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Equities

Hong Kong shares fall on renewed uncertainty over Sino-US trade

China Unicom declines after 4G additions slowed in April

HONG KONG (Nikkei Markets) -- Hong Kong shares retreated early Wednesday, as renewed uncertainty over trade relations between the U.S. and China weighed on risk appetite.

U.S. President Donald Trump on Tuesday said he was not pleased with the trade agreement with China and that the two nations remain in talks, fueling concern that tensions between the two sides have not eased. Trump's comments came after an announcement by Treasury Secretary Steven Mnuchin on Sunday that a "trade war" between the U.S. and China was on hold for now.

The Hang Seng Index was down 1% to 30,909.01 by the noon lunch break on Wednesday. China Shenhua Energy, a coal miner, dropped 6.8% to lead percentage losses on the index. China's National Development and Reform Commission has asked utilities to stop stockpiling thermal coal and told miners to cut prices, Reuters reported, citing two sources familiar with the matter. Oil producers CNOOC and China Petroleum & Chemical (Sinopec) shed 2.9% and 2.4%, respectively, as Brent crude futures traded below $80 a barrel. China Unicom (Hong Kong) fell 2%. The mobile operator late Monday said its 4G subscribers rose by 4.06 million last month, a slowdown from an addition of 7.07 million users in March.

COSCO Shipping Holdings lost 3% after a 5.1% rally on Monday. Hong Kong markets were closed on Tuesday for a local holiday.

"The Hong Kong stock market is cooling down this morning after investors discovered the U.S.-China trade deal has not been finalized," said Linus Yip, chief strategist at First Shanghai Securities, adding that market players are cautious about the "costs China has to pay."

"Even though some sectors such as shipping saw a relief rally earlier, the benefit of China importing more U.S. goods will not apply sector-wide. Investors need to carefully assess which stock will benefit, and the potential reduction of Chinese exports may weigh on shipping volumes," he said.

The Shanghai Composite Index was down 0.8% by midday on Wednesday, while its Shenzhen counterpart had shed 0.5%.

Trump also proposed a plan to penalize ZTE and change its management, as he seeks to keep the Chinese telecommunications equipment maker in business after the U.S. Department of Commerce earlier banned American enterprises from selling to the company.

Separately, Reuters cited U.S. lawmakers as saying will try to prevent Trump from easing penalties on ZTE.

Trading in ZTE's Shenzhen- and Hong Kong-listed shares remains halted.

WuXi Biologics rose 2.7% in Hong Kong after saying it plans to set up a new clinical and commercial manufacturing facility for biologics in Singapore for 80 million Singapore dollars ($59.7 million).

Sino Harbour Holdings Group tumbled 3.4% after saying it expects a significant decline in its profit for the year ended March 31.

Online gaming and internet services company Kingsoft fell 2.6% after reporting a 50% decline in net profit for the January-March quarter. Revenue for the period rose 4% to 1.26 billion yuan ($197.7 million).

Mining company CST Group climbed 2.8% after saying a unit agreed to sell 3.82 billion shares in mining-focused investment company G-Resources Group to PX Capital Management for 267.5 million Hong Kong dollars ($34.1 million). Shares of G-Resources jumped 16.7%.

-- Amy Lam

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