Hong Kong stocks hit by US - North Korea tensions as heavyweights fall
HONG KONG (Nikkei Markets) -- Hong Kong shares were on course for this year's worst day on elevated geopolitical tensions after North Korea said it is considering launching intermediate missiles into waters near the U.S. territory of Guam.
North Korea will develop a plan by mid-August for launching missiles to fall 30 to 40 kilometers away from Guam in the Pacific Ocean, the nation's state media reported Thursday. U.S. Secretary of State Rex Tillerson said Wednesday the Asian country posed no "imminent threat," several hours after U.S. President Donald said further threats from the North would be met with "fire and fury."
The Hang Seng Index shed 1.6% to 27,315.13 by midday, heading lower for a second day. Forty-one of its 49 active constituents retreated, with heavyweight lenders HSBC Holdings and China Construction Bank (CCB) sliding at least 2%, internet giant Tencent Holdings losing 1.5% and insurer AIA Group shedding 1.2%. The Hong Kong gauge is still up more than 24% this year, among the best-performing benchmarks in the region.
"For the moment, I think this is due to the geopolitical risk. There is a lot of uncertainty," said Banny Lam, head of research at CEB International Investment. "Investors are looking for an excuse for a correction."
The Hang Seng China Enterprises Index of large mainland companies in the city gave up 2%, while the Shanghai Composite skidded 1.1% in mainland trading, set for its steepest drop in more than three weeks.
Other Asian markets also pulled back after U.S. indexes edged lower overnight. The Nikkei Asia300 Index of some of the region's most influential companies slumped 1.2%.
Wharf Holdings, controlled by conglomerate Wheelock, tumbled 7.2% to emerge as the day's biggest decliner on the Hang Seng Index. Nomura downgraded it to neutral from buy, saying the stock likely had limited upside after a 14% rally the previous day, when the property investor announced plans to demerge certain property assets into a separately listed company.
China Mobile lost 0.5% to HK$84.20 in Hong Kong trading. During the noon break, the mobile services giant reported its half-yearly earnings climbed 3.5% from a year earlier to 62.7 billion yuan ($8 billion). It also announced an interim dividend of HK$1.623 a share and a special dividend of HK$3.20 a share.
Hong Kong rail operator MTR and telecommunications major PCCW are among other companies due to report earnings later Thursday. HKT, in which PCCW owns a majority stake, was little changed a day after reporting a 3% increase in half-yearly profit for the group. MTR was down 0.5%.
Wanda Hotel Development surged 28% after announcing plans to buy assets worth more than $1 billion from companies controlled by its billionaire founder Wang Jianlin. Trading in Wanda's shares was halted on Wednesday.
China Investments Holdings jumped 14% after saying it expects a "significant increase" in first-half profit.
Pax Global Technology fell 6% following a 14% drop in first-half profit even as its revenue rose 21%.
Hi Sun Technology China slid 4.7% amid broader market losses. The payment-processing-solution provider on Wednesday reported a 75% jump in half-yearly profit.
Hypermarket chain Sun Art Retail Group added 4.8% following a 23% increase in first half profit.
-- Suzannah Benjamin and V. Phani Kumar