HONG KONG (Nikkei Markets) -- Hong Kong shares headed higher on Monday, extending a two-week streak, as Chinese authorities moved to support Asia's largest economy while the nation scrambled to contain the coronavirus.
The Hang Seng Index added 0.5% to 27,940.81 by noon. Social media and gaming major Tencent Holdings rose 0.6%, while pan-Asia insurer AIA Group climbed 0.7%, with the two stocks contributing nearly half of the index's gains by points.
Smartphone components supplier Sunny Optical Technology Group climbed 3.5% following a 33.2% increase in January shipment volumes for handset lens sets. Meanwhile, Q Technology (Group) jumped 7.7% after reporting a 2.6% increase in total sales volume of camera modules for January.
Gains on Monday came after the People's Bank of China said it would lower the rate on 200 billion yuan ($28.6 billion) worth of one-year medium-term lending facility loans to financial institutions to 3.15% from 3.25%. The cut came about two weeks after the PBOC lowered interest rates on reverse repurchase agreements by 10 basis points.
"We are expecting more rate cuts," said Steven Leung, executive director at UOB Kay Hian (Hong Kong), adding that a reduction to the loan prime rate on Thursday was likely in addition to continuous liquidity injections. "People are getting more comfortable with the infection numbers being released by China."
The coronavirus has so far infected more than 70,000 people and claimed over 1,700 lives. The virus, first detected in Wuhan in the central Chinese province of Hubei, has crippled business activity in parts of the country. Provincial authorities have ordered residents there, including about 24 million people in rural areas, to stay home until further notice, the South China Morning Post reported late on Sunday.
Hong Kong has so far confirmed 57 cases of infections and one fatality.
In the mainland, the Shanghai Composite Index added 1.3% by midday, while the yuan traded onshore rose 0.1% against the dollar to 6.9760.
Beauty products company Bonjour Holdings jumped 20.2% in Hong Kong after its vice chairman agreed to buy another 40.4% stake in the firm for 158 million Hong Kong dollars ($20.3 million), a move that will trigger a mandatory cash offer for the rest of the shares.
Da Yu Financial Holdings surged 33.8% after saying it expects to swing to a profit of HK$840 million for the six months ended Dec. 31, compared with a loss of HK$14 million a year ago.
Ascletis Pharma added 7.5% after saying its Ritonavir oral tablet received approval from relevant regulatory authorities of Zhejiang province to conduct study for treatment of novel coronavirus pneumonia.
Furniture maker Kasen International Holdings jumped 14.6% after saying it had resumed work at its manufacturing plant in Haining from Feb. 14, following a temporary suspension because of the coronavirus outbreak.
ANTA Sports Products added 3.7% after saying about 40% of its stores in China for various brands had resumed operations as of Feb. 14 following a temporary closure due to the virus.
Air China slipped 0.4% following a 4.1% decline in total passengers carried during January.
Automotive parts maker Wuling Motors Holdings fell 6% after reporting a more than 80% year-on-year drop in net profit for the year ended Dec. 31.
Watch retailer Hengdeli Holdings fell 1.8% after saying it expects to report a loss of at least 330 million yuan for the year ended Dec. 31, compared with a profit in the year ago period.
-- Suzannah Benjamin