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Nikkei Markets

Hong Kong shares climb after US Fed cuts rates

AAC Technologies jumps after Apple's quarterly earnings beat expectations

HONG KONG (Nikkei Markets) -- Hong Kong shares rose for the first time in three days on Thursday, in line with gains across most of the region, after the U.S. Federal Reserve delivered a widely expected rate cut even as it signaled a pause going forward.

The Hang Seng Index added 0.9% to 26,906.72 after slipping 0.8% over the last two days. Pan-Asia insurer AIA Group and Tencent Holdings climbed 2.3% and 1.5%, respectively. China Construction Bank added 1.3% after reporting a 6.1% increase in third-quarter net profit and a 2.3% expansion in net interest income.

PetroChina slid 4% after the oil-and-gas company said its third-quarter net profit slumped 58% to 8.83 billion yuan ($1.25 billion). China Petroleum & Chemical, or Sinopec, declined 2.4% following a 27.8% decrease in profit for the January-to-September period.

The S&P 500 Index rose to a record high overnight after the U.S. central bank cut interest rates by 25 basis points, to a range from 1.5% to 1.75%, its third such reduction since July. At a post-policy news conference, Fed Chairman Jerome Powell said the current stance of the monetary policy was "likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook."

The likely end to the rate-cutting cycle and trade talk uncertainties are "limiting gains" for Hong Kong shares, said Tracy Chan, an analyst at KGI Asia, calling Thursday's move in shares a knee-jerk reaction.

The Hong Kong Monetary Authority, the city's de facto central bank, lowered its policy rate by 25 basis points to 2% on Thursday following the Fed's move. Hong Kong's monetary policy moves in lock-step with the U.S. as the Hong Kong dollar is pegged to a range of 7.75 to 7.85 against the greenback.

Meanwhile, Chile on Wednesday said it was canceling an Asia-Pacific Economic Cooperation forum that was due to take place in Santiago Nov. 16-17 amid social unrest in the country. U.S. President Donald Trump and China's Xi Jinping were expected to sign a preliminary trade deal at the summit.

On the mainland, the Shanghai Composite Index lost 0.4% on Thursday. Data released on Thursday showed China's factory activity shrank by a wider than expected clip in October. The manufacturing Purchasing Managers' Index fell to 49.3 this month, China's National Bureau of Statistics said. Economists polled by Reuters were expecting a reading of 49.8, unchanged from September.

Apple supplier AAC Technologies Holdings rose 3.5% in Hong Kong. The iPhone maker on Wednesday reported better-than-expected September quarter earnings and projected fiscal first-quarter revenue that was ahead of analysts' expectations.

Air China fell 0.6% after reporting a 2.3% decline in total revenue for the third quarter. Net profit for the period rose 4.3% from a year ago.

Ausnutria Dairy jumped 6% after saying it expects net profit for the January-to-September period to increase 34.4% to 37.7% from a year ago.

Semiconductor equipment maker ASM Pacific Technology declined 0.3% following a 63% slide in third-quarter net profit and a 19.5% decrease in revenue.

Trading in CGN Power's shares was halted on Thursday, pending the release of an announcement.

-- Benny Kung

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