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Nikkei Markets

Hong Kong shares come off six-week high as Brexit is watched

Xiaomi slides after an investor is said to sell 231 million shares at a discount

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower from a six-week high on Wednesday, as investor risk appetite wavered amid political uncertainty related to Britain's exit from the European Union.

The Hang Seng Index lost 0.3% to 26,763.58 by noon after a 2% jump on Tuesday. Technology heavyweights Tencent Holdings and China Mobile declined, respectfully, 0.6% and 0.9%. Among banks, U.K.-headquartered lender HSBC Holdings slipped 0.3%, and China Construction Bank gave up 0.6%.

Investors were watching developments in the U.K. after lawmakers on Tuesday voted against Prime Minister Theresa May's proposed deal to take Britain out of the EU. Negotiations for Brexit, which is scheduled for March 29, have been going on for several months. Britain voted to leave the EU in June 2016. The pound sterling was little changed against the U.S. dollar in Asian trading on Wednesday after falling as much as 1.5% in intraday moves on Tuesday. The Japanese yen, considered to be a safe-haven asset, rose 0.2% against the dollar.

"We can see financial markets have been quite immune to bad news recently," said Will Leung, head of investment strategy for Hong Kong and greater China wealth management at Standard Chartered Bank. He attributed weakness in Hong Kong shares "more to a natural correction after Tuesday's gains rather than Brexit."

The Hang Seng Index has risen 7% over the last eight trading days amid optimism over Sino-American trade relations and hopes for more state support for the Chinese economy. Chinese Vice Premier Liu He is scheduled to visit Washington on Jan. 30-31 for further trade talks, according to media reports.

"It is hard to guess whether a quick deal can happen, but I believe the market will treat it as good news as long as trade frictions do not escalate. A complete resolution would be the best scenario, but it probably won't happen so soon," Leung said.

In the mainland, the Shanghai Composite Index slipped 0.1%, while the yuan edged 0.1% lower to 6.7684 against the U.S. dollar.

Chinese smartphone maker Xiaomi declined 2.4% in Hong Kong. An unidentified investor in the company offered to sell shares worth up to $282 million at a discount, according to two people familiar with the matter. The investor has offered 231 million shares, around 1% of the outstanding, in a range of HK$9.28 to HK$9.60 apiece, a 6.8% to 3.6% discount to Xiaomi's closing price on Tuesday.

Healthcare services provider Evergrande Health Industry Group rose 6.9% after saying it will acquire a 51% stake in National Electric Vehicle Sweden for $930 million.

China Resources Land fell 2.1% following a 23.3% decline in December contracted sales.

Luye Pharma Group advanced 5% after saying it has given British drugmaker AstraZeneca the right to exclusively promote its high cholesterol drug based on traditional Chinese medicine in mainland China.

Personal-computer maker Lenovo Group dropped 3.7% after saying it plans to issue convertible bonds worth $675 million.

Legend Holdings, Lenovo's largest shareholder, declined 3.4% to HK$21.35. The company said its shareholder Lian Heng Yong Xin agreed to sell 54.1 million shares in the company, or about 2.29% of total issued shares, to ENN Group International Investment at HK$21.56 each.

China Coal Energy climbed 1.6% following a 6.7% increase in December commercial coal sales volume.

Camera-modules maker Q Technology (Group) slid 6.7% after forecasting a 95% decrease in net profit for the year ended Dec. 31.

Apparel company Bossini International Holdings slumped 10.2% after saying it expects losses for the six months ended Dec. 31 to widen.

-- Amy Lam

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