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Nikkei Markets

Hong Kong shares near seven-month high ahead of trade talks

Cathay extends gains on January data, while Lenovo jumps on quarterly profit

HONG KONG (Nikkei Markets) -- Hong Kong shares closed near a seven-month high on Thursday amid lingering optimism over a Sino-American trade agreement before the start of high-level negotiations in Washington later in the day.

The Hang Seng Index added 0.4% to 28,629.92, its highest closing since July 30. HSBC Holdings advanced 0.8%, after shedding 2.4% over the last two days following weaker-than-expected 2018 results. It was the largest contributor to gains on the gauge by points. Smartphone-component suppliers AAC Technologies Holdings and Sunny Optical Technology Group rose 2.7% and 4.7%, respectively.

The three main U.S. equity indexes extended their recent gains on Wednesday amid confidence over U.S.-China trade talks. Officials from both nations have been engaged in discussions as they seek a deal before a mutually agreed, 90-day truce on tariffs ends on March 1. Chinese Vice Premier Liu He is expected to meet U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington. Meanwhile, minutes of the Federal Reserve's January meeting showed on Wednesday that most policymakers favored a patient approach to interest-rate changes, also helping sentiment.

"Market participants are all waiting for progress on U.S.-China trade talks, and pricing in an eventual deal," said Jason Lee, vice president for stocks at Hong Kong consultancy Investment Strategy Institute. "Handset stocks and 5G stocks are still hot themes for the market as new phone models from Samsung and Xiaomi raise hopes for another smartphone sales wave."

In the mainland, the Shanghai Composite Index slipped 0.3%, while the yuan traded onshore rose 0.1% against the dollar to 6.7117.

Personal computer maker Lenovo Group jumped 11.9% in Hong Kong after swinging to a profit in the third quarter following a loss in the year-ago period.

Cathay Pacific Airways rose 4.3% after reporting a 7.4% increase in January passengers carried. The stock climbed 7.8% on Wednesday after the airline said it expects to have swung to a profit for 2018.

Great Wall Motor rose 5% after saying it agreed to sell its car leasing unit Tianjin Great Wall Car Sharing Service to its parent Baoding Great Wall Holdings Company for 464.2 million yuan ($69.3 million). Auto dealer China Yongda Automobiles Services Holdings jumped 7.9% after saying it is in preliminary talks with a consortium of investors for the sale of a more than 50% stake in its automobile finance business.

The People's Insurance Co. (Group) of China added 0.6% after reporting a 1.4% increase in January aggregate premium income from its life insurance unit. Its unit PICC Property and Casualty advanced 3.3% following a 31.2% rise in premium income.

Clothing retailer Bossini International Holdings fell 1.8% after saying its net loss for the July-December period more than doubled from a year ago to HK$25.8 million ($3.3 million).

Ausnutria Dairy edged 0.5% higher after saying it expects net profit for 2018 to have risen by up to 91.5% from a year ago.

Chinese Estates Holdings declined 1.6% after saying it expects consolidated net profit for 2018 to have decreased by up to 78%.

Changmao Biochemical Engineering jumped 10.5% after saying it expects a net profit of about 45 million yuan to 55 million yuan for 2018, up from 3.4 million yuan a year ago.

China New Higher Education Group tumbled 13.4% to HK$4.40 at the close, with most of the losses coming in late afternoon trading. A report released by Empty City Research, which claims to be a firm focused on exposing financial fraud committed by listed Chinese companies, issued a report on China New Higher Education on Thursday, in which it alleged financial impropriety by the private education company.

A request for comment from China New Higher Education wasn't immediately answered.

-- Amy Lam

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