HONG KONG (Nikkei Markets) -- Hong Kong shares headed higher on Friday, tracking gains in the rest of the region, after comments from a U.S. Federal Reserve official strengthened expectations for a larger rate cut later this month.
The Hang Seng Index rose 1.1% to 28,772.46 by noon after shedding 0.6% over the last two days. Insurance heavyweights AIA Group and Ping An Insurance Group added 2% and 1.5%, respectively. Ping An-backed Chinese online wealth management platform Lufax is planning to exit its peer-to-peer lending business, Reuters reported, citing three sources with direct knowledge of the matter.
Markets in the rest of Asia were also trading higher, with the Nikkei Asia300 Index adding 1.1%. New York Federal Reserve President John Williams during a speech on Thursday stressed the importance of acting "quickly to lower rates at the first sign of economic distress." The comments helped boost expectations for a 50-basis-point rate cut when the Fed meets to review policy on July 30 and 31.
The probability of a 50-basis-point interest rate cut by the Fed this month is currently at about 44%, according to CME's FedWatch Tool, up from 19.9% a week ago. The tool indicates a 100% probability of a rate cut at the meeting.
Lower interest rates in the U.S. tend to spark inflows into higher yielding riskier assets, including regional equities. The U.S. dollar index, measured against a basket of major currencies, declined 0.4% overnight.
"Emerging and Asian markets are experiencing more inflows this morning as investors prepare for a very accommodative monetary environment," said Ricky Huang, an analyst at Luk Fook Financial Service. "Yet, I think it is a very short-term catalyst, because the dollar may stabilize around this level."
In the mainland, the Shanghai Composite Index rose 1%, while yuan traded onshore added 0.1% to 6.8734 against the dollar.
Coolpad Group sank 44.4% as the mobile phone maker's stock resumed trading after a near 28-month halt. The company on Thursday said it had fulfilled all resumption conditions, including publishing outstanding financial results and conducting investigations to address issues that auditors had raised earlier.
Hong Kong-based railway operator MTR fell 2.1% after saying it will make a provision of 2 billion Hong Kong dollars ($255.91 million) for the six months ended June 30 toward costs related to the construction of a new line.
FIH Mobile advanced 3.6% after saying it expects a consolidated loss for the six months ended June 30 to narrow to about or below $85 million from $348.6 million a year ago.
China Railway Construction added 2.7% after the state-owned construction company reported a 28% jump in value for newly signed contracts for the second quarter.
Prosperity International Holdings jumped 10.3% as trading resumed after a two-week halt. The iron ore miner reported a loss of HK$1.83 billion for the year ended March 31, wider than the HK$961 million loss it reported the previous year.
Shanghai Fudan-Zhangjiang Bio-Pharmaceutical surged 10.5% after saying it expects net profit for the first half to rise more than 50% from a year ago.
-- Amy Lam