May 17, 2017 7:34 pm JST

Hong Kong shares down for second day as US turmoil feeds caution

HONG KONG (Nikkei Markets) -- Hong Kong shares fell Wednesday as mounting political tensions in Washington fuelled doubts about U.S. President Donald Trump's ability to push through economic policies.

The Hang Seng Index fell 0.2% to 25,293.63, mirroring weakness in most other Asian markets, as investors turned risk-averse following reports that Trump tried to stop a federal investigation into his former national security advisor's links with Russia. Trump has also been in the spotlight recently for abruptly dismissing Federal Bureau of Investigation Director James Comey and reportedly divulging sensitive information to a Russian diplomat. European stocks declined in early trading Wednesday, while U.S. equities were set to open lower. The Nikkei Asia300 Index was little changed.

"The uncertainty over the U.S. political climate, depending on how long it lasts, could have a significant impact on markets all over," said Francis Lun, chief executive officer at Geo Securities. "Considering the news, I would think Hong Kong stocks have held up reasonably well. Tencent earnings will be crucial."

Heavyweight Tencent Holdings, which was the most traded stock on Wednesday, added 0.4% to a record high. After the market's close, Tencent reported a 58% rise in first-quarter net profit and a 55% increase in revenues, both ahead of Reuters estimates.

In mainland markets, the Shanghai Composite fell 0.3%, snapping a four-session winning spell. China's central bank and the Hong Kong Monetary Authority on Tuesday approved to a bond link between the city and the mainland - similar to the separate stock exchange links connecting Shanghai and Shenzhen with Hong Kong - providing overseas investors access to China's bond market. Initially, only overseas and Hong Kong investors will be able to trade Chinese securities, with mainland investors expected to gain access to Hong Kong-traded bonds on a later date.

"If China were to liberalize its bond market for foreign investors, then it could become eligible for inclusion into the major bond indices," Goldman Sachs analysts wrote in a note. "The authorities should welcome this process, since it will induce natural sticky inflows, which should help to at least partially offset some of the foreign exchange outflows."

The onshore traded yuan was down 0.1% at 6.8898 against the dollar.

Insurers and lenders were among the biggest drags on the Hang Seng Index. China Construction Bank (CCB) and AIA Group dropped at least 0.9% each and China Life Insurance fell 1.4%.

Henderson Land Development lost 1.5% after the property developer agreed to pay a record sum for a plot of land in Hong Kong's Central financial district.

Chinese carmaker BYD rose 0.8% after saying a unit and German automaker Daimler AG will together inject 1 billion yuan ($145.1 million) in their joint venture.

Hong Kong rail operator MTR's shares rose 2.3% to a record high amid reports that the company will join a bid for the Malaysia-Singapore high-speed rail project.

Glencore advanced 1.7%. The commodity producer and trader has teamed up with U.S. private equity firm Carlyle Group in a bid to buy Morocco's only oil refinery, Reuters reported, citing industry sources.

Energy producers China Petroleum & Chemical (Sinopec) and CNOOC shed 0.3% each as global oil prices headed for a second day lower after U.S. crude inventories rose.

China Nonferrous Mining surged 18% after issuing a positive profit alert. The company said it expects net profit of $30 million in the first four months of 2017, an increase of about $29 million from the year earlier period, while revenue is projected to increase around 33%.

CAR sank 3.5% to HK$7 after reporting a 23% drop in first-quarter net profit.

VTech Holdings jumped 6.3% after the consumer-electronics products maker reported a 12% increase in revenue for the year ended March 31 and forecast sales increases across product lines for 2018. VTech's net profit slipped 1.3%.

Fosun International's unit Shanghai Fosun Pharmaceutical Group slid 6%, its worst decline in over a year, after saying it will raise HK$2.3 billion in a discounted share offering.

Anta Sports Products rose 2.8% after saying retail sales of Anta-branded products increased in the "low teens" during the first quarter.

China Coal Energy fell 2% after reporting an 8.8% decline in commercial coal sales volume for April.

People's Insurance Group of China added 1.2% following plans for an initial public offering and listing of the company's A-shares.

-- Nimesh Vora and V.Phani Kumar

--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.

Asia300

Tencent Holdings Ltd.

China

Market(Ticker): HKG(700)
Sector:
Industry:
Technology Services
Internet Software/Services
Market cap(USD): 395,752.82M
Shares: 9,497.99M
Asia300

China Construction Bank Corp.

China

Market(Ticker): HKG(939)
Sector:
Industry:
Finance
Major Banks
Market cap(USD): 210,379.78M
Shares: 250,010.98M
Asia300

AIA Group Ltd.

Hong Kong

Market(Ticker): HKG(1299)
Sector:
Industry:
Finance
Life/Health Insurance
Market cap(USD): 89,661.34M
Shares: 12,074.09M
Asia300

China Life Insurance Co. Ltd.

China

Market(Ticker): HKG(2628)
Sector:
Industry:
Finance
Life/Health Insurance
Market cap(USD): 109,028.09M
Shares: 28,264.70M
Asia300

Henderson Land Development Co. Ltd.

Hong Kong

Market(Ticker): HKG(12)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 24,623.82M
Shares: 4,001.14M
Asia300

BYD Co. Ltd.

China

Market(Ticker): HKG(1211)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 18,846.89M
Shares: 2,728.14M
Asia300

MTR Corp. Ltd.

Hong Kong

Market(Ticker): HKG(66)
Sector:
Industry:
Transportation
Railroads
Market cap(USD): 34,790.22M
Shares: 6,002.12M
Asia300

China Petroleum & Chemical Corp.

China

Market(Ticker): HKG(386)
Sector:
Industry:
Energy Minerals
Integrated Oil
Market cap(USD): 104,800.24M
Shares: 121,071.20M
Asia300

CNOOC Ltd.

Hong Kong

Market(Ticker): HKG(883)
Sector:
Industry:
Energy Minerals
Oil & Gas Production
Market cap(USD): 51,358.69M
Shares: 44,647.45M
Asia300

Fosun International Ltd.

China

Market(Ticker): HKG(656)
Sector:
Industry:
Non-Energy Minerals
Steel
Market cap(USD): 13,228.21M
Shares: 8,581.81M

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