April 18, 2017 7:35 pm JST

Hong Kong shares post worst decline this year on China regulatory woes

HONG KONG (Nikkei Markets) -- Hong Kong shares suffered their worst loss in four months on Tuesday as Chinese markets sank to two-month lows amid concerns about increased regulatory scrutiny.

The Hang Seng Index fell 1.4% to 23,924.54, closing below the psychologically important 24,000 level for the first time in over two months. Forty-six shares in the 50-stock index closed lower, with mainland companies leading declines. A gauge of mainland companies in Hong Kong, also called H-share index, fell 1.6% to a more-than-two-month low. China Unicom (Hong Kong) and China Resources Power Holdings fell at least 4% each, and China Resources Land dropped 2.4%.

Tuesday's slump came after the Shanghai Composite fell 0.8%, marking a third day of losses, amid concerns that tighter scrutiny by authorities could dent investor appetite for stocks. Over the weekend, China Securities Regulatory Commission Chairman Liu Shiyu asked stock exchanges to combat any activities that disturb market order. The remarks come as Chinese authorities seek to rein in excessive risk taking and curb speculation in the nation's equity and property markets. The yuan fell 0.1% to 6.8845 against the dollar in onshore trade.

"Investors are very sensitive to any measures that could affect liquidity into equity markets," said Eugene Law, director at China Galaxy Securities. "There are concerns that we could see more and more measures from authorities that could hurt investment into mainland markets and also weigh on Hong Kong."

Global investor sentiment continues to be dominated by escalating tensions over North Korea. In the first leg of a four-nation Asia tour, U.S. Vice President Mike Pence warned that President Donald Trump's resolve, when it comes to North Korea, should not be tested. The Nikkei Asia300 Index, which tracks over 300 companies in the region, was down 0.5%.

Hong Kong developers were also among the major losers on Tuesday, with Hang Lung Properties and Sino Land falling at least 2.7% each.

"Even with property prices continuing to climb, I am not too excited about these stocks as I expect concerns over rising interest rates to return," Law said.

China Life Insurance fell 2.2%, in line with broader market losses. The insurer late on Thursday reported a 22% increase in accumulated premium income for the March quarter. New China Life Insurance slid 1.3% following a 20% decrease in quarterly gross premium income to 37.3 billion yuan.

Cosco Shipping Holdings skidded 5.4% after saying its unit Pan Asia plans to increase its registered capital by introducing certain strategic investors.

Guangdong Land Holdings slumped 3.8% after saying late on Thursday that it expects profit for the March quarter to fall at least 50%.

Air China declined 3.1%, paring gains for the month to 6.2%. China's national carrier on Thursday said passenger traffic rose 8.2% in March. Separately, the airline also said it has cancelled some flights to Pyongyang due to poor demand, Reuters reported, citing a person in the company's communications team. It denied a report by broadcaster CCTV that all flights from Beijing to the North Korean capital were suspended.

China Southern Airlines tumbled 3.3%, clipping its advance this year to 32%. It reported a 12% increase in passenger traffic in March. The National Development and Reform Commission, China's top economic planner, on Friday approved the airline's plan for a 14.8-billion yuan ($2.1 billion) base at new airport in Beijing.

China Eastern Airlines, which received a similar approval on Thursday, was down 1.4%. Shortly after the markets closed, the airline reported a 9.6% increase in March passenger traffic.

Angang Steel Company fell 5.3%, trimming gains since the start of the year to 12%. On Thursday, the steel-product maker said it expects a profit of 1.1 billion yuan for the first quarter, compared with a loss of 615 million yuan a year ago. The stock had soared last month after the company forecast a profit for 2016.

Shenzhen Investment slipped 3.5%, following an over 7% jump last week. On Thursday, the property developer reported an over 30% increase in contracted sales for the March quarter.

Shunfeng International Clean Energy fell 5.2% after saying its unit Suniva Inc has filed for bankruptcy in the U.S.

Trading in broadcaster i-CABLE Communications and shoe retailer Belle International Holdings remained halted on Tuesday, pending announcements. i-CABLE, a unit of billionaire Peter Woo's Wharf Holdings, slumped 33% last month after Wharf said it will not renew funding commitments to the loss-making pay TV and broadband services provider.

-- Nimesh Vora

--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

China Unicom (Hong Kong) Ltd.

Hong Kong

Market(Ticker): HKG(762)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 37,838.49M
Shares: 23,947.08M
Asia300

Hang Lung Properties Ltd.

Hong Kong

Market(Ticker): HKG(101)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 11,142.81M
Shares: 4,497.57M
Asia300

China Life Insurance Co. Ltd.

China

Market(Ticker): HKG(2628)
Sector:
Industry:
Finance
Life/Health Insurance
Market cap(USD): 108,907.73M
Shares: 28,264.70M
Asia300

COSCO SHIPPING Holdings Co. Ltd.

China

Market(Ticker): HKG(1919)
Sector:
Industry:
Transportation
Marine Shipping
Market cap(USD): 10,953.53M
Shares: 10,216.27M
Asia300

Air China Ltd.

China

Market(Ticker): HKG(753)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 17,638.82M
Shares: 14,524.81M
Asia300

China Southern Airlines Co. Ltd.

China

Market(Ticker): HKG(1055)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 11,091.00M
Shares: 10,088.17M
Asia300

China Eastern Airlines Corp. Ltd.

China

Market(Ticker): HKG(670)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 12,848.01M
Shares: 14,467.58M

Belle International Holdings Ltd.

Hong Kong

Market(Ticker): HKG(1880)
Sector:
Industry:
Consumer Non-Durables
Apparel/Footwear
Market cap(USD): 6,578.7M
Shares: 8,434.23M

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