HONG KONG (NewsRise) -- Hong Kong shares swung to a weekly loss as trading activity moderated and heavyweight stocks pulled back amid concerns valuations had climbed too fast.
The Hang Seng Index capped a weekly loss of 0.3%, its first in three weeks, as it slid 0.6% to 23,965.70 on Friday. Heavyweight stock HSBC Holdings tumbled 7% since last Friday, its worst week in a year, and its unit Hang Seng Bank gave up 2.1% to pressure the benchmark gauge after the lenders reported a decline in 2016 earnings. The stocks fell 0.8% and 1.2%, respectively, on Friday. Tencent Holdings was the day's biggest drag on the 50-member index, dropping 1.7%, as investors locked in some recent profits.
While the week began on a positive note amid speculation that Chinese pension funds were deploying some of their assets into equities, momentum indicators signaling overbought levels prompted some investors to question whether the magnitude of the gains was justified. The Hang Seng Index has rallied almost 9% this year, outperforming even U.S. equity benchmarks that have been spurred by optimism Donald Trump's administration will unveil a fiscal stimulus.
"Chinese pension funds coming down to Hong Kong is just a matter of time, but then I don't think there will be a big impact. Even pension funds don't buy in one go," said Victor Au, chief operating officer at Delta Asia Securities in Hong Kong. "There may be some money trying to front-run the pension funds, but the pension funds may wait for a correction before buying."
Turnover on the Hong Kong stock exchange's main board moderated to HK$80 billion ($10.3 billion) on Friday, weaker than the daily average in the past two weeks. Mainland investors transacted HK$7 billion of local equities through the links with Shanghai and Shenzhen bourses, also lower than in the recent past.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 1% on Friday, trimming its weekly advance to 0.6%. The Shanghai Composite Index inched up less than 0.1% on Friday, capping a third weekly gain.
The yuan traded onshore weakened 0.2% to 6.8737 to a dollar, showing little reaction to U.S. President Trump's comments in a Reuters interview on Thursday. Trump called China the "grand champions" of currency manipulation in the interview, just hours after U.S. Treasury Secretary Steven Mnuchin told CNBC he wasn't ready to call China a currency manipulator any time soon.
New World Development was the week's best performer, jumping 9.3% after reporting a more than 30% increase in its interim earnings for 2016.
Belle International Holdings climbed 7.7% after Credit Suisse upgraded the footwear maker's stock rating to outperform from underperform, citing an upbeat outlook for its sportswear business.
Apparel retailer Esprit Holdings surged 20% this week, the steepest weekly advance since October 2015, after swinging back to half-yearly profits. The stock climbed 7.4% on Friday, adding to an 8.8% spike on the previous day.
Nine Dragons Paper Holdings sank 4.7% on Friday, trimming some recent gains, after the company reported a surge in half-yearly profits to 1.9 billion yuan ($279million) from 312 million yuan a year earlier. The stock is still up 3.2% this month.
ZTE fell 1.4% in the downbeat market. The U.S. government on Thursday extended the telecommunications-equipment maker's temporary general license, which was set to expire on Monday, until March 29, allowing U.S. firms to continue supplies to the company.
AIA Group slipped 0.6% in choppy trading after the insurance major reported a more than 50% increase in net income for the year ended Nov. 30.
-- V. Phani Kumar