HONG KONG: Hong Kong shares retreated following a choppy trading session, as losses by Chinese banks overshadowed advances by mainland infrastructure companies after authorities announced plans for a new economic zone. The Hang Seng Index slipped 0.2% to 24,215.97 by midday, after rising as much as 0.5% earlier in the session. Bank of China (BOC) fell 1.6% to extend Monday’s decline following a drop in 2016 net income. Bank of Communications shed 1.7%. HSBC Holdings slipped 0.6%, tracking global financial stocks as U.S. bond yields declined to six-week lows.
The Shanghai Composite was up 1.1%, on course for its best day in one-and-a-half months, as investors returning from an extended weekend reacted to China’s plans to establish a new economic zone in Hebei province to help deepen its economic integration with neighboring Beijing and Tianjin. Shares of cement producer BBMG extended Monday’s 35% rally to jump more than 9% in Hong Kong. Anhui Conch Cement added 1.7%. Hebei-based companies shot higher in mainland trading, with Shanghai-listed Hebei Baoshuo and Shenzhen-listed Hebei Huijin Electromechanical surging by their 10% limit. “The announcement of the special economic zone is the trigger for today’s rally in Chinese stocks. Also, I think with the start of the new quarter, we could see more allocation towards equities,” said Linus Yip, strategist at First Shanghai Securities. “For Hong Kong and other global markets, the focus is on the outcome of the U.S.- China summit” this week.
Caution prevailed ahead of a potentially tense two-day meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping. North Korea fired a missile into the Sea of Japan Wednesday, weighing risk sentiment. The Nikkei Asia300 index was slightly lower, while U.S. stock futures pointed to a tepid start on Wall Street. China Gas Holdings rose 5.3% in Hong Kong after saying it will accelerate investments in the Beijing-Tianjin-Hebei region following a government notification to control consumption of coal in that area.
