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Nikkei Markets

Hang Seng slides on worries Trump move to hurt trade talks

CSPC Pharma slumps after Beijing adds cancer drug to discount purchasing list

HONG KONG (Nikkei Markets) -- Hong Kong shares tumbled on Friday, with the city's main equity benchmark dragged lower by heavyweights, amid lingering concern over Sino-American trade tensions and President Donald Trump's approval of a law to periodically review the city's autonomy.

The Hang Seng Index declined to 26,363.78 by noon, declining 2%, its steepest fall in almost three weeks. Among heavyweights internet services company Tencent Holdings fell 2.4%, while pan-Asia insurer AIA Group slipped 2.1%. The two stocks contributed about a fifth of the gauge's losses by points.

CSPC Pharmaceutical Group slumped 11.3%. Morgan Stanley said China's inclusion of CSPC's cancer drug albumin-bound paclitaxel in its potential list for centralized procurement was not expected by the market.

With Friday's losses, the Hang Seng Index is poised to end the week lower. The gauge has been choppy recently even as protests in the city appeared to ease after pro-democracy candidates won a landslide in Sunday's district council elections. The day's sharp retreat took some analysts by surprise.

"The market had been on a steady uptrend, and today's decline is totally outside of expectations," said Steven Leung, executive director at UOB Kay Hian (Hong Kong). Looking ahead, "the main focus is on Dec. 15, and whether the U.S. raises tariffs."

Investors are waiting for more news on the way forward for trade talks between the U.S. and China. Both countries have said that the signing of a preliminary trade agreement is imminent, but no concrete steps have been announced.

Trump on Wednesday signed the Hong Kong Human Rights & Democracy Act, a move that has angered Beijing.

Andrew Sullivan, director at Pearl Bridge Partners, said Friday's fall was related to concern over Sino-American trade talks.

"Everyone is waiting for China's response to the fact that Trump signed the bill," he said. "Yesterday, there were still overnight orders coming in from the U.S., but with no one in the office in the U.S. on Thursday, it is today" the market felt the full impact.

U.S. markets were closed overnight for the Thanksgiving holiday.

In the mainland, the Shanghai Composite Index slipped 0.6%.

Chow Tai Fook Jewellery Group jumped 8.4% after it reported a 20.8% decline in April-to-September profit that it had warned of earlier. Goldman Sachs said the company's adjusted net income beat the brokerage's estimates.

Fellow jewelry retailer Luk Fook Holdings International slipped 0.2% following a 25.4% drop in profit for the six months ended Sept. 30.

Chinese apparel company Bosideng International Holdings added 4.8% following a 36.4% increase in net profit for the April-to-September period.

Changsha Broad Homes Industrial Group slid 7% after saying joint global coordinators for its initial public offering had exercised an over-allotment option for 0.14% of the company's shares. The IPO had an option for up to 15%.

--Suzannah Benjamin

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