he benchmark Hang Seng Index was 0.3% higher at 22,318.66 at the noon-break, paring its losses this week to 0.9%. Sands China gained 1.9% to HK$37.05 and Galaxy Entertainment Group climbed 1.7% to HK$35.55, extending their streak as the best performing stocks this month on the gauge.
Casino stocks have been a bright spark in Hong Kong this week as a surging dollar and rising U.S. bond yields were in focus in Asian trading. The dollar index surged to multi-year highs and U.S. 10-year Treasury yield rose to this year's highest level overnight after Federal Reserve Chair Janet Yellen said in a congressional testimony that an increase in short-term rates "relatively soon" will be appropriate.
"There has been a turnaround for casinos since the industry had year-on-year revenue growth in the past few months," said Sam Chi Yung, a senior investment strategist at South China Financial Group. However, the city's other blue chips haven't been performing well recently amid prospects of interest-rate increases by the U.S. Fed, which is leading investors to "buy U.S. dollar assets and may affect non-U.S. markets, including Hong Kong."
U.S. Fed Fund futures traded on the CME were pricing in a 90% probability that Fed will hike rate next month after Yellen's testimony.
The rates outlook has ushered volatility into regional markets as investors consider the possibility of fund outflows
Asian currencies extended declines on Friday, with the onshore Chinese yuan falling 0.2% after the nation's central bank weakened its daily reference rate for the eleventh consecutive day. Among regional stock markets, Japan's Nikkei 225 Index rose 0.8% while South Korea's Kospi and India's Sensex slipped 0.3% each.
Hong Kong Exchanges & Clearing declined 0.7% to HK$202.60. Charles Li, the chief executive officer of the bourse operator, said Friday that the timing of a highly anticipated trading link with the Shenzhen bourse "would be clear before Christmas," according to a Nikkei Quick News report. There was market speculation that the link would start as early as Nov. 21, but the Chinese language newspaper Hong Kong Economic Daily reported on Friday that it is possible to go live in December, due to the continued decline of the yuan.
While the link may prove to be good news for Hong Kong stocks in the long term, investors "aren't over excited" about it immediately, South China Financial's Sam said
The Shenzhen exchange connect, which expands a similar link between the Shanghai and Hong Kong bourses, is expected to improve trading volumes in Hong Kong. Chinese investors can purchase as much as a net 10.5 billion yuan ($1.52 billion) of local stocks a day through the Shenzhen link, the same as via the Shanghai connect program.
China Shenhua Energy dropped 3.1% to HK$15.70, the top decliner on the Hang Seng Index, after China adopted new rules to increase coal output on Thursday amid surging prices.
China Vanke, mainland China's largest listed property developer, climbed 4.2% to HK$22.15 after saying on Thursday that China Evergrande Group has acquired the company's Shenzhen-listed shares worth 22.26 billion yuan on the market, raising its stake in the developer to 9.45%.
Swire Pacific declined 0.5% to HK$76.85 after the Hong Kong conglomerate said it plans to acquire Coca-Cola's bottling assets in China in a deal with a total value of 5.87 billion yuan.