HONG KONG (Nikkei Markets) -- Hong Kong shares fell for a third day on Thursday as persistent weakness in the local currency and rising U.S. bond yields overshadowed an earnings-driven rally for heavyweight Tencent Holdings.
The Hang Seng Index fell 0.5% to 31,942.15, after a choppy morning session during which it changed direction several times. Financial stocks were the main drag on the market, with China Construction Bank and Industrial & Commercial Bank of China shedding 1.7% and 1.9%, respectively, while insurer AIA Group fell 1.3%.
Social-media and gaming major Tencent, the most-valuable company listed in Hong Kong, rose 3.7% after reporting a better-than-expected 61% surge in March quarter net profit and a 48% increase in revenue. It rose more than 7% earlier in the day.
Shares of Union Medical Healthcare surged almost 85% before giving up some gains to finish 61.7% higher at 6 Hong Kong dollars apiece. The company on Wednesday announced an agreement with online medical platform Tencent Doctorwork to jointly establish a number of clinics in Hong Kong.
The Hong Kong Monetary Authority intervened in the currency market on Wednesday -- the second time this week -- according to Reuters, after the Hong Kong dollar fell to the low end of its trading range against the greenback. It was at 7.8493 against the U.S. dollar on Thursday.
Investors were also concerned over potential outflows from regional equity markets as the U.S. 10-year bond yield hovered near seven-year highs.
"There are outflows after the Hong Kong dollar reached the weak end of its range," said Jason Lee, vice president for stocks at investment consultancy Investment Strategy Institute in Hong Kong. Even Tencent came off its intraday highs, a sign that "many investors are eager to lock in profit," he said.
The Shanghai Composite Index lost 0.5% while the Nikkei Asia300 Index shed 0.4% as uncertainty over trade relations between the U.S. and China and renewed concerns about North Korea kept investors cautious. The regime in Pyongyang this week cancelled a meeting with South Korea, raising questions over a scheduled summit with the U.S. next month.
Alibaba Health Information Technology, a unit of e-commerce major Alibaba Group Holding, surged 26.1% in Hong Kong after it said its net loss for the year ended March 31 narrowed to 107 million yuan ($16.8 million) from 207.6 million yuan a year ago. Revenue for the period surged more than five times to 2.44 billion yuan.
TPV Technology tumbled 12.1% after the maker of televisions and monitors swung to a loss of $8 million for the March quarter.
Victory City International Holdings surged 17.8%. The garment maker on Wednesday said it expects to report a "significant increase" in net profit for the year ended March.
Advanced Semiconductor Manufacturing slid 3.5%. The chipmaker said it swung to a net loss of 4.2 million yuan in the March quarter, even as revenue rose 8.3% to 240.8 million yuan.
-- Amy Lam