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Nikkei Markets

Hong Kong and China markets edge up further amid coronavirus woes

Cathay Pacific gains even as it plans reductions to mainland flight capacity

HONG KONG (Nikkei Markets) -- Hong Kong and Chinese shares headed higher following upbeat global cues, although worries about the spread of the novel coronavirus in the mainland kept investors cautious.

The Hang Seng Index rose 0.5% to 26,814.28 by noon. Mainland lenders China Construction Bank and Industrial & Commercial Bank of China advanced 1.2% and 1.1%, respectively, contributing most to the index's gains by points. The Hang Seng China Enterprises Index for large mainland companies listed in Hong Kong added 0.8%.

The gains come after all three major U.S. equity indexes rose overnight, with the Nasdaq Composite hitting a record high.

Still, focus remained firmly on updates about the spread of the coronavirus, which appeared to have picked up pace since the middle of January. China said the death toll from the virus had risen to 490 as of Tuesday, with the total number of confirmed cases of people infected climbing to more than 24,000. Hong Kong has so far reported a total of 18 cases of the virus and one fatality.

Market participants signaled more downside ahead.

Daniel So, a strategist at CMB International, said the Hang Seng Index has not yet reached a real trough amid uncertainty about the epidemic. "I believe the market is inclined to be cautious and there will still be selling pressure in the medium term," he added.

In the mainland, the Shanghai Composite Index rose 1.6%, extending a 1.3% advance on Tuesday. The index had slumped 7.7% on Monday when markets reopened after an extended Lunar New Year break.

The People's Bank of China injected a total of 1.7 trillion yuan ($242.8 billion) into markets through reverse repos over Monday and Tuesday, and lowered interest rates on 7-day and 14-day reverse repurchase agreements, as part of efforts to stabilize markets.

The central bank is likely to lower its key lending rate on Feb. 20 and reduce banks' reserve requirement ratios in the coming weeks, Reuters reported, citing policy sources.

In Hong Kong, Cathay Pacific Airways jumped 5.6% even as the airline said it plans to reduce flight capacity to and from mainland China by 50% or more between Jan. 30 and the end of March, due to the coronavirus outbreak.

Developer China Jinmao Holdings added 1.8% following a 1.8% increase in January contracted sales.

Xtep International Holdings advanced 4.7% after the sportswear maker said mainland China fourth-quarter same-store sales grew in the low-teen percentages from a year earlier.

Perfect Shape Medical added 1.8% after the beauty services provider said sales contracts for the 10 months ended Jan. 31 rose 10.6%.

Powerlong Commercial Management Holdings rose 1.8% after saying it expects to report at least a 50% increase in profit for the year ended Dec. 31, excluding listing expenses. The company's shares were listed in Hong Kong in December.

Mining company Greentech Technology International fell 1.2% following a 19.6% drop in tin production during the October-to-December period.

-- Benny Kung

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