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Nikkei Markets

Hong Kong shares edge higher after dovish Fed statement

Henderson Land rises after chairman talks of retirement

  © Reuters

HONG KONG (Nikkei Markets) -- Hong Kong shares headed higher Thursday, tracking gains in the rest of Asia, after the U.S. Federal Reserve indicated it would not raise interest rates in 2019.

The Hang Seng Index added 0.2% to 29,370.02 by noon. Henderson Land Development added 3%, leading percentage gains on the gauge, after reporting a 1.1% increase in 2018 net profit.

CK Infrastructure Holdings declined 2.8% even as its profit for 2018 rose 2% from a year ago. Power Assets Holdings, its affiliate, declined 1.7% following an 8.2% decrease in 2018 net profit. Group companies CK Asset Holdings and CK Hutchison Holdings rose 0.3% and 0.2%, respectively, ahead of their results Thursday.

Tencent Holdings, the most valuable company listed in Hong Kong, edged 0.3% lower ahead of its 2018 results, due later on Thursday.

The U.S. central bank on Wednesday stood pat on interest rates, as was widely expected, and signaled it will not raise them in 2019. The Fed raised rates four times last year and had earlier indicated more increases would come, a possibility that had made investors in the region nervous. U.S. equity indexes ended mixed overnight. The Nikkei Asia300 Index was up 0.4%, with most markets in Asia trading higher.

The Hang Seng Index is more likely to correct now, as its valuation has exceeded "fair" levels, entering "optimistic territory," said Andy Wong, chief investment strategist at Harris Fraser (International). The Fed's indication of no more rate increases this year was expected, he added.

The Hang Seng Index has risen more than 13% so far in 2019 as concerns of rising U.S. borrowing costs have faded and hopes for a resolution of the trade dispute between the U.S. and China have increased.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are due to meet Chinese Vice Premier Liu He in Beijing next week for further trade talks.

Wong said optimism over the outcome of trade negotiations between the U.S. and China is already priced into the Hang Seng Index. "With the negotiation period getting longer, chances of a less sanguine outcome are raising the risk of correction," he added.

In the mainland, the Shanghai Composite Index rose 0.6%, while the yuan traded onshore added 0.1% against the dollar.

New China Life Insurance jumped 10.2% in Hong Kong following a 47.25 surge in 2018 net profit and a 6.2% increase in revenue.

Hong Kong & China Gas added 2% after reporting a 13.2% increase in 2018 net profit.

Wuxi Biologics slid 1.6% to HK$79.60. The company said its controlling shareholder is placing 52 million existing shares at HK$77 each, a 4.8% discount to Wednesday's closing price.

Sany Heavy Equipment International Holdings shed 2.3% despite reporting a more than doubling of its 2018 net profit.

Restaurant operator Ajisen (China) Holdings jumped 7.6% after saying it swung to a profit of 51 million yuan for 2018 from a loss of 486.7 million yuan a year ago. Turnover for the year rose 1.9%.

Auto parts maker Minth Group skidded 7.1% after reporting an 18% drop in 2018 profit.

Chinese selfie-app maker Meitu jumped 7% despite reporting a widening of its loss and a drop in revenue last year.

--Amy Lam

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