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Nikkei Markets

Hong Kong shares recover as Chinese stocks pare losses

H-share index snaps six-day losing streak, while Tencent gains 1.6%

HONG KONG (Nikkei Markets) -- Hong Kong shares ended higher on Monday, as a recovery for Chinese companies helped the city's main index log its first gain in four days, even as fears of a trade war between the world's two largest economies loomed.

The Hang Seng Index rose 0.8% to close at 30,548.77 on Monday, after falling as low as 29,995.16 points earlier in the day. The index had lost 3.9% in the three days ending Friday. China Petroleum & Chemical (Sinopec) climbed 5.2%, leading gains on the index in percentage terms, after reporting a 10.1% increase in 2017 profit and a 22% jump in turnover. Heavyweight Tencent Holdings added 1.6% following its worst weekly performance since February amid a stake sale by its largest shareholder last week and after it reported disappointing gaming revenue figures for 2017.

Early losses for the Hang Seng Index came as the Dow Jones Industrial Average on Friday rounded off its worst week since January 2016, after U.S. President Donald Trump signed a memorandum to impose tariffs on up to $60 billion of Chinese imports. The move, which came weeks after Trump's plans to levy import tariffs on steel and aluminum, prompted an apparent retaliation from China in the way of tariffs on up to $3 billion of U.S. imports.

However, markets appeared to take comfort from a news report that indicated the U.S. and China were in talks over trade policy. U.S. Treasury Secretary Steven Mnuchin is considering a visit to Beijing to pursue negotiations, the Wall Street Journal reported on Monday, citing unnamed sources.

The Hang Seng China Enterprises Index, or the H-share index, of large Chinese companies listed in Hong Kong rose 0.6%, its first advance in seven days. In the mainland, the Shanghai Composite Index closed 0.6% lower after dropping as much as 2% intraday. The Nikkei Asia300 Index was up 0.4%, also reversing earlier losses.

"While the market's pessimistic reflex may be tempting for some to bottom-fish, we note that market visibility in the near-term is extremely clouded," said Hong Hao, chief strategist at BOCOM International. "The more strength in the uptrend, the bigger the strength and probability of a reversal."

China Evergrande Group climbed 3.9% in Hong Kong ahead of its annual results announcement. At the end of the day's trading, the developer reported a near quintupling of its full-year net profit to 24.37 billion yuan ($3.86 billion).

China Shenhua Energy fell 2.7%. The company on Friday said its 2017 net profit nearly doubled, but that it expects commercial coal production and coal sales volume for 2018 to decrease 1.8% and 3.1%, respectively, from a year earlier.

China Overseas Land & Investment slipped 2%, trimming year-to-date gains to 7.8%, despite reporting a 10.1% increase in full year profit to 40.77 billion Hong Kong dollars ($5.2 billion).

Chinese carmaker Great Wall Motor dropped 3.7% after reporting a 52.4% decline in profit for 2017.

Pork producer WH Group slid 4.2% ahead of its annual results later on Monday.

-- Amy Lam

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