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Nikkei Markets

Hong Kong shares jump after China cuts tariffs on US goods

Crude lifts oil shares while supply concerns amid virus spur consumer stocks

HONG KONG (Nikkei Markets) -- Hong Kong shares closed at more than a one-month high on Thursday after China's announcement of a reduction to tariffs on some U.S. goods and speculation of support from mainland investors buoyed sentiment.

The Hang Seng Index advanced 2.6% to 27,493.70, its highest close since Dec. 24. With Thursday's gain, the gauge this week recovered most of last week's 5.9% drop.

Among heavyweights, HSBC Holdings added 1.9%. The London-headquartered lender is set to unveil a plan to cut some senior international management jobs and reduce its presence in some smaller markets, Reuters reported, citing people with knowledge of the matter. HSBC declined to comment on the report. Separately, Reuters cited a staff memo as saying the bank plans to ban all staff travel to Hong Kong until March 2 due to the coronavirus outbreak.

China Petroleum & Chemical rose 3.6% and offshore oil producer CNOOC added 5%, as Brent crude futures headed for a second day higher following a 2.4% increase on Wednesday. CNOOC is lowering crude oil throughput this month at its Huizhou plant in China's Guangdong Province by about 8% from its original plan, as the coronavirus has cut demand for refined fuel, Reuters reported, citing a company source.

Instant-noodle maker Nissin Foods jumped 3.1%, extending a 4.8% climb on Wednesday, while personal hygiene products maker Hengan International Group added 3.6% on speculation the company would benefit as people stocked up on essentials amid the coronavirus outbreak.

In the mainland, the Shanghai Composite Index climbed 1.7%. China on Thursday said it will halve tariffs on $75 billion of U.S. goods with effect from Feb. 14 after Beijing and Washington signed a phase one trade agreement earlier this year.

Positive cues from Wall Street overnight also helped gains in Asia. The S&P 500 Index and the Nasdaq Composite closed at record highs on Wednesday following upbeat jobs and business activity data from the world's largest economy. Still, worries over the widespread impact of the coronavirus gripped markets. Hong Kong has confirmed 21 cases of infections as of Wednesday and one fatality. In China, the death toll has reportedly crossed 560 people, while more than 28,000 cases of the infection have been confirmed.

"I think the rebound is near completion," said Kevin Leung, executive director for investment strategy at Haitong International Securities, referring to the recent stock advances. "Firstly, there is some short covering. Secondly, mainland capital is trying to stabilize things."

Leung said he expects "panic selling" to only last "maybe a few months" and that he is not too worried about the rest of the year.

Pine Care Group surged 96.3% after the elderly home-care services provider said Pine Active Care was selling 52% of its stake in the company to Tang Yiu Sing for 773.3 million Hong Kong dollars ($99.6 million). Following the sale, Tang Yiu Sing will own a 52.55% stake in the firm, triggering a possible mandatory cash offer for company.

Shares of China Medical System Holdings were suspended on Thursday after short-seller Blue Orca issued a report on the drugmaker, alleging financial impropriety and inflated profits. The stock was down 1.9% when trading was halted after falling more than 10% earlier.

Blue Orca said it has a short position in CMS, alleging that its investigation found a "rotten pattern of undisclosed self-dealing." A call and an email to CMS's investor relations department seeking a comment were not immediately answered.

Mainland property developer China Vanke advanced 3% following a 12.3% increase in January contracted sales from a year earlier.

KWG Group also rose 3% after reporting a 1.2% increase in presales value for January.

Mining company China Hanking Holdings added 3.1% after saying it expects net profit for the year ended Dec. 31 to have risen 50% from a year ago.

Sany Heavy Equipment International added 3.7% after the company said it expects profit for the year ended Dec 31 to have risen 45% to 55% from a year ago.

-- Benny Kung

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