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Nikkei Markets

Hong Kong shares climb as US-China trade talks progress

Mainland Chinese companies in Hong Kong jump as Shanghai Composite rallies

HONG KONG (Nikkei Markets) -- Hong Kong shares headed higher on Friday, poised to log their best quarterly gain in almost a decade, helped by signs of progress in Sino-American trade talks in Beijing this week.

The Hang Seng Index was up 0.7% to 28,976.44 by noon. Heavyweights Tencent Holdings and Ping An Insurance Group added 1.4% and 2%, respectively, and were the biggest contributors to gains by the midday break.

The index has risen about 12% during the first three months of 2019, and is on course for its biggest quarterly advance since September 2009.

Global markets await details on developments between the U.S. and China as the two nations hammer out a way forward for bilateral trade nearly a year after U.S. President Donald Trump's administration first announced tariffs on goods imported from China. U.S. Treasury Secretary Steven Mnuchin, who is in Beijing along with Trade Representative Robert Lighthizer, on Friday said he had a "productive working dinner" on Thursday, according to Reuters. The two officials are due to meeting Chinese Vice Premier Liu He later on Friday.

Meanwhile, Chinese Premier Li Keqiang, speaking at the annual Boao forum, on Thursday said the country plans to relax market access for Hong Kong, Macau and Taiwan investment in finance, professional service and high-end manufacturing industries.

"We've seen some China policies become effective recently. Premier Li's speech yesterday sent a positive message," said Linus Yip, chief strategist at First Shanghai Securities. "Since China has rolled out stimulus policies much earlier than other countries amid a global slowdown, it is believed that it could stabilize earlier."

Yip expects the Hang Seng Index to be volatile in the April to June quarter, trading in a range of 28,000 points to 30,2000 points.

The Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong rose 0.8% by midday on Friday, while the Shanghai Composite Index jumped 2.4%. The yuan traded onshore rose 0.2% against the dollar to 6.7236.

Tsingtao Brewery rose 3% in Hong Kong following a 12.6% jump in full-year net profit and a 1.1% increase in revenue.

China Southern Airlines and China Eastern Airlines climbed 7.4% and 6.9%, respectively, ahead of their earnings releases due later on Friday.

Chinese sportswear company Xtep International Holdings tumbled 14.5% after saying it plans to sell 247.1 million new share at HK$5.56 each, a 15% discount to Thursday's close.

China Oriental Group fell 11.6% after the iron and steel producer reported a 1.2% decline in 2018 net profit and a 1.4% decrease in revenue from a year ago.

BAIC Motor declined 3.4%. The carmaker and a unit of Germany's Daimler have agreed to contribute a total of 700 million yuan ($104.1 million) to Mercedes-Benz Leasing in proportion to their respective shareholdings.

Luye Pharma Group jumped 11.7% following a 32.8% increase in 2018 net profit and a 35.6% surge in revenue. The Chinese drugmaker also said it has submitted a new drug application to the U.S. Food & Drug Administration for its schizophrenia and bipolar disorder treatment Rykindo.

Sunac China Holdings added 0.7% following a 50.6% jump in the property developer's 2018 net profit, and an 89.4% surge in revenue.

-- Carrie Chen

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