HONG KONG (Nikkei Markets) -- Hong Kong shares jumped to a fresh five-month high on Thursday after U.S. President Donald Trump announced the date for signing a preliminary Sino-American trade deal and China's central bank said it is cutting banks' reserve requirements to boost Asia's largest economy.
The Hang Seng Index added 1.3% to 28,543.52, ending the maiden trading day of the new year at its highest since July 25. The market was closed on Wednesday for New Year's Day. Pan-Asia insurer AIA Group jumped 3.6%, contributing most to the index's gains by points. Social media and gaming major Tencent Holdings rose 1.8%.
Trump on Tuesday said he will sign a first phase of a trade deal with China in Washington on Jan. 15, adding that he will travel to Beijing later for further negotiations. The U.S. has already said it will roll back some import tariffs, while China has pledged to buy more American goods.
Meanwhile, the People's Bank of China on Wednesday said will reduce banks' reserve requirement ratio -- the amount of cash lenders must hold in reserve -- by 50 basis points with effect from Jan. 6. The move follows similar cuts in 2019 and 2018 as the economy struggled under the influence of the trade war and Beijing strove to channel credit to small and medium-size enterprises in the private sector.
"Both factors are adding momentum to the market," said Ronald Wan, chief executive, Partners Capital International. "The RRR cut shows the Chinese government is actually working on the stability of the economy and toward maintaining the growth rate closer to 6%."
Looking ahead, Wan said he is positive on Chinese financial stocks and domestic consumption-related companies as a trade deal seems imminent and mainland authorities focus on providing liquidity to companies. He expressed caution over companies with high gearing ratios, especially small- and medium-sized manufacturers.
Meanwhile, a private survey released on Thursday showed China's factory activity expanded at a slower pace in December. The Caixin/Markit Manufacturing Purchasing Managers' Index for last month came in at 51.5, down from 51.8 in November, but remained in expansion territory.
In the mainland, the Shanghai Composite Index climbed 1.2%, while the yuan traded onshore slipped 0.1% to 6.9651 against the dollar.
In Hong Kong, anti-government protests continued, with an estimated 1.3 million people joining a march on New Year's Day. The demonstrations, which started in June to oppose a now-withdrawn extradition bill, have morphed into a movement to demand broader democratic rights in the Chinese-controlled city.
Gaming hardware company Razer jumped 8.7% in Hong Kong. The company on Thursday said its fintech arm has applied for a full digital banking license with the Monetary Authority of Singapore so that it can establish a youth bank aimed at millennials. Separately, Razer said it had named Chong Neng Tan as its chief financial officer, effective Jan. 1.
Star Properties Group (Cayman Islands) surged 22.8% after saying its unit agreed to sell Rainbow Red Holdings, which owns property in Hong Kong's New Territories, for 980 million Hong Kong dollars ($125.8 million). The company expects to record a gain of about HK$380 million before tax on completion of the deal.
Financial services company Innovax Holdings advanced 9.2% after saying it bought 2.6 million shares in recently listed Taizhou Water Group for HK$11 million. Taizhou Water slipped 1.7%.
Online education course provider Koolearn Technology Holding fell 0.5% after saying it expects to report a "substantial" net loss for the six months ended Nov. 30, compared with a profit in the year-ago period.
-- Suzannah Benjamin