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Nikkei Markets

Hang Seng slips after Trump signs Hong Kong bill into law

Alibaba extends gains on confirmation stock to join Hang Seng Composite Index

HONG KONG (Nikkei Markets) -- Hong Kong shares edged lower on Thursday after U.S. President Donald Trump enacted a law that seeks to re-examine Hong Kong's autonomy on an annual basis.

The Hang Seng Index lost 0.2% to 26,893.73 after falling as much as 0.7% in early trade. Among heavyweights, China Mobile fell 1.6%, while Ping An Insurance Group slipped 0.9%.

Sun Hung Kai Properties edged 0.2% lower. The property developer on Wednesday said its units have won the tender for a land parcel in Hong Kong's Kowloon area at a premium of 42.23 billion Hong Kong dollars ($5.39 billion).

Trump on Wednesday signed the Hong Kong Human Rights & Democracy Act, a move Beijing has been opposed to amid violent anti-government protests in the former British colony. The legislation requires the U.S. to conduct an annual review of Hong Kong's special trading status on the basis of whether the city still has sufficient autonomy.

There have been concerns that the bill being enacted could put a spoke in trade talks between the U.S. and China. Investors are currently waiting to see when the U.S. and China will sign the first phase of a trade agreement, which both countries have indicated is imminent.

"It will add some sort of uncertainty. There could be some sort of delay," said Ronald Wan, chief executive at Partners Capital International. "But it won't really derail the deal between the two countries. China has expressed many times that they want to reach a deal."

China's foreign ministry on Thursday reiterated that it will take "counter measures," calling the legislation a serious interference in Chinese affairs.

"Now the wait begins to see just how strong the pledged Chinese response will be, and how much it impacts on the 'Final Countdown' phase one trade deal," Michael Every, senior strategist for Asia Pacific at Rabobank, wrote in a note.

In the mainland, the Shanghai Composite Index fell 0.5%. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong declined 0.6%.

Alibaba Group Holding rose 5.6%, its third day of gains since its debut. The Hang Seng Indexes Company on Wednesday said the stock meets the Fast Entry Rule for the Hang Seng Composite Index, and will be added to the gauge effective Dec. 9.

Chinese smartphone maker Xiaomi climbed 1.8% after reporting a 1.1% increase in third-quarter net profit and a 5.5% higher revenue.

China First Capital Group added 3.3% as trading resumed after a halt. The company on Thursday said 37.35 million shares held by substantial shareholder Wealth Max Holdings were sold by a stock broker to meet margin calls triggered by a sharp fall in the stock. China First Capital's shares plunged 78% on Wednesday before trading was suspended.

China Agri-Industries Holdings surged 29% to HK$4.09 after saying the Hong Kong unit of China's state-owned COFCO has offered to privatize it by paying HK$8.9 billion in cash, or HK$4.25 per share, for the 39.25% stake it doesn't already own.

--Suzannah Benjamin

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