Hong Kong Shares Sink To 6-Week Low, China Stretches Losing Streak

Hong Kong shares sank to their lowest in six weeks on Wednesday, with mainland Chinese markets also weak, as fears of a cut in U.S. stimulus efforts gained ground following comments from top Federal Reserve officials.

* HSI -1.0 pct, H-shares -0.7 pct, CSI300 -0.2 pct

* HK property stocks again suffer as Fed jitters linger

* AIA in worst day in 2 mths, outperformers under pressure

* China solar jumps after EU tariffs weaker than expected

Hong Kong shares sank to their lowest in six weeks on Wednesday, with mainland Chinese markets also weak, as fears of a cut in U.S. stimulus efforts gained ground following comments from top Federal Reserve officials.

Asia insurer giant AIA Group led losses among Hang Seng Index components as investors took profits on the year's outperformers. High dividend and growth-sensitive counters were also hit as Hong Kong turnover stayed below average.

The Hang Seng Index shed 1 percent to 22,069.2, its lowest close since April 23. Losses on Wednesday brought the benchmark below chart support levels, suggesting more losses are possible in the short term.

The China Enterprises Index of the top Chinese listings in Hong Kong slid 0.6 percent. The CSI300 of the leading Shanghai and Shenzhen A-share listings shed 0.2 percent in its sixth-straight daily loss, while the Shanghai Composite Index slipped 0.1 percent in a fifth loss.

Shanghai volume neared 2013 lows as China's money rates rose slightly and hovered around high levels on Wednesday, reflecting strong fund demand in advance of a three-day holiday next week, dealers said.

"It's a little tricky at the moment. Nobody quite knows the time table for the Fed's tapering, so high dividend names are not exactly popular right now, but neither are beta names," said Linus Yip, a strategist with First Shanghai Securities.

Kansas City Federal Reserve Bank President Esther George again on Tuesday urged the Fed to ease off its aggressive purchases. George said slowing bond buying would help wean financial markets off their dependence on ultra-easy money from the U.S. central bank.

Hong Kong property conglomerate Cheung Kong Holdings sank 2.8 percent to its lowest since September. Henderson Land fell 2.2 percent after shareholders received their dividend payouts on Wednesday.

Low global interest rates are a key support for Hong Kong property prices and the share prices of real estate developers in the territory. Any change in interest rate expectations is a key catalyst for the sector.

Link Real Estate Investment Trust (REIT) fell 2.5 percent, as losses accelerated after it reported a 9.7 percent growth in revenue and 10.3 percent growth in net property income in the year that ended March 31, from a year earlier.

The high yielding counter has now dived 14.5 percent since May 15. It is now up 2.3 percent for the year, compared to the 2.6 percent slide on the Hang Seng Index.

AIA Group lost 3.4 percent in its worst day in two months and a mainland news report quoted its China chief executive as saying insurers face increasing competition from other financial products.

The insurer has shed almost 9 percent from May peaks, leaving it now up 9.8 percent on the year. Further weakness appear likely, with Southeast Asian currencies under pressure and likely to sap its profits from the region. Singapore, Malaysia and Thailand account for nearly half of its new businesses last year.


Data on Wednesday showed activity in China's services sector expanded in May but at a pace little changed from the month before, the latest sign that the world's No. 2 economy is struggling to regain momentum.

Markets are bracing for U.S. non-farm payrolls data on Friday and a slew of China economic data for May. Trade is due on Saturday and inflation, urban investment, industrial output and retail sales on Sunday. Monthly money supply and loan growth data is expected between June 10 and 15.

GCL Poly Energy jumped 6.1 percent in its best day in two weeks after the European Union imposed an initial duty of 11.8 percent tariff on China solar panel imports, far below the average 47 percent that had been planned.

Chinese brokerages outperformed in the mainland after the official China Securities Journal reported that Beijing is drafting a development plan that aims to grow the securities industry by ten-fold.

In Shanghai, Citic Securities gained 1.1 percent, while Haitong Securities rose 0.9 percent.

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