Hong Kong Stocks Weaken After Higher Start

MarketWatch Pulse

Hong Kong stocks lost hold of a mildly positive open to trade lower Wednesday morning, as investors took a cautious stance after the People's Bank of China (PBOC) said in its quarterly policy report that it would maintain its "steady monetary policy" and create a "neutral and moderate" financial environment for China's economic restructuring. The Hang Seng Index was down 0.5%. The biggest drag was banking major HSBC Holdings PLC -- which carries a more than 12% weighting on the Hang Seng -- extended its weakness from the previous session after a report on alleged tax evasion at its Swiss unit. Shares of HSBC were down 1.3%, while fellow London-based lender Standard Chartered PLC also lost 2.1%. However, mainland Chinese banks posted broad increases, even as the PBOC report appeared to limit the gains: China Merchants Bank Co. and Bank of Communications Co. advanced 0.8% each, Agricultural Bank of China Ltd. rose 0.6%, Agricultural Bank of China Ltd. added 0.4%, and China Construction Bank Corp. edged 0.2% higher. In other sectors, China Railway Group Ltd. dropped 2.5% after news it planned to raise up to 12 billion yuan ($1.9 billion) through an A-share placement, though the company's A-shares rose 3.4% in Shanghai. Chinese coal producer China Shenhua Energy Co. fell 0.5% after reporting its net profit slid 20% last year. Domestic competitor Yanzhou Coal Mining Co. also dropped 1.1%. Over on the mainland, the Shanghai Composite Index sat flat after a two-day winning streak.

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