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Nikkei Markets

HKEX losses drag Hong Kong shares lower

Foxconn unit FIH rallies amid reports founder may make fresh presidential bid

HONG KONG (Nikkei Markets) - The Hang Seng Index ended lower on Thursday, weighed down by losses for local bourse operator Hong Kong Exchanges & Clearing, even as Chinese companies listed in the city rose amid positive news on Sino-American trade relations.

The Hang Seng Index slipped 0.3% to 27,087.63 after rising as high as 27,283.98 earlier.

Hong Kong Exchanges & Clearing declined 3.5% to HK$237.40 after making an unsolicited bid to acquire the London Stock Exchange Group for 29.6 billion pounds ($36.5 billion). Citi Research downgraded the stock to "sell" from "buy" and lowered its target price to HK$210 from HK$285 after the announcement, citing high regulatory hurdles for the deal.

The bid faces rejection amid uncertainty over political risk and deal structure, the Financial Times reported, citing people briefed on the offer. The LSEG is leaning toward rejecting the Hong Kong bourse's approach, the report cited two people close to the London-based company's board as saying.

HSBC Holdings slipped 0.8% after climbing 3.1% on Wednesday. The London-headquartered lender is preparing to put its French retail bank up for sale, The Wall Street Journal reported, citing people familiar with the matter. A spokesperson for HSBC declined to comment.

HKEX and HSBC were among the top contributors to the index's losses by points.

Meanwhile, trade-sensitive pork producer WH Group added 3.9%.

The Hang Seng China Enterprises Index rose 0.3%. In the mainland, the Shanghai Composite Index advanced 0.8%. The yuan traded onshore jumped 0.4% against the dollar to 7.0894.

U.S. President Donald Trump on Wednesday said he was postponing the imposition of a 5% additional tariff on Chinese goods from Oct. 1 by two weeks. The move came after China on Wednesday released a list of U.S. goods that would be exempt from a 25% extra import tariff that was imposed last year. Markets in the rest of the region were mixed, and equity index futures pointed to a higher opening on Wall Street. The Nikkei Asia300 Index added 0.5%.

However, some participants were circumspect.

This news does not necessarily mean a complete resolution of the trade war, said Kevin Leung, executive director for investment strategy at Haitong International Securities. "We have seen the boy who cried wolf a couple of times," he said, referring to Trump's verbal flip-flops on his China stance in recent months.

The delay helps sentiment rather than represent a "substantial change," he added.

The U.S. and China on Sept. 1 imposed a round of punitive tariffs on goods imported from each other. The U.S. had earlier said it will raise an existing 25% tariff on some Chinese goods to 30% on Oct. 1, and also threatened to impose new levies on Dec. 15, which would effectively cover all Chinese goods imported to the U.S.

Sino-American trade negotiators are due to meet in Washington in early October.

Leung noted an improvement in Sino-American trade relations and Hong Kong's political situation in the recent past. The Hang Seng Index, which had jumped 1.8% on Wednesday, is up 5.3% in September after Hong Kong Chief Executive Carrie Lam announced the withdrawal of a controversial extradition bill that sparked months of protests in the city.

FIH Mobile, a unit of Hon Hai Precision Industry or Foxconn, jumped 14.6% in Hong Kong. Speculation that the company's founder Terry Gou may be planning another presidential bid grew after his aides reportedly visited Taiwan's top election agency to enquire about paperwork needed for an independent campaign. Gou on Thursday quit Taiwan's opposition party Kuomintang after losing the party's primary in July.

Cathay Pacific Airways slipped 0.9% after reporting an 11.3% decline in total passengers carried during August amid a decline in tourist arrivals in the former British colony.

China Life Insurance rose 1.6% following a 5.8% increase in premium income for the January-to-August period.

Kaisa Group Holdings climbed 3.3% after reporting a 14.6% jump in August contracted sales.

China Resources Power Holdings declined 0.9% following a 1.4% decrease in total net generation of subsidiary power plants in August.

-- Benny Kung

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