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Nikkei Markets

Hong Kong shares recover to record their best day in eight years

Cathay to slash capacity, while HK Express temporarily suspends operations

HONG KONG (Nikkei Markets) -- Hong Kong shares jumped on Friday after recent steep losses, tracking gains for rest of Asia and U.S. equity futures, even though worries over the coronavirus pandemic remained.

The Hang Seng Index added 5.1% to 22,805.07, its best single-day gain since December 2011. China Mobile jumped 13.6%, leading percentage gains on the gauge. The company on Thursday reported full-year earnings and signaled plans to expedite the rollout of its fifth-generation telecommunications network, looking past the immediate impact from the coronavirus outbreak.

CK Asset Holdings surged 13.5%, leading percentage gains on the index. The property developer on Thursday reported a 27.4% slump in 2019 profit, but said revenue jumped 49.4% from a year ago.

CK Hutchison Holdings climbed 8.9% after the ports-to-energy conglomerate reported a 2.1% increase in 2019 net profit even as revenue slipped 3%.

Other equity markets in Asia also rose after overnight gains on Wall Street. The U.S. dollar index, measured against a basket of major currencies, was down 1.2% after rising for three consecutive days.

Even so, concerns over the impact of the coronavirus on global economic growth continued to weigh on risk sentiment. A number of cities in Europe were under lockdown after the number of fatalities in Italy surpassed those in China as of Thursday. The U.S. state of California late Thursday issued a 'stay at home' order, with residents told they should only leave their homes if necessary.

Market participants were not convinced the rebound would be sustainable. The Hang Seng Index is still down more than 12% so far in March.

"It is a short-term rebound today. Hong Kong stocks are quite cheap," Jason Chan, head of research at uSMART Securities, said.

"It is too early to call it a trough," he said, adding, however, that as long as the outbreak in Europe was brought under control and there were not any obvious systemic risks or defaults, room for further losses for the Hang Seng Index would be slim.

On the mainland, the Shanghai Composite Index added 1.6%, while the yuan traded onshore climbed 0.6% against the dollar to 7.0660.

Cathay Pacific Airways added 1.1% in Hong Kong. The airline said it would reduce capacity by 96% during April and May due to the coronavirus outbreak. Its unit airline HK Express on Friday said it would suspend all flight operations from March 23 to April 30.

Wireless communication equipment maker Comba Telecom Systems added 5.9% after reporting a profit of 51.8 million Hong Kong dollars ($6.7 million) for 2019, compared with a loss a year ago.

Power transmission wire maker Jiangnan Group gained 3.4% after saying it expected profit for the year ended Dec. 31 to have more than doubled from a year ago.

Hong Kong & China Gas slumped 8.5% after reporting a 25.2% plunge in 2019 profit.

-- Benny Kung

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