HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Wednesday, as worries over Sino-American trade relations were reignited after the U.S. Senate passed legislation that would require an annual review of the special treatment the city receives under American law.
The Hang Seng Index was down 0.6% to 26,924.18 by noon. Heavyweight insurers AIA Group and Ping An Insurance Group fell 1.7% and 0.7%, respectively. Snack maker Want Want China Holdings, which rose 4.5% on Tuesday following an increase in its fiscal first-half profit, declined 3.6%.
Offshore oil producer CNOOC slipped 1.3%. The company late Tuesday said Xu Keqiang was appointed chief executive officer, effective immediately.
The U.S. Senate on Tuesday unanimously passed the Hong Kong Human Rights and Democracy Act, a legislation that would require Washington to assess annually whether the former British colony enjoyed sufficient autonomy to warrant its special status under American laws. The bill will now go to the House of Representatives for approval before it can be sent to President Donald Trump for enactment. The move came at a time when Hong Kong is in the midst of social turmoil following months of anti-government protests.
U.S. Vice President Mike Pence on Tuesday said a deal with China would be difficult if demonstrations in Hong Kong are not treated "properly" or "humanely" by Beijing. Meanwhile, China's foreign ministry on Wednesday issued a statement condemning the U.S. Senate's move, adding that Washington should stop interfering in Hong Kong and Chinese affairs.
The passage of the bill casts uncertainty over a trade deal, said Thomas Fung, chief investment officer at China Rise Securities Asset Management. However, in the long term, the bill is "actually a good thing, as it brings more international scrutiny."
Separately, Trump said at a cabinet meeting on Tuesday that tariffs on Chinese goods could be raised if a deal does not take place.
In the mainland, the Shanghai Composite Index slipped 0.4% by midday. The People's Bank of China's one-year loan prime rate, the benchmark for mortgage rates in the country, fell to 4.15% on Wednesday from 4.2%, based on quotations provided by banks. Earlier this week, the PBOC lowered its seven-day reverse repo rate to 2.5% from 2.55%.
Snack-food maker Zhou Hei Ya International Holdings added 3.2% in Hong Kong. The company on Tuesday said it had entered a franchise agreement in the Guangxi autonomous region in China to expand its business. The stock jumped 21.9% on Tuesday before trading was halted.
Magnus Concordia Group jumped 5.9% after the printing company said it expects to report a profit of at least 30 million Hong Kong dollars ($3.83 million) for the six months ended Sept. 30, compared with HK$4 million a year ago.
-- Benny Kung