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Nikkei Markets

Hong Kong shares flat ahead of US Federal Reserve meeting

Chinese energy stocks slip back as global oil prices retreat

HONG KONG (Nikkei Markets) -- Hong Kong shares were little changed by midday on Wednesday amid thin trading volumes, as investors awaited the outcome of the U.S. Federal Reserve's policy review.

The Hang Seng Index had added 0.03% to 26,797.53 by noon after changing direction at least 10 times. Heavyweight insurers Ping An Insurance Group and AIA Group rose 0.8% and 0.5%, respectively.

Energy producers CNOOC and PetroChina shed 1.7% and 2.1%, respectively, after Brent crude prices declined 6.5% overnight after a 14.6% jump on Monday. The retreat for oil prices came after Saudi Arabia said it will restore lost oil production by the end of the month following an attack on the nation's oil facilities.

Turnover on the stock exchange's main board was at 32.70 billion Hong Kong dollars ($4.18 billion) by noon, lower than usual for the time of day.

The U.S. Federal Reserve is widely expected to deliver a 25-basis-point rate cut later on Wednesday, its second reduction this year. The central bank started easing monetary policy in July as growth in the world's largest economy shows signs of easing amid a tit-for-tat trade war with China.

"The Fed cutting rates by 25 basis points is within expectations," said Stevan Tam, associate director at Fulbright Securities. "The local market does not seem to have any favorable news. It is still overshadowed by social factors."

Investors continue to watch political developments in Hong Kong, as the monthslong pro-democracy protests show few signs of easing.

In the mainland, the Shanghai Composite Index rose 0.4%, while the yuan traded onshore rose 0.1% against the dollar to 7.0866.

The People's Bank of China on Tuesday extended 200 billion yuan ($28.3 billion) of one-year medium-term lending facility (MLF) loans, less than the 265 billion yuan in loans maturing, and kept the one-year MLF rate unchanged at 3.3%, according to Reuters.

"The PBOC will likely cut rates before the end of the month," Fullbright Securities' Tam added.

China's central bank earlier this month announced a reduction to the amount of cash banks must hold as reserves by 50 basis points for all lenders, its third reserve requirement ratio cut this year.

Meanwhile, a round of deputy-level Sino-American trade talks is scheduled to start in Washington on Thursday, ahead of high-level talks in October. The meeting next month is expected to involve U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.

Chinese food-delivery company Meituan Dianping added 4.2% to HK$75 in Hong Kong. Goldman Sachs reiterated its "buy" rating on the stock and lifted its target price to HK$97.50 from HK$85, saying the company has "further solidified its leading position in China's addressable consumer services market."

Metal recycling company China Environmental Resources Group rose 1.3% after saying it expects its consolidated loss for the year ended June 30 to narrow from a year ago.

United Laboratories International Holdings climbed 1.8% after the medicine distributor said its unit received approval notice from China's National Medical Products Administration for the clinical trial of a long-acting insulin degludec injection.

--Benny Kung

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