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Nikkei Markets

Hong Kong shares edge up on 'cautious optimism' about trade deal

Kasen International roars back after responding to short seller

HONG KONG (Nikkei Markets) -- Hong Kong shares inched higher by noon on Friday, with heavyweight stocks finding support amid fresh indications of progress in Sino-American trade talks.

The Hang Seng Index had risen 0.3% to 26,536.06 by noon after climbing as high as 26,690.17 earlier. China Construction Bank and insurer AIA Group added 0.8% and 0.7%, respectively, contributing most to the gauge's gains by points.

Investors are awaiting further news on progress in trade talks between the U.S. and China, as a preliminary deal remains to be signed. Chinese Vice Premier Liu He this week reportedly said he was "cautiously optimistic" about a phase one trade deal with the U.S. Liu has invited American Trade Representative Robert Lighthizer to Beijing later this month for further talks, Bloomberg reported, citing people familiar with the matter.

However, there are expectations that President Donald Trump will sign the Hong Kong Human Rights and Democracy Act into a law, a move Beijing is opposed to amid monthslong anti-government protests in the former British colony.

"For now, it looks like the trade war is having more of an impact on the market than local events," said Alvin Ngan, an analyst at Zhongtai International Securities. He added that the trade discussions appeared to have no clear direction at the moment.

Turnover on the Hong Kong Stock Exchange's main board was at 35.79 billion Hong Kong dollars ($4.74 billion) by midday, lower than usual for the time of day.

Ngan expects trading volumes to improve after Alibaba Group Holding's debut in Hong Kong on Tuesday.

Hong Kong Exchanges & Clearing slipped 0.5%. Consumer finance company Home Credit, which had filed papers for an initial public offering in Hong Kong, on Thursday said it was not proceeding with the offering due to market conditions. The announcement came just days after miner Heaven-Sent Gold Group announced the postponement of its proposed flotation in the city.

In the mainland, the Shanghai Composite Index slipped 0.6%.

Meituan Dianping jumped 8.2% after the Chinese food-delivery and online-services company said it swung to a third-quarter profit of 1.33 billion yuan ($189.1 million) from a loss of 83.30 billion yuan in the year ago period. Revenue surged 44.1% during the quarter.

Shares of Kasen International Holdings skyrocketed 462% to HK$2.56 as trading resumed after the company rebutted claims of financial impropriety by short-seller Blue Orca Capital. The stock had slumped 90.1% to HK$0.455 on Thursday before trading was halted around noon. Despite Friday's rally, the stock is still about HK$2 shy of its closing price on Wednesday.

ArtGo Holdings, which also resumed trade after a halt on Thursday, declined 1.6%, extending the previous day's 98% drop after index provider MSCI reversed a decision to add the stock to its indexes. The company said 150.8 million shares held by substantial shareholder Maswin International were sold under margin financing arrangements on Thursday because of the stock's plunge.

Trading in baby formula maker China Feihe was halted at the company's request following a report on it by financial research company GMT Research. GMT Research had in its report Thursday recommended that investors avoid Feihe's stock.

Pacific Textiles Holdings slid 4.4% after the fabric maker reported a 17.9% drop in net profit for the April-to-September period and an 11.1% decline in revenue.

--Benny Kung

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