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Nikkei Markets

Hong Kong shares flat as protests, policy moves watched

Shanghai Composite rises for sixth day, while yuan slips

HONG KONG (Nikkei Markets) -- Hong Kong shares ended little changed on Monday amid caution over unrelenting political unrest in the city, even as mainland stocks advanced after the People's Bank of China cut its reserve requirement ratio.

The Hang Seng Index edged 0.04% lower to 26,681.40 after changing directions at least 11 times. Social media and gaming major Tencent Holdings slipped 0.3%, while Sino Biopharmaceutical shed 4.2%. Financial heavyweights HSBC Holdings and AIA Group rose 0.5% and 0.4%, respectively.

China's central bank late on Friday announced a reduction in the amount of cash banks must hold as reserves by 50 basis points for all lenders. The reserve requirement ratio cut was the third such reduction this year after the PBOC's move in January to lower the rate by 100 basis points in two tranches.

China's cabinet last week said it will make "timely use" of broad and targeted RRR cuts for banks. Expectations for fiscal support from Beijing have grown in recent months as China contends with the effects of a bruising trade war with the U.S.

The RRR cut was already factored in by the markets, but there are expectations that Beijing will relax policies further, said Thomas Fung, chief investment officer at China Rise Securities Asset Management.

Unrest in Hong Kong continued for a 14th consecutive weekend despite a move by the city's chief executive last week to withdraw a controversial extradition bill that has triggered mass protests in the city. The withdrawal only met one of the activists' five demands, and pro-democracy activists have said it was "too little, too late."

There have been net capital inflows into H-shares this month from China, "but probably foreign investors are selling more on worries about local events," Fung said.

Meanwhile, data released on Sunday showed China's exports fell 1% in August from a year ago, while imports slid 5.6%. Economists polled by Reuters anticipated exports to have risen 2%. Imports were expected to have shrunk 6%.

In the mainland, the Shanghai Composite Index added 0.8%, rising for a sixth consecutive day, while the yuan traded onshore declined 0.2% to 7.1282.

Geely Automobile Holdings added 5.2% in Hong Kong. The automaker on Friday reported a 19% decline in total sales volume for August. Daiwa Capital Markets maintained its "buy" rating on the stock, noting that the sales decline narrowed from July's 24% drop. The brokerage firm said it expects the industry to recover in the second half of the year.

Information technology company Sunevision Holdings advanced 4.6% after reporting an 11% increase in net profit and a 19% jump in revenue for the full year ended in June.

Midea Real Estate Holding climbed 1.8% following an 18.1% increase in contracted sales for August.

-- Benny Kung

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