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Nikkei Markets

Hong Kong stocks slip as property developers retreat

Sun Hung Kai Properties down after buying $3.2 billion plot

HONG KONG (Nikkei Markets) -- Hong Kong shares declined Wednesday over concerns about rising U.S. bond yields that hit a seven-year high overnight.

The Hang Seng Index fell 0.1% to 31,110.20, marking a second day of losses. Wharf Real Estate Investment dropped 3.4% and Henderson Land Development gave up 0.9%, sending a gauge of large real estate companies listed in the city 0.4% lower.

Local developer Sun Hung Kai Properties, which made a successful bid of HK$25.16 billion ($3.20 billion) to acquire a plot of land in a government auction on Tuesday, slipped 0.6%.

Market heavyweight Tencent Holdings fell 0.5% before it reported its first-quarter earnings, due later Wednesday.

All three Wall Street equity indexes retreated on Tuesday after a string of recent advances as the yield on 10-year U.S. Treasury bonds climbed to 3.07%. Data released overnight showed U.S. retail sales rose 0.3% in April while numbers for March were revised higher, feeding speculation that the Federal Reserve may accelerate interest rate increases.

But Ben Kwong, executive director of KGI Asia in Hong Kong, said the pullback in Hong Kong was normal following the Hang Seng's recent six-day rising streak. "Since Hong Kong is more sensitive to changes in U.S. interest rates, the rising 10-year Treasury yield as well as the Hong Kong Monetary Association's intervention yesterday has resulted in investors being more cautious," he said.

The Hong Kong dollar touched 7.85 against the U.S. dollar on Tuesday, the low end of a band within which it trades, prompting intervention by the city's de facto central bank. The currency rose to 7.8494 against the U.S. dollar on Wednesday.

The Hang Seng China Enterprises Index of large mainland companies listed in the city ended little changed. The Shanghai Composite lost 0.7% in mainland trading, while the yuan traded onshore strengthened 0.1% to 6.3685 against the dollar. The Nikkei Asia300 Index of regional stocks outside Japan slipped 0.3%.

Risk appetite in the region was also hurt by North Korea's cancellation of planned talks on Wednesday with South Korea, which raised doubts about a planned summit with U.S. President Donald Trump in Singapore next month. Kim Kye Gwan, North Korean first vice foreign minister, said the country has no interest in a summit with the U.S. if it is based on "one-sided" demands to give up nuclear weapons.

China Gold International Resources tumbled 5.8% as its first-quarter net profit after income taxes fell to $2 million from $6.4 million a year earlier. Revenue for the period increased 30% to $106.7 million. MMG, an industrial-and-precious metals miner, lost 7%, trimming gains over the past month to 21%.

Car rental-services company CAR climbed 5.6% after it reported a 9% increase in first-quarter profit to 229 million yuan ($36 million) even as revenue for the period slipped 4% to 1.60 billion yuan.

Publishing company Media Chinese International fell 4.1% on its expectations for a loss in the year ended March, compared with a profit in the previous financial year.

Perfect Shape Beauty Technology jumped 9.9%. The slimming-and-beauty-services provider said it expects operating profit for the year ended March 31 to have more than doubled.

-- Carrie Chen

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