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Nikkei Markets

Hong Kong shares extend gains as insurers push higher

Xiaomi and Meituan jump on plan to include dual-class shares in Stock Connect

HONG KONG (Nikkei Markets) -- Hong Kong shares extended a two-week winning streak on Monday, with financial companies pacing advances amid an optimistic outlook for life insurers.

The Hang Seng Index rose 0.3% to 26,806.18 by noon after changing directions at least five times. China Life Insurance jumped 5.2% after saying it expects net profit for the January-to-September period to have increased 180% to 200% from a year earlier. Pan-Asia insurance heavyweight AIA Group added 1.3%, contributing most to the index's gains by points.

China Pacific Insurance Group climbed 2.6% after reporting a 5.7% increase in its premium income for the first nine months of 2019, helping push the Hang Seng China Enterprises Index up 0.3%.

The Hang Seng Index increased 1.6% last week amid signs of progress to resolve the Sino-American trade war. There have been further developments since then, with Chinese Vice Premier Liu He reportedly saying there had been "substantial progress" to lay the foundation for a phase one agreement. U.S. President Donald Trump on Friday said he thinks a deal with China will be signed by the time the Asia-Pacific Economic Cooperation summit takes place in Chile in mid-November. Trump and Chinese President Xi Jinping are expected to attend the meetings.

Turnover on the Hong Kong Stock Exchange's main board was at 35.09 billion Hong Kong dollars ($4.47 billion) by the midday break, lower than usual for the time of day.

Monday's advances came even as the People's Bank of China on Monday unexpectedly kept its new benchmark lending rate, the one-year loan prime rate, unchanged at 4.2%. The five-year LPR was also unchanged at 4.85%. Data released last week showed China's gross domestic product growth slowed to a near three-decade low.

The Shanghai Composite Index was little changed by the midday break on Monday, while the yuan traded onshore rose 0.2% against the U.S. dollar to 7.0678.

Alvin Ngan, an analyst at Zhongtai International Securities, noted that local equities lacked catalysts for a boost.

"Since mainland economic data isn't too good, money could also be after stocks that are profitable and stable," he said. "It seems the central bank doesn't want to greatly lower the [medium-term lending facility] rate despite weak economic data, so it is very difficult for the stock market to go up," he added.

Shares of Chinese online food delivery-to-ticketing platform Meituan Dianping and smartphone maker Xiaomi, both of which have dual-class shares, were among the notable gainers after the stock exchanges in Shanghai and Shenzhen revised rules to allow companies with weighted voting rights to be included in the list of stocks eligible for trading via the electronic trading links with Hong Kong. The change is due to take effect on Oct. 28.

Meituan added 4.2%, while Xiaomi rose 4.8%.

Separately, Xiaomi plans to launch more than 10 5G phones in 2020, Reuters cited Chief Executive Lei Jun as saying at a conference in China on Sunday.

Chinese car dealer Dah Chong Hong Holdings jumped 29.7% to HK$3.49 after CITIC Pacific, a unit of China's CITIC, said it will offer to buy the shares of the company it does not own at HK$3.70 apiece. CITIC Pacific, which currently owns about a 56.8% stake in Dah Chong Hong, will pay about HK$3.02 billion for the 816.8 million shares of the company it does not own.

-- Benny Kung

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