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Nikkei Markets

Hong Kong shares fall as trade uncertainties return

China Shenhua Energy tumbles after coal miners asked to lower prices

HONG KONG (Nikkei Markets) -- Hong Kong shares fell by the biggest magnitude in seven weeks on Wednesday as renewed uncertainty over U.S.-China trade relations weighed on risk appetite.

The Hang Seng Index ended 1.8% lower at 30,665.64. Coal miner China Shenhua Energy dropped 6.4% to lead percentage losses on the index. China's planning agency National Development and Reform Commission told utilities to stop stockpiling thermal coal and ordered miners to cut prices, Reuters reported, citing sources familiar with the matter.

China Unicom (Hong Kong) fell 2.7% after the mobile services provider on Monday said subscribers for its fourth-generation services rose by 4.06 million in April, compared with an addition of 7.07 million users in March.

U.S. President Donald Trump on Tuesday said he was not pleased with the trade agreement with China and that the two nations remain in talks, fueling concerns that tensions between the two sides have not eased. Trump's comments came after an announcement by Treasury Secretary Steven Mnuchin on Sunday that a "trade war" between the U.S. and China was on hold for now.

Market participants were cautious about the "costs China has to pay," said Linus Yip, chief strategist at First Shanghai Securities. "Even though some sectors such as shipping saw a relief rally earlier, the benefit of China importing more U.S. goods will not apply sector-wide. Investors need to carefully assess which stock will benefit, and the potential reduction of Chinese exports may weigh on shipping volumes," he said.

COSCO Shipping Holdings lost 2.1% after a 5.1% rally on Monday. Hong Kong markets were closed on Tuesday for a holiday.

Trump also proposed a plan to penalize ZTE and change its management, as he seeks to keep the Chinese telecommunications equipment maker in business after the U.S. Department of Commerce earlier banned American enterprises from selling to the company. Separately, Reuters cited U.S. lawmakers as saying they will try to prevent Trump from easing penalties on ZTE.

Trading in ZTE's Shenzhen- and Hong Kong-listed shares remains halted.

The Shanghai Composite Index ended 1.4% lower, while the Shenzhen Composite Index gave up 1.1%. The yuan traded onshore weakened 0.3% to 6.3833 against the U.S. dollar. The Nikkei Asia300 Index of regional stocks outside Japan lost 0.6%.

Future Land Development Holdings gave up 3.1% in Hong Kong. The Chinese property developer's average financing costs are expected to increase to between 5.75% and 6.00% this year from about 5% in 2017 because of tighter liquidity conditions in the mainland, Executive Director Kenny Chan told reporters on Wednesday.

Oil producers CNOOC and PetroChina slumped 6.1% and 4.5%, respectively, as Brent crude futures retreated further away from $80 a barrel.

AAG Energy Holdings jumped 5.9% after saying that a unit of conglomerate Fosun International is in talks for a potential cash offer to acquire a majority stake in the natural-gas producer. Fosun shares ended unchanged at HK$17.28.

WuXi Biologics rose 1.8% in Hong Kong after saying it plans to set up a new clinical and commercial manufacturing facility for biologics in Singapore for 80 million Singapore dollars ($59.7 million).

Sino Harbour Holdings Group tumbled 3.4% after saying it expects a significant decline in its profit for the year ended March 31.

Online gaming and internet services company Kingsoft fell 1.1% following a 50% decline in net profit for the January-March quarter. Revenue for the period rose 4% to 1.26 billion yuan ($197.7 million).

Mining company CST Group climbed 2.8% after saying a unit agreed to sell 3.82 billion shares in mining-focused investment company G-Resources Group to PX Capital Management for 267.5 million Hong Kong dollars ($34.1 million). Shares of G-Resources jumped 13.3%.

-- Amy Lam

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