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Nikkei Markets

Financials lift Hong Kong shares amid trade optimism

AIA and Great Wall Motor jump after third-quarter results

HONG KONG (Nikkei Markets) -- Hong Kong shares were on course for their best day in more than two weeks on Monday, with some upbeat earnings and indications of progress toward a Sino-American trade deal helping to lift sentiment.

The Hang Seng Index rose 1.2% to 26,983.82 by noon. Pan-Asia insurer AIA Group advanced 4.2% following a 1% increase in the value of new business. The insurer said value of new business, excluding Hong Kong, rose 14% in the third quarter from a year ago.

Industrial & Commercial Bank of China rose 1.4% after reporting a 5.8% increase in third-quarter net profit and a 5.4% higher net interest income. London-headquartered lender HSBC Holdings rose 0.7% ahead of its third-quarter results announcement.

Hopes for a resolution in the protracted trade war between Washington and Beijing gathered pace after the U.S. Trade Representative's office and China's Commerce Ministry said officials from the two nations were "close to finalizing" parts of a trade deal, following telephone discussions on Friday. The comments are the latest in a string of positive signs that the two sides might be ready to sign off on phase one of a trade deal by the time Presidents Donald Trump and Xi Jinping attend a summit in Chile next month.

"Global news flow is good and valuations are low," said Steven Wong, an investment analyst at Harris Fraser Group. "Market fundamentals are not that weak."

Meanwhile, anti-government protests in Hong Kong showed no sign of abating despite the withdrawal of a controversial extradition bill, a number of arrests and the government's move to invoke an emergency law to ban the use of face masks at public gatherings. The protests, which started in June to demand the withdrawal of now-retracted extradition legislation, have evolved into a pro-democracy movement that has frequently turned violent as activists clash with the police.

Wong said that it appeared as if weak sentiment clouding Hong Kong had already been priced in, especially for some retailers.

Shares of Hong Kong-based jewelry companies Chow Tai Fook Jewellery Group and Chow Sang Sang Holdings International, and cosmetics retailer Sa Sa International Holdings are all on track to end this month higher. The stocks had come under pressure recently as the citywide protests took a toll on sales and in-store footfalls.

On Monday, Chow Tai Fook edged 0.1% higher and Chow Sang Sang slipped 0.3%, while Sa Sa rose 0.5%.

In the mainland, the Shanghai Composite Index rose 0.7% by midday on Monday, while the yuan traded onshore edged 0.1% higher against the dollar to 7.0587.

Great Wall Motor jumped 11.9% in Hong Kong after reporting a more than sixfold increase in net profit for the third quarter.

Agricultural Bank of China (ABC) rose 1.6% following a 6.1% increase in third-quarter net profit amid narrower credit impairment losses.

-- Benny Kung

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