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Nikkei Markets

Hong Kong and China shares rise after break

HKEX up after dropping London Stock Exchange bid

HONG KONG (Nikkei Markets) -- Hong Kong shares rose amid robust trading volumes on Tuesday, as links connecting the city's markets to China reopened after a week, even though caution over an ongoing political crisis and uncertainty about Sino-American trade relations prevailed.

The Hang Seng Index added 0.5% to 25,948.09. Turnover on the Hong Kong Stock Exchange's main gauge was at 83.18 billion Hong Kong dollars ($10.60 billion), higher than in the recent past as trading via the Shanghai and Shenzhen stock connects resumed after the Golden Week holiday. Hong Kong's financial markets were closed on Monday, while mainland markets were shut between Oct. 1 and Monday.

London-headquartered lender HSBC Holdings edged 0.3% higher. The bank has embarked on a cost-cutting drive that could result in up to 10,000 job cuts, the Financial Times reported, citing two people briefed on the matter.

Hong Kong Exchanges & Clearing advanced 2.3% after the market operator said it will not pursue its $39 billion bid for London Stock Exchange Group and signaled intent to keep its focus on an existing three-year strategic plan through 2021.

Hong Kong rail operator MTR slipped 0.1%. Train stations in the city were damaged over the weekend after protests turned violent once again, leading to widespread outages for rail links across Hong Kong. Services resumed on Tuesday, but some stations remained closed and the government issued a statement saying all trains other than the Airport Express will stop running at 8 p.m.

Protests over the long weekend followed a move by Hong Kong Chief Executive Carrie Lam to invoke emergency powers to impose a ban on the use of face masks during demonstrations. Hundreds of thousands of activists took to the streets wearing masks, defying the ban. The protesters are demanding an inquiry into police actions and universal suffrage, among other things.

"The market has already priced in a bit of the anti-mask law," said Banny Lam, head of research at CEB International. "Of course local events are affecting sentiment, but since many Hong Kong-listed companies do not have a lot of operations in the city, they are not being impacted much. It is understandable for investors to buy into big blue-chips now."

Meanwhile, markets are awaiting the outcome of a round of high-level Sino-American trade talks, due to take place in Washington this week. The U.S. Department of Commerce included some of China's artificial intelligence startups to its Entity List on Monday, including video surveillance firm Hikvision and facial recognition technology companies SenseTime Group and Megvii Technology. The Trump administration will curb companies from exporting American-made goods to the companies on the list, similar to a restriction imposed on Chinese technology giant Huawei Technologies earlier this year.

Megvii, which has filed to list its shares in Hong Kong, on Tuesday said it "strongly objects" to its inclusion in the list, saying such a designation has "no grounds."

The Shanghai Composite Index advanced 0.3%, while the yuan traded onshore strengthened 0.2% to 7.1308 against the dollar.

Chinese convenience store chain Best Mart 360 Holdings slumped 9.5% in Hong Kong. A number of the company's stores in the city were reportedly vandalized over the weekend protests.

Chinese property developer Kaisa Group Holdings climbed 3.2% after reporting an 89% surge in contracted sales for September to 10.83 billion yuan ($1.51 billion).

CMMB Vision Holdings plunged 25.6% after the media services company said it plans to consolidate every 20 issued and unissued shares into one.

-- Benny Kung

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