ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Nikkei Markets

Hong Kong shares set to snap winning streak on trade worries

Sunny Optical slides despite higher May shipments

HONG KONG (Nikkei Markets) -- Hong Kong shares headed for their first decline in five days on Wednesday, weighed down by losses for Chinese companies amid mounting concern over Sino-American trade tensions.

The Hang Seng Index was down 1.6% to 27,348.52 by noon after rising 3.8% over the past four trading days. Social media and gaming major Tencent Holdings declined 2.2%, while financial heavyweights AIA Group and HSBC Holdings shed 2.3% and 1.3%, respectively.

Sunny Optical Technology Group fell 6.5%. The smartphone component maker on Tuesday reported a 38.7% increase in May shipment volumes for handset lens sets. Goldman Sachs said gross margins were likely to be weighed amid rising competition and higher demand for low-end lenses. AAC Technologies Holdings, also a supplier to smartphone makers, declined 4.7%.

U.S. Commerce Secretary Wilbur Ross on Tuesday said U.S. President Donald Trump and China's Xi Jinping will not strike a "definitive deal" on trade at a meeting expected at the upcoming Group of 20 summit in Japan this month. His comments come a day after Trump said he would impose more tariffs on Chinese goods if a meeting between the two presidents does not take place at the summit.

"The messages are a bit confusing," said Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai. "But it seems both sides are still in a standoff, and the market does not have hopes at all for a trade deal at the end of the month."

The Hang Seng Index was leading losses in the region by noon, as thousands of demonstrators occupied streets near Hong Kong's government offices on Wednesday morning. They were protesting against a controversial bill that would allow people to be extradited to China. The Legislative Council's debate scheduled for 11 a.m. on Wednesday was delayed because of the protests.

The U.S. on Tuesday expressed "grave concern" over the extradition bill, and said it puts the city's special status at risk.

The U.S. threat of revoking Hong Kong's special status is having a "psychological effect" on equities today, said Eddie Tam, chief investment officer at Central Asset Investments. "Yet, earnings impact is limited, because there are very few big companies doing U.S.-Hong Kong trade exclusively."

The U.S. grants Hong Kong a special status, allowing the city to be treated as a nonsovereign entity separate from China for trade and economic matters under U.S. law.

Everbright Sun Hung Kai's Wen said the impact was "quite hard to quantify" at present.

In the mainland, the Shanghai Composite Index was down 0.6% by the midday break. The yuan traded onshore declined 0.1% to 6.9154 against the dollar.

Standard Chartered fell 2.6% in Hong Kong. The lender on Wednesday said it had temporarily suspended operations at two branches in Hong Kong's Admiralty district due to severe traffic disruption in the area.

Mainland developer China Resources Land edged 0.9% lower even as it reported a 36.3% increase in contracted sales for May.

Railway construction-related products maker Hebei Yichen Industrial Group slumped 10% despite reporting a 2.3% increase in net profit for the year ended Dec. 31.

-- Amy Lam

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media