Hong Kong shares fall ahead of Sino-US trade talks, Fed policy statement

HONG KONG: Hong Kong stocks fell on Wednesday, as investors braced for trade talks between US and Chinese officials, and awaited the US Federal Reserve's upcoming policy statement.

The Hang Seng index fell 0.3 percent to 30,723.88, while the China Enterprises Index lost 1.1 percent to 12,193.59 points.

Senior US and Chinese officials will hold trade talks from Thursday in Beijing, as Washington threatens to impose tariffs on up to $150 billion of Chinese imports and Beijing vowed to retaliate.

The Fed is seen set to hold interest rates steady on Wednesday but will likely encourage expectations that it will lift borrowing costs in June on the back of rising inflation and low unemployment.

The sub-index of the Hang Seng tracking energy shares dipped 0.1 percent, while the IT sector rose 0.45 percent, the financial sector was 0.72 percent lower and the property sector dipped 0.49 percent.

The top gainer on Hang Seng was Sunny Optical Technology Group Co Ltd up 4.92 percent, while the biggest loser was Bank of Communications Co Ltd which was down 2.32 percent.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.15 percent, while Japan's Nikkei index closed down 0.16 percent.

The yuan was quoted at 6.3616 per US dollar at 08:25 GMT, 0.48 percent weaker than the previous close of 6.331.

As of the previous trading session, the Hang Seng index was up 2.97 percent this year, while China's H-share index was up 5.3 percent. As of the previous close, the Hang Seng has stayed flat this month.

The top gainers among H-shares were China Railway Group Ltd up 1.43 percent, followed by Huaneng Power International Inc gaining 0.96 percent and CNOOC Ltd up by 0.91 percent.

The three biggest H-shares percentage decliners were China Vanke Co Ltd which was down 3.67 percent, Sinopharm Group which fell 3.5 percent and People's Insurance Group of China Co Ltd down by 2.7 percent.

At close, China's A-shares were trading at a premium of 20.12 percent over the Hong Kong-listed H-shares.

The price-to-earnings ratio of the Hang Seng index was 12.5 as of the last full trading day while the dividend yield was 3.2 percent.

So far this week, the market capitalisation of the Hang Seng index has risen by 1.64 percent to HK$19.94 trillion.