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Nikkei Markets

Hong Kong shares flat at midday as caution over coronavirus prevails

Cathay Pacific Airways reports 28% drop in 2019 profit

HONG KONG (Nikkei Markets) -- Hong Kong shares were little changed after a choppy morning session on Wednesday, as investors awaited further responses from governments and central banks to combat the new coronavirus and its economic impact.

The Hang Seng Index added 0.04% to 25,402.40 by noon after changing directions at least 10 times. Heavyweights diverged, with AIA Group and Industrial & Commercial Bank of China rising 1% and 0.9%, respectively, while Ping An Insurance Group slipped 0.6%.

Equity indexes on Wall Street rose on Tuesday, but index futures were pointing to a weak start for Wednesday. Central banks have already pledged and announced support, and markets are expecting more action. After the U.S. Federal Reserve unexpectedly delivered a 50-basis-point rate cut last week, participants are pricing in a 75-basis-point reduction at next week's policy review.

Meanwhile, the total confirmed cases of people infected with the virus globally topped 117,000 as of Tuesday. Outside of China, Italy has the most number of cases, with over 10,000 people now infected and more than 600 deaths. Cases in the U.S. have topped 1,000, Bloomberg cited a Johns Hopkins tally as saying.

"People are waiting to see what big central banks will do on rate reduction or new policies," said Steven Leung, executive director at UOB Kay Hian (Hong Kong). "With markets worried about the risk of an upcoming recession, central banks pumping money into the market will prompt people to buy things."

He expects Hong Kong shares to start to stabilize, moving in a narrower range after experiencing big swings in the recent past.

In mainland China, the Shanghai Composite Index added 0.3%. The yuan traded onshore was little changed against the dollar at 6.9522.

Cathay Pacific Airways rose 1.9% in Hong Kong. During the break, the airline reported a 28% drop in 2019 profit and said revenue slipped 3.7% from a year ago.

Wheelock and Co. was little changed at the noon break. The company reported a 46% drop in 2019 net profit at midday.

Yuexiu Property added 4.6% after reporting a 27.5% jump in 2019 profit. Revenue surged 45% to 38.34 billion yuan ($5.51 billion).

Convenience Retail Asia advanced 6.1% following a 13.3% increase in 2019 profit and a 5.9% rise in revenue.

Wharf Holdings fell 3.1% after the company, which has a major exposure to the Chinese property market, signaled it expects a dismal first-half in 2020 because of the coronavirus outbreak. Wharf's 2019 net profit slumped 49% on-year to 3.39 billion Hong Kong dollars ($436.3 million).

Property investment company Tomson Group declined 1.5% after saying it expects net profit for 2019 to have decreased by about 60% from a year ago.

-- Benny Kung

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