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Nikkei Markets

Hong Kong shares slip amid worries about more US tariffs

Chinese automakers rise after report of tax cuts for car purchases

HONG KONG (Nikkei Markets) -- Hong Kong shares edged lower on Tuesday as investors weighed the possibility of the U.S. imposing import tariffs on all shipments from China.

The Hang Seng Index slipped 0.2% to 24,769.77 by noon after changing direction at least six times. BOC Hong Kong Holdings slid 4.4%, leading percentage losses on the gauge, after the lender reported a 4% decrease in third-quarter operating profit. Bank of China (BOC) added 1.5% following a 5.7% increase in third quarter profit while Ping An Insurance Group climbed 1% after reporting a 19.7% increase in profit for the January to September period.

Hong Kong's main equity gauge had fallen as much as 1.1% earlier after U.S. equity indexes extended losses on Monday amid fresh concerns that Sino-American trade tensions were set to escalate. The U.S. is preparing to announce tariffs on all Chinese imports by early December if talks between presidents Donald Trump and Xi Jinping fail to ease the trade war, Bloomberg reported Monday, citing three people familiar with the matter.

Washington and Beijing have already imposed three rounds of punitive trade tariffs on goods from each other in a monthslong trade spat weighed on global risk appetite.

Local market conditions are "not so good, especially after a number of companies reported disappointing third-quarter results," said Stanley Chik, head of research at Bright Smart Securities in Hong Kong. "If unpredictability in outside markets continues and the A-share market does not recover, the Hang Seng Index may go down to test a lower support at 24,000 level in near term."

In the mainland, the Shanghai Composite added 0.7%, while the yuan fell 0.1% to 6.9676 against the dollar. China's main equity benchmark is down 9.3% in October so far.

Chinese automakers listed in Hong Kong advanced, with Great Wall Motor and Geely Automobile Holdings rising 8.1% and 2.5%, respectively. Guangzhou Automobile Group, which reported a 6.1% increase in third-quarter profit on Monday, jumped 5.7%. The gains for the sector came after Bloomberg reported, citing people familiar with the matter, that China is considering cutting taxes levied on car purchases by 50%.

Electric carmaker BYD slid 4.6% after reporting a 1.9% decrease in third-quarter profit and saying it expects profit for 2018 to fall by as much as 32.8% from a year ago.

Analysts at Jefferies said they expect the potential policy to "reverse the weakening trend of the car market" and help ease market concerns.

China Telecom fell 4.2%. The telecommunications operator on Monday reported a 2.7% increase in net profit for the January to September period. That was slower than the 5.5% on-year increase it had reported for the year-ago period.

Building materials maker BBMG slid 3.6% following an 8.6% decline in third-quarter net profit from a year ago.

Anhui Expressway fell 0.5% following a 2.8% decrease in net profit for the third quarter.

Kingmaker Footwear Holdings plunged 8.3% after forecasting an 85% decline in profit for the six months ended in September.

Guangzhou Baiyunshan Pharmaceutical Holdings jumped 13.9% after reporting a more than doubling of its third-quarter net profit and a 210% surge in revenue.

--Amy Lam

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