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=ASIA MARKETS: Hong Kong Shares Fall Ahead Of Expected Fed Rate Move

HONG KONG (Jun 13) -- Hong Kong shares headed lower on Wednesday morning as investors shifted focus to the U.S. Federal Reserve’s ongoing policy review following the U.S.-North Korea summit in Singapore.

The Hang Seng Index had fallen 0.6% to 30,910.60 by noon. Industrial & Commercial Bank of China (ICBC) and Bank of China (BOC) dipped 1.4% and 1%, respectively after data released on Tuesday showed new Chinese bank loans fell to 1.15 trillion yuan ($179.7 billion) in May from April’s 1.18 trillion yuan. Analysts polled by Reuters were expecting mainland lenders to have extended 1.2 trillion yuan in new loans.

Wednesday’s losses in Hong Kong followed two days of lackluster trade as investors stayed on the sidelines while U.S. President Donald Trump and North Korean leader Kim Jong Un met for the first time. The summit ended with the isolated state committing to the complete denuclearization of the Korean Peninsula while the U.S. pledged to provide security guarantees.

Most equity benchmarks in the rest of the region also edged lower on Wednesday and the Nikkei Asia300 Index slipped 0.4% ahead of the outcome of the Fed’s two-day policy review. The U.S. central bank, which last raised rates in March, is widely expected to raise interest rates later on Wednesday. The Fed has indicated the possibility of three increases this year, but investors are waiting to see if it lifts that forecast to four. The European Central Bank and the Bank of Japan are also conducting policy reviews this week.

“The Hang Seng Index is essentially lacking direction as people wait for rate decisions from three central banks,” said Felix Man, executive director at Future Land Resources Capital Group.

Chinese telecommunications equipment maker ZTE plunged 39.5% in Hong Kong as it resumed trading after a near two-month halt. The company agreed to pay $1.4 billion in civil penalties and make changes to its board and management to lift a U.S. ban on American companies supplying it with components. ZTE’s Shenzhen-listed shares tumbled by the maximum permitted 10%.

“Today's market weakness is partly because of ZTE,” Man said. “While A-share trading is limited at a 10% downside today, mainland investors will come to short-sell H-shares” in Hong Kong.

The Shenzhen Composite had slid 0.9% by noon on Wednesday while Shanghai’s gauge lost 0.8%.

CK Hutchison Holdings fell 1.6%. A consortium including the company, CK Asset Holdings, CK Infrastructure Holdings and Power Assets Holdings made a $9.9 billion offer for Australian pipeline company APA Group. CK Infrastructure rose 0.3% while CK Assets was unchanged at HK$66.75 and Power Assets added 0.5%. APA jumped 21% in Sydney.

Skyworth Digital Holdings advanced 6.3%. On Tuesday, the television maker said its profit for the year ended in March tumbled 58.7% on-year to HK$541 million even as revenue rose 8% to HK$46.26 billion. During Wednesday’s trading break, Skyworth said it plans to submit a bid for land use rights for parcels of industrial and residential land in China’s Quanjiao County.

Anhui Conch Cement slipped 2.2% after the construction materials company on Tuesday said unit Anhui Tongling Conch Cement has suspended some production lines amid environmental concerns.

- By Amy Lam; amy.lam@NikkeiNewsrise.com; +852 39605150
- Edited by Suzannah Benjamin
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