Hong Kong shares snapped a five-day winning stretch as risk appetite waned amid elevated tensions in the region after North Korea fired a missile over Japan.
The Hang Seng Index fell 0.4% to 27,765.01. China Shenhua Energy lost 1.5%, giving up some recent gains, after Chinese authorities announced the combination of the coal miner’s parent group with Guodian Group, creating the world’s largest power utility. Wharf Holdings, a unit of Wheelock, and Cheung Kong Property Holdings shed at least 0.9% to pace losses for property companies.
Internet services major Tencent Holdings slid 1%, extending losses from near record levels. Industrial & Commercial Bank of China (ICBC) rose 0.2% and Bank of China (BOC) slipped 0.2%, continuing to outperform the broader market as they have done over the past month. Both lenders are due to their report interim earnings Wednesday.
The “resilient” performance of Chinese financials will likely “support the market and limit the downside” at a time heavyweight Tencent is under pressure, said Daniel So, a strategist at CMB International. “After some healthy correction,” the market is likely to resume its upward trend, he said.
Tuesday’s performance came against the backdrop of geopolitical tensions, which sent the Nikkei Asia300 Index down 0.2% while pushing safe-haven assets such as the Japanese yen and gold higher. North Korea early on Tuesday fired a missile that flew over Japan and landed in the Pacific Ocean, in what appeared to be a defiant gesture after the United Nations imposed new sanctions following two long-range missile launches last month by Pyongyang.
Some miners benefited from the rise in gold prices, with Zijin Mining Group climbing 3.2% and Zhaojin Mining Industry advancing 2.1%.
Yuan-denominated A-shares in mainland China broadly defied the weakness in regional stocks, sending the Shanghai Composite 0.1% higher, while the Hang Seng China Enterprises Index of large mainland companies in Hong Kong, also recognized as the H-share index, fell 0.4%. The Shanghai index is up 8.4% this year, compared with a 20% rally for the H-share index during the period.
The onshore traded yuan, meanwhile, rose 0.2% to 6.5944 against the dollar, poised for its strongest level since June 2016.
“I do think the Shanghai Composite is playing catch-up,” said CMB International’s So. “With China’s economic growth better-than-expected in the first half, and the renminbi starting to stabilize, I think fundamentals support the A-shares to play catchup.”
Leshi Internet Information & Technology, a listed unit of Chinese electronics conglomerate LeEco, swung to a net loss of 636.8 million yuan ($96 million) from a profit in the year ago period. Trading in Leshi’s shares has been suspended since April.
Alibaba Health Information Technology slipped 0.6% in Hong Kong. The company late Monday said a unit will form a joint venture with Yunnan Hongxiang Yixintang Pharmaceutical and Beijing Jiahe Meikang Information Technology in China for application software services. The JV will have a registered capital of 30 million yuan. Its parent Alibaba Group Holding lost 2% in New York overnight.
Chinese automaker BYD slid 3.2% after reporting a 24% drop in first-half profit. BYD Electronic International fell 0.9%. The handset-component maker late Monday said profit for the six months ended June 30 more than doubled and revenue rose 13%.
BAIC Motor added 4.8% following a 36% increase in first-half revenue, even as profit attributable to equity holders for the period more than halved.
BOE Technology Group slid 2.3% in Shenzhen, paring its gains in 2017 to 34%. The electronic display-products maker on Monday said it swung back to a profit in the first half, compared with a loss in the year-earlier period.
Shares of Citic rose 1.9% after the company reported a 60% jump in half-yearly profits to HK$32.3 billion ($4.1 billion) during the midday break. The diversified Chinese conglomerate said the growth was driven mainly by better earnings in its property business and a HK$2.7 billion stake sale in the Guoan Football Club.
Greenland Hong Kong Holdings, a subsidiary of a Shanghai-listed Greenland Holdings, fell 2.6%, trimming its year-to-date gains to 39%, despite a 125% surge in the developer’s interim profits.
Also giving up some of its recent gains, China Foods tumbled 6.4% after posting a 23% growth in its interim earnings. The company also decided against paying an interim dividend, compared with its payout of 1.2 Hong Kong cents in the year-ago period. The stock is still up 15% so far in August.
China Evergrande Group jumped 12% after reporting a nine-fold increase in first-half profit at the end of Monday’s trading.
China Minsheng Banking slid 2.4%. Late Monday, the lender reported a 3.2% increase in first-half net profit.
KWG Property Holding jumped 6.8% following a 9.5% increase in first-half profit and a 44% surge in revenue.
Luye Pharma Group tumbled 7.8% following a 9.2% decline in first-half net profit.
Tiande Chemical Holdings dropped 6.7% after saying first-half profit fell 31% from the year-ago period.
By Suzannah Benjamin and V. Phani Kumar
Nikkei Asia Review