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Nikkei Markets

Hong Kong and China shares rise even as coronavirus spreads

Casinos slide after Macao announces two-week closure in wake of virus

HONG KONG (Nikkei Markets) -- Hong Kong shares advanced and mainland Chinese equities staged a modest rebound on Tuesday, aided by positive global cues, even as Beijing scrambled to contain the spread of the Wuhan coronavirus.

The Hang Seng Index, which rose 0.2% on Monday, added 1.2% to 26,675.98 on Tuesday. Among heavyweights, Tencent Holdings rose 3.4%, AIA Group climbed 1% and China Construction Bank advanced 1.2%. Smartphone component makers Sunny Optical Technology Group and AAC Technologies Holdings climbed 4.8% and 0.6%, respectively, amid optimism over China's fifth-generation mobile internet services.

Casino operators listed in the city declined after Macao's Chief Executive Ho Iat Seng said he had asked gaming companies to close all casinos in the city for two weeks amid efforts to contain the spread of the Wuhan coronavirus.

Galaxy Entertainment Group dropped 2.3% and Sands China retreated 2%, while Wynn Macau slid 1.7%.

In mainland markets, the Shenzhen-listed shares of electric battery and vehicles maker BYD jumped 4.7%, while Shanghai-listed Spring Airlines and China Oilfield Services gained 2.1% and 8.9%, respectively, after each ranked among the many stocks that fell by the daily 10% limit on Monday.

The Shanghai Composite Index ended 1.3% higher and the Shenzhen Composite Index advanced 1.8%. The Shanghai index slid 7.7% on Monday in what was its worst single-day performance since August 2015, as the mainland markets reopened after an extended Lunar New Year break. The yuan traded onshore strengthened 0.4% against the U.S. dollar to 6.9915.

The advances came after stocks on Wall Street gained overnight in the wake of better-than-expected U.S. manufacturing data. U.S. equity index futures were trading higher on Tuesday, pointing to another higher opening on Wall Street later in the day.

Fears over the economic impact of the fast-spreading Wuhan coronavirus lingered, meanwhile, leading some participants to remain cautious.

Before the epidemic comes under control, "the market could still face correction pressure after jumping," said Linus Yip, chief strategist at First Shanghai Securities. He added that while those with a short-term investment horizon were speculating, "long-term money, which focuses on buying and holding, will come into the market slowly."

China on Monday said the total number of confirmed cases of the Wuhan coronavirus had risen to 20,623 from 17,705 as of Sunday, and deaths increased 18% to 427 from a day before. Hong Kong, which has 15 confirmed cases of those infected with the virus, on Tuesday reported its first fatality, fueling fears that the number could rise.

The virus, which originated in the central Chinese city of Wuhan, causes pneumonia-like symptoms and is believed to be highly contagious, with cases reported in North America, Europe and other parts of the world.

The Hang Seng Index shed 6.7% in January, with most of those losses coming in the latter half of the month as the Wuhan virus infections multiplied. The epidemic has served to dampen sentiment, which up until then had been buoyant, following a preliminary trade agreement between the U.S. and China.

Chinese officials are hoping, meanwhile, that the U.S. will agree to some flexibility on pledges in their phase-one trade deal, Bloomberg reported, citing people familiar with the situation.

Lee's Pharmaceutical Holdings surged 36% in Hong Kong after saying its antiviral drug Yallaferon had been admitted to the "Catalogue of Emergency Drug Manufacturers of Anhui Province" and has become one of the critical materials for coronavirus prevention and control.

Sany Heavy Equipment International Holdings jumped 7.6% after saying it expects profit for the full year to have increased significantly from a year ago.

Yuzhou Properties climbed 3.6% after reporting a 23% increase in January contracted sales.

Times China Holding advanced 3.3%. The property developer on Monday reported contracted sales of 6.67 billion yuan ($951 million)for last month, up from 4.18 billion yuan a year ago.

Clothing retailer Mulsanne Group Holding fell 6.4% after forecasting a 40% to 45% decline in profit for the year ended Dec. 31.

-- Benny Kung

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