HONG KONG (NewsRise) -- Hong Kong shares fell for a second week, led by mainland companies and local property developers, as rising chances of a rate increase by the Federal Reserve weighed on investor confidence.
Hawkish comments from central bankers including New York Fed President William Dudley, San Francisco Fed President John Williams and Governor Jerome Powell have forced investors to recognize that U.S. borrowing costs may climb at a faster clip than many expected. The dollar and Treasury yields resumed a northward journey as the odds traders place on a hike in March more than doubled within a matter of days, taming risk appetite.
Stocks in Hong Kong, a city that borrows the U.S. monetary policy because of the local currency's peg to the greenback, have fallen for six of the past seven days, with investors also reassessing a market trading at 18-month highs less than two weeks ago.
The benchmark Hang Seng Index declined 1.7% this week, its worst performance this year, as it lost 0.7% to 23,552.72 on Friday. Bank of China (BOC), China Life Insurance and Cheung Kong Property Holdings all fell at least 3.6% during the five-day period to feed the 50-member gauge's losses.
"The message from Fed officials is quite clear and the market has taken notice," said Ben Kwong, executive director at KGI Asia. "The biggest risk for Hong Kong markets now is that interest rates in the U.S. are going to rise much faster than what investors anticipated."
Fed rate concerns and worries that China's policy makers may reiterate the need for more reforms as well as curbs to mitigate financial risks also weighed down mainland equities before the opening session of the National People's Congress, the nation's parliament, on Sunday.
The Shanghai Composite Index slipped 0.3% Friday to cap a weekly loss of 1.1%. The decline came even as economic data this week indicated a continued improvement in activity at the nation's factories.
The yuan traded onshore slid 0.2% to 6.8978 against the dollar, also poised for a second weekly retreat, after flirting with the 6.90-level. The Chinese currency traded offshore in Hong Kong was down 0.2% at 6.9003.
PetroChina sank 4.3% during the week as Brent crude traded near its lowest price in more than three weeks. The stock was down 0.2% Friday.
Casino operators were a bright spark during the downbeat week, with Sands China, Wynn Macau and MGM China Holdings all rising at least 3.1% as January gambling revenue in Macau surged nearly 18%. Galaxy Entertainment Group ended the week as the Hang Seng Index's best performer, rising 4.3% despite a 1.4% loss Friday, after it reported better-than-estimated 2016 earnings.
Alibaba Group Holding is leading a $200 million investment into the online commerce business of India's Paytm, The Times of India reported, citing a regulatory filing. Shares of the Chinese e-commerce major fell 0.8% to $103.19 in U.S. trading overnight.
China Railway Construction (CRCC) retreated 0.5% after saying Thursday that a consortium including the company's unit won a public-private partnership contract worth 6 billion yuan ($870 million).
Market heavyweight Tencent Holdings rose 0.4%, trimming its weekly loss to 1.9%. The company has been sued for patent infringement by Gmedia Technology in Hong Kong and the mainland.
Greenland Hong Kong Holdings climbed 2.9% after the property developer said it expects its 2016 profit to rise by no less than 300%. Asia Tele-Net and Technology, an electroplating equipment maker, jumped 4.9% after saying it expected a "significant" increase in last year's profit.
Future Bright Mining Holdings slid 0.5% after issuing a profit warning.
-- Nimesh Vora