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Nikkei Markets

Hong Kong shares break rally as virus cases keep rising

Kingsoft and Netdragon Websoft jump amid speculation virus will boost demand

HONG KONG (Nikkei Markets) -- Hong Kong shares fell for the first time this week on Friday, as confirmed cases and fatalities from the Wuhan coronavirus grew.

The Hang Seng Index slipped 0.3% to 27,404.27 on Friday. Among heavyweights, AIA Group and Ping An Insurance Group declined 1.1% and 0.5%. Property developer China Overseas Land & Investment lost 1.8% following a 17.9% drop in last month's contracted sales.

Despite Friday's pullback, the local index rose 4.1% for the week, delivering its biggest weekly gain in nearly two months. On the mainland, the Shanghai Composite Index added 0.3%, its fourth consecutive advance. The Shanghai Composite Index fell 3.4% during the week following a 7.7% slump on Monday when markets reopened after an extended Lunar New Year break.

Recent gains for Hong Kong and China's equity markets came amid extended gains for U.S. equities, supportive measures from the People's Bank of China, signs of further progress in the de-escalation of the Sino-American trade war and speculation about support from mainland investors.

Still, broader market sentiment has been under pressure as participants assess the extent of the global economic impact from the Wuhan coronavirus. China late on Thursday reported more than 31,000 confirmed cases of people with virus infections and a death toll of 636. So far, there have been two virus-linked fatalities outside China, one each in Hong Kong and the Philippines.

"The market now is still rather pessimistic," said Stanley Chik, head of research at Bright Smart Securities. "As long as the virus shows signs of spreading, chances that the market [will] correct will be very high, so investors better not drop their guard."

Any positive news was likely to spark a rebound, but such news would only have a limited impact, he added.

Games and software product developers Kingsoft and Netdragon Websoft Holdings rose 9.9% and 16.2% respectively, amid expectations for higher demand for their products amid the virus outbreak.

TCL Electronics Holdings jumped 14.9% after the consumer electronics company said it expected profit for the year ended Dec. 31 to have increased at least 120% from a year ago amid improving profit margins.

Casino operator Wynn Macau fell 1.2% after reporting a 2.3% decline in fourth quarter net profit.

Property developer China Aoyuan Group declined 3.1% after reporting a 9.7% decrease in January contracted sales from a year ago.

Freight-forwarding company YTO Express (International) Holdings slid 10.7% after saying it expected to report a "substantial" year-on-year decline in profit for the year ended Dec. 31.

Cosmetics retailer Sa Sa International Holdings slipped 0.7% after reporting a 76.9% plunge in retail sales in Hong Kong and Macao during the Lunar New Year holiday due to the coronavirus outbreak.

Alibaba Health Information Technology rose 4% after saying it planned to buy all of Ali JK ZNS from a unit of its parent Alibaba Group Holding for 8.08 billion Hong Kong dollars ($1.04 billion).

-- Benny Kung

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