase.

Melco International Development shed 5.5% in Hong Kong after its U.S.-listed unit Melco Resorts & Entertainment reported a slump in third quarter net profit to $9.6 million from $115.9 million a year earlier. Net revenue fell 11.6%.

Smartphone components supplier Q Technology (Group) added 1.4% after reporting a 79.3% jump in total sales volume for camera modules in October.

Garment trading company YGM Trading rose 1.5% after saying a unit has agreed to sell property in Macau for HK$220 million ($28.1 million).

China Tian Lun Gas Holdings climbed 1.4% after saying a unit agreed to buy all of Shijiazhuang Jinming Gas for 265 million yuan ($38.2 million).

Hua Hong Semiconductor advanced 3.8% following a 36.7% jump in third quarter net profit and a 14.9% increase in revenue.

Luxury goods distributor Dickson Concepts (International) jumped 8% after saying it expects to record a "significant" increase in profit for six months ended Sept. 30 from a year ago.

Hanison Construction Holdings added 2.2% after forecasting an increase of up to 220% for net profit for the six months ended Sept. 30.

Mobile game company FingerTango jumped 23.7% after saying its chairman and controlling shareholder, Liu Jie, bought 89.6 million shares of company in open market on Thursday, increasing his stake to 55.39% from 50.91%. The company also said it was not aware of any reason for unusual price and trading volume on Thursday, when the stock slumped 62.8%.

-- Amy Lam

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