August 9, 2017 8:25 pm JST

Hong Kong shares dragged by U.S. warning on North Korea while Wharf surges

HONG KONG (Nikkei Markets) -- Hong Kong shares snapped a three-day rising streak Wednesday as U.S. President Donald Trump's warning to North Korea weighed on investor sentiment. The losses were tempered by Wharf Holdings, which surged to an all-time high after announcing half-yearly results.

The Hang Seng Index fell 0.4% to 27,757.09 at the close, pulling back from a 26-month high. Financial stocks led the declines, with heavyweight AIA Group dropping 2%, while mainland lenders Bank of China (BOC) and China Construction Bank (CCB) slid at least 1.3%. Hong Kong Exchanges & Clearing fell 1.2%, trimming year-to-date gains to 24%, even as the bourse operator posted a 17% increase in first-half profit during Wednesday's noon break.

Risk assets came under pressure after President Trump warned the U.S. will respond to North Korea's threats against the nation with "fire and fury." In response, Pyongyang said it's considering plans for a missile strike on Guam. The escalation in geopolitical tensions saw the Nikkei Asia300 Index drop 0.5%, while spot gold prices and the Japanese yen - both seen as safe havens - hardened.

In Hong Kong, investors were said to be locking in gains after a string of recent advances as their attention shifted to earnings-related news.

"Investors are focusing on individual stocks, particularly those that are going to announce results," said Ben Kwong, executive director at KGI Asia. "There is buying ahead of results. If there is no surprise at all, then we may see some profit-taking pressure, but if it's a positive surprise, it may go up further."

Wharf surged 14% after the property investor, a unit of diversified conglomerate Wheelock, disclosed plans for a demerger of wholly-owned subsidiary Wharf Real Estate Investment Co. for a separate listing. The REIC will hold assets valued at more than HK$230 billion ($29.4 billion) as well as Wharf's 72% stake in its listed unit Harbour Centre Development, it said. Wharf's first-half earnings, also announced at midday, climbed 26%. Separately, Wharf increased its interim dividend by 10% and said it will conditionally pay a special dividend in the form of shares in unit i-Cable Communications.

Wheelock soared 11% following the announcement, while Harbour Centre fell 0.4% and i-Cable declined 1.4%.

Heavyweight Tencent Holdings squeezed out a 0.5% advance to reach a fresh all-time high as investors await its first-half earnings due next week. The social media and gaming giant is up more than 6% so far this week.

"Tencent's shares will continue to test higher levels until the results announcement," Kwong said. "But the share price has already factored in a lot of the positive expectations. If there is no further positive surprise, the overbought shares will see some correction pressure."

In the mainland, the Shanghai Composite lost 0.2%. Official data released Wednesday showed producer prices in the country rose 5.5% in July, lower than estimates compiled by Bloomberg. The consumer price index increased 1.4% last month, also below forecasts.

"With a mild inflation environment, we expect the government to continue to maintain relatively steady but just enough liquidity condition to support growth," economists at Goldman Sachs wrote in a report.

Several stocks moved on earnings-related news or forecasts. Among them, Esprit Holdings rose 5.1% on the fashion retailer's projection for an increase in first-half profit.

Property developer CIFI Holdings rose 4.3% after a 62% jump in first-half core net profit. Camera-module maker Q Technology Group climbed 4.3% as its half-yearly profit nearly tripled. And Uni-President China Holdings, a unit of Uni-President Enterprises, surged 8.7%. Late Tuesday, the instant-noodle and beverage maker reported a 27% drop in first-half profit, but it exceeded market expectation.

Hua Hong Semiconductor slid 7.1% after an 11.9% drop in second-quarter profit. Langham Hospitality Investments lost 4.2% following a less than 1% increase in first-half profit.

Trading in Wanda Hotel Development was halted Wednesday, pending an announcement about an agreement for a possible asset restructuring. The company's shares jumped 16% Tuesday even as it denied media reports about plans to sell two projects in Australia.

-- Suzannah Benjamin and V. Phani Kumar

Asia300

AIA Group Ltd.

Hong Kong

Market(Ticker): HKG(1299)
Sector:
Industry:
Finance
Life/Health Insurance
Market cap(USD): 96,916.24M
Shares: 12,074.54M
Asia300

Bank of China Ltd.

China

Market(Ticker): HKG(3988)
Sector:
Industry:
Finance
Major Banks
Market cap(USD): 165,449.83M
Shares: 294,387.79M
Asia300

China Construction Bank Corp.

China

Market(Ticker): HKG(939)
Sector:
Industry:
Finance
Major Banks
Market cap(USD): 216,209.46M
Shares: 250,010.98M
Asia300

Hong Kong Exchanges & Clearing Ltd.

Hong Kong

Market(Ticker): HKG(388)
Sector:
Industry:
Finance
Investment Banks/Brokers
Market cap(USD): 36,755.56M
Shares: 1,239.80M
Asia300

Wheelock & Co. Ltd.

Hong Kong

Market(Ticker): HKG(20)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 13,968.45M
Shares: 2,041.74M
Asia300

Tencent Holdings Ltd.

China

Market(Ticker): HKG(700)
Sector:
Industry:
Technology Services
Internet Software/Services
Market cap(USD): 493,362.34M
Shares: 9,498.99M
Asia300

Uni-President Enterprises Corp.

Taiwan

Market(Ticker): TAI(1216)
Sector:
Industry:
Consumer Non-Durables
Food: Major Diversified
Market cap(USD): 12,212.66M
Shares: 5,682.01M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.