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Nikkei Markets

Hong Kong shares follow US stocks higher as trade worries ease

Chinese developers climb after regulators said to encourage bond issuance

HONG KONG (Nikkei Markets) -- Hong Kong shares were poised for a third consecutive advance on Thursday following overnight gains on Wall Street, as investors took comfort from indications that Sino-American tensions were easing.

The Hang Seng Index rose 1.3% to 26,537.78 by noon. Tencent Holdings, which has a market value of more than HK$3 trillion ($383.6 billion), added 0.8% after saying it plans to pay a special dividend of about HK$250 million following the spinoff and U.S. listing of Tencent Music Entertainment Group.

China Resources Land jumped 5.7% following a 45.2% surge in November contracted sales.

Hengan International Group slid 4.8% to HK$54.30 as trading resumed after it denied allegations about its financials contained in a report earlier this week by short-seller Bonitas Research and said it will consider legal action against Bonitas. In a fresh report, Bonitas said Hengan's response was "weak and evasive of our key points."

Brokerage house Jefferies said Hengan's profitability on sanitary napkins and cash dividend payouts are real and transparent in its view, while reaffirming its buy rating and HK$86 price target.

The three major U.S. equity indexes rose 0.5% or more overnight amid speculation trade tensions between the world's largest economies may be cooling.

China is preparing to replace its "Made in China 2025" industrial policy with a new program promising greater access for foreign companies, The Wall Street Journal reported Wednesday, citing people briefed on the matter. Other media have reported China plans to reduce tariffs on imported U.S. cars. Also, Meng Wanzhou, an executive at Chinese telecommunications-equipment maker Huawei Technologies who was recently arrested, has been released on bail.

The Hong Kong stock market is "benefiting from hopes that the U.S.-China trade war will continue to de-escalate," said Stanley Chik, head of research at Bright Smart Securities. Separately, "people are anticipating more pro-growth and credit easing measures when China's Central Economic Work Conference is held."

The conference, an annual event on China's policy outlook, is reportedly to be held next week.

In the mainland, the Shanghai Composite rose 1.6%, while the yuan traded onshore added 0.1% to 6.8730 against the dollar.

Mainland developer China Vanke climbed 5.6% in Hong Kong. China's National Development and Reform Commission said it encourages "quality" companies to raise funds from the bond market to strengthen their working capital. Equity research company CMS International on Thursday said the development is a good sign for large-cap developers including Vanke. NDRC defines a qualified quality company as one which has a AAA credit rating and a leading position within its industry or region, among other factors.

Among other developers, China Evergrande Group added 3%. Gemdale Properties and Investment surged 8.6% following a 54.4% jump in November contracted sales.

Link Real Estate Investment Trust advanced 1.1% after saying it sold 12 properties for HK$12.01 billion, or at about a 32.1% premium to the appraised value of the portfolio as on Sept. 30., to a consortium led by Gaw Capital Partners.

Information technology facilities-management company Sunevision Holdings jumped 8.6% after saying its unit received a letter from Hong Kong's Lands Department, confirming that its bid at a land premium of HK$5.46 billion had been accepted in a tender.

Explorer New Times Energy soared 27.7% after saying it made an oil discovery in Argentina's Salta province. The company said preliminary tests indicate crude oil at a flow rate of about 550 barrels of oil per day with virtually no water content.

Innovent Biologics rose 1.9% after saying two clinical studies for a biosimilar product candidate used in treatment of malignant tumors met primary endpoints.

-- Amy Lam

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