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Nikkei Markets

Hong Kong shares end above 29,000 after flat China GDP figures

Yuan jumps but analysts warn economic cycle might not have reached bottom

HONG KONG (Nikkei Markets) -- Hong Kong shares weathered a choppy trading day to end at a seven-month high on Friday, as investors digested China's economic growth numbers.

The Hang Seng Index ended 0.6% higher at 29,056.42, its highest closing level since May 7. The gauge rose 1.5% for the week, its seventh consecutive weekly advance.

Mainland financial stocks Ping An Insurance Group and China Construction Bank added 4.3% and 1.2%, respectively, contributing most to the gauge's gains by points.

Sino Biopharmaceutical gained 3.5% and CSPC Pharmaceutical Group surged 5.1% amid a positive earnings outlook and investor expectations that the drugmakers could withstand efforts by Beijing to cut the cost of generic medicines because of their diversified product portfolios.

The Hang Seng China Enterprises Index for large Chinese companies listed in Hong Kong climbed 0.8%. On the mainland, the Shanghai Composite Index edged 0.1% higher, while the yuan traded onshore climbed 0.3% against the dollar to 6.8534.

Data released on Friday showed China's gross domestic product grew 6.1% in 2019, the slowest pace since 1990. The reading was within the government's target of 6% to 6.5% for the year. GDP during the December quarter rose 6%, unchanged from the pace in the September quarter and in line with the expectations of economists polled by Reuters and Bloomberg.

Still, some market participants believe Asia's largest economy will likely face more pain.

"We think it is premature to call the bottom of the current economic cycle," Martin Rasmussen, chief economist at Capital Economics, wrote in a note. He said easing external headwinds following the formalization this week of a preliminary trade agreement between the U.S. and China will likely be offset by "a renewed slowdown in domestic demand, triggering further monetary easing by the People's Bank."

Meanwhile, optimism over the trade deal lingered.

Stanley Chik, head of research at Bright Smart Securities, expects trading on the Hong Kong stock market to be range bound following the signing of the deal.

"Especially with long holidays approaching, turnover will dwindle," he said.

Mainland markets will be closed from Jan. 24 through Jan. 30 for the Lunar New Year holiday, while Hong Kong's markets will be shut on Jan. 27 and Jan. 28.

Cathay Pacific Airways declined 1.6% in Hong Kong after reporting a 3.6% drop in total passengers carried during December.

O-Net Technologies (Group) slid 8% after the optical networking products maker said it expected net profit for 2019 to have decreased more than 50% from a year ago.

BII Railway Transportation Technology Holdings jumped 7.8% after the company said it expected profit for 2019 to have at least doubled from a year ago.

China Shanshui Cement Group added 7.1%. The company said it expected profit for last year to have risen "substantially" from a year ago primarily due to an increase in the sales volumes and selling price of cement.

China Aircraft Leasing Group Holdings added 0.7% after saying it had agreed to buy 40 Airbus A321neo series aircraft. The company expects delivery of the aircraft in stages up to 2026.

-- Benny Kung

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