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Nikkei Markets

Asian shares advance as US, China sign interim trade pact

Samsung Electronics, ZTE gain

HONG KONG (Nikkei Markets) -- Asian shares outside Japan advanced Thursday as investors assessed details of the U.S.-China interim trade deal.

The Nikkei Asia300 index rose 0.3% to 1,424.15.

U.S. President Donald Trump and Chinese officials on Wednesday signed the phase-one trade deal that involves Beijing increasing purchases of U.S. goods in return for tariff reduction on over $100 billion of Chinese imports. The deal further affirms the importance of ensuring transfer of technology on voluntary basis, requires measures for intellectual property protection, and lays out an enforcement mechanism for currency matters.

"The broad outlines have been well known for several weeks. We reckon that a lot of the optimism on this front has already been priced in," DBS Group Research said. With China-U.S trade tensions likely to be on the backburner for a while, market participants' focus will shift to earnings, macro data, and outlook for U.S. elections, it added.

U.S. presidential elections will be held in November.

Updates on the phase-two of the trade pact will be another area of focus for investors in the coming months. Trump said yesterday that tariffs on Chinese goods that remain in place could be removed once the phase-two deal is reached.

Talks related to the phase-two deal had already begun, U.S. Vice President Mike Pence said yesterday in an interview to Fox Business Network just hours after the signing of the interim deal, Reuters reported.

In movers on the A300 on Thursday, Guangzhou Automobile Group fell 3.8%. The Chinese carmaker on Thursday said it was in talks with New York-listed electric vehicle maker Nio about a financing proposal, but it does not expect the total amount of its investment in the company to exceed $150 million. The statement came after media reports said Nio was in talks for up to $1 billion in funding.

The H-shares of Chinese telecommunications firm ZTE rose 1.1%. The company announced an A-share subscription agreement consisting of 381.1 million shares at 30.21 yuan each. The company will raise gross proceeds of about 11.5 billion yuan ($1.67 billion) from the deal. ZTE's Shenzhen shares were up 1.7% at 37.56 yuan.

Chinese airlines slipped despite a year-on-year increase in number of passengers carried last month. Air China declined 0.8% following a 5% increase in passengers while China Eastern Airlines dropped 0.9% after a 5.6% rise in passenger numbers. China Southern Airlines slid 1.3% in spite of a 6.7% growth in the number of passengers carried.

Huaneng Power International fell 0.8% after reportedly saying that December quarter power generation declined 0.9% from a year ago.

Samsung Electronics added 2.9%, extending its monthly advance. The company last week reported December quarter operating profit that beat estimates.

--Nimesh Vora

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