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Nikkei Markets

Hong Kong shares end week lower on trade and local tensions

New World leads losses as local developers remain under pressure

HONG KONG (Nikkei Markets) -- Hong Kong shares edged lower on Friday to complete their third weekly decline, as fresh worries over U.S.-China trade relations and protests in the city weighed on sentiment.

The Hang Seng Index slipped 0.7% to 25,939.30 on Friday, its lowest close since Jan. 8. The gauge has fallen 3.6% since last Friday as trade tensions escalated late last week after U.S. President Donald Trump announced plans to impose import tariffs on more Chinese goods and anti-government demonstrations in the city continued. Beijing retaliated against the U.S. tariff threat by halting imports of U.S. agricultural products, and allowing the yuan to weaken below 7-to-a-dollar for the first time in more than a decade.

Hong Kong-listed property developers were among some of the biggest losers on the gauge this week, with New World Development shedding 10.3% to lead losses, and Sun Hung Kai Properties declining 7.3%. Local developers have been among the hardest hit stocks in Hong Kong amid the ongoing protests.

The Real Estate Developers Association of Hong Kong, which counts the two companies among its members, on Thursday said in a statement it "condemns the escalating violence" in the city, noting that acts of violence were being perpetrated by a small group of individuals.

On Friday, New World Development ended unchanged at HK$9.67, while Sun Hung Kai lost 1.9%.

Casino operator Sands China edged 1.4% lower despite reporting a 9% increase in profit for the period on a 4.8% rise in revenue.

Hong Kong rail operator MTR rose 0.8% even as it reported a 22.3% decline in profit for the January-to-June period. The stock has shed 11.8% over the past three weeks after the company issued a profit warning. Weeks-long protests in Hong Kong have also occasionally disrupted its services.

China Mobile added 2.9%. The company on Thursday said it was pursuing new growth drivers to circumvent the pressure on its traditional revenue streams as it gears up for a commercial rollout of fifth-generation internet services. The comments came after it reported a 15% drop in January-to-June net profit and a 0.6% decline in revenue.

The Hang Seng Index had opened higher on Friday, rising as high as 26,313.78, but it quickly gave up gains. Concerns over Sino-American trade relations grew after Bloomberg reported, citing people familiar with the matter, that the U.S. was is holding off on a decision about licenses for American companies to restart business with China's Huawei Technologies, after Beijing said it would halt purchases of U.S. farming goods.

Equity futures pointed to a weaker opening on Wall Street on Friday. Chinese telecommunications equipment maker ZTE tumbled 7.8% in Hong Kong.

The intensity of the Hang Seng Index's recent rebound was not strong, said Stanley Chik, head of research at Bright Smart Securities. "Overall, the market hasn't improved much," he said.

Chik added that he did not expect "big changes" to the three factors clouding sentiment currently -- U.S.-China trade tensions, the yuan's exchange rate and political unrest in Hong Kong.

Meanwhile, investors continue to keep an eye on the anti-government protests in Hong Kong. Protesters are staging a peaceful demonstration at the city's airport on Friday.

On the mainland, the Shanghai Composite Index shed 0.7% after rising 0.9% on Thursday. The yuan traded onshore slipped 0.1% to 7.0516 against the dollar.

Great Wall Motor rose 1.2% in Hong Kong after reporting an 11.1% increase in sales volume for July.

Aluminum producer United Company Rusal slumped 5% after reporting a 41% drop in net profit for the first half of the year.

Longfor Group Holdings added 1.7% following a 16% increase in contracted sales for July.

Carnival Group International Holdings fell 7.1% after the property developer said it expected to report a loss of at least 450 million Hong Kong dollars ($57.4 million) for the January-to-June period, compared with a loss of HK$94.9 million a year ago.

Denim fabric maker Hingtex Holdings plunged 17.5% after saying it expected to report a more than 50% drop in net profit for the first six months of 2019.

-- Benny Kung

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