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Nikkei Markets

Hong Kong shares flat as geopolitics counter China's upbeat GDP report

Casino operators recover from Monday's drop; Apple suppliers slide

A flag bearing the logo of the Hong Kong Exchanges and Clearing Limited flies in Hong Kong.   © Reuters

HONG KONG (Nikkei Markets) -- Hong Kong shares were little changed by midday on Tuesday, as better-than-expected first-quarter economic growth data from China helped erase early losses amid caution over geopolitical issues.

The Hang Seng Index was unchanged at 30,316.14 by the noon lunchbreak after falling as low as 30,057.83 in the morning. The gauge rose as much as 0.5% after data showed China's gross domestic product expanded 6.8% in the January-March quarter, ahead of the 6.7% pace analysts polled by Reuters were expecting.

Macau casino operators Galaxy Entertainment Group and Sands China rose 1.5% and 2.6%, respectively. The two stocks fell on Monday amid worries that China's plans for a free-trade zone on Hainan island might hurt traffic to the gaming hub. Apple suppliers Sunny Optical Technology Group and AAC Technologies Holdings dropped 4.1% and 4.2%, respectively. China Shenhua Energy slipped 0.2% after reporting an 8.7% drop in March commercial coal production.

Indexes on Wall Street closed higher overnight as the first-quarter corporate earnings season got off to a positive start. The safe-haven Japanese yen edged lower for a second day as risk appetite stabilized amid bets the U.S.-led missile strike in Syria over the weekend was a one-off event. Still, investors continued to watch for further news on the subject out of the U.S. and Russia, an ally of Syrian President Bashar al-Assad.

Mark To, managing director of asset management and head of research at Wing Fung Financial Group, said China's first-quarter GDP data helped Tuesday's rebound, but cautioned that "there is a lot of negative news from the outside."

In the short term, investors are relatively sensitive to trade war and geopolitical-related news, he said, adding that the Hang Seng Index was expected to trade between the 30,000 and 32,000 levels.

In the mainland, the Shanghai Composite Index fell 0.4%, while its Shenzhen counterpart shed 0.8%.

Leshi Internet Information & Technology jumped 9.9%. China Evergrande Group's Hong Kong-based fund has invested about $300 million in a Faraday Future offshore unit in 2017, according to a Reuters report, citing Tencent's news portal. Leshi's top shareholder, Jia Yueting, the founder of the company's Chinese parent LeEco, has an investment in Faraday Future. China Evergrande shares fell 1.4% in Hong Kong.

Shares in China's state-owned ZTE were halted in Hong Kong on Tuesday after the U.S. imposed a ban on sale of equipment to the Chinese telecommunications-equipment maker. The U.S. Department of Commerce on Monday said Secretary of Commerce Wilbur L. Ross Jr. imposed a denial of export privileges against ZTE, after determining that the company made false statements on multiple occasions following its earlier shipments of telecom equipment to Iran and North Korea. ZTE shares were last traded at HK$25.60 in Hong Kong on Monday.

Chow Tai Fook Jewellery Group jumped 6.3% to a three-and-a-half-year high after saying retail sales value rose 13% in mainland China during March and 11% in Hong Kong and Macau.

China Eastern Airlines edged 0.2% higher after reporting a 10.6% increase in its number of passengers carried in March to 10.1 million. Air China dropped 2%. On Monday, the airline reported an 11.4% increase in passengers carried last month to 9.4 million.

U.S.-listed Chinese e-commerce major JD.com on Tuesday said it agreed to acquire a 33.3% stake in Allianz China General Insurance for 536.6 million yuan ($85.4 million), making it the company's second-largest shareholder. JD.com shares edged 0.3% higher in New York on Monday.

-- Amy Lam

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