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Nikkei Markets

Hong Kong shares retreat after China GDP hits 27-year low

Cathay Pacific slides on September traffic figures and weaker outlook

HONG KONG (Nikkei Markets) -- Hong Kong shares fell for the first time in three days on Friday, as investors digested data that showed China's economy was growing at its weakest pace in 27 years.

The Hang Seng Index fell 0.5% to 26,719.58, its first decline since Tuesday. The gauge rose 1.6% for the week amid some signs that high-level Sino-American trade talks in Washington last week went well.

The Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong declined 0.5% on Friday, while the Shanghai Composite Index lost 1.3%. The Hong Kong-listed shares of Industrial & Commercial Bank of China slid 1.1%, while China Construction Bank ended 0.8% lower.

Data released on Friday showed China's gross domestic product grew 6% from a year earlier during the third quarter, slowing from the second quarter's 6.2% pace and weaker than the 6.1% reading analysts polled by Reuters were expecting. The level of growth was reportedly the weakest since 1992.

While the growth data fueled expectations of more fiscal stimulus from Chinese authorities, some market participants were not convinced that would be sufficient to ward off the impact of the ongoing Sino-American trade war.

The government would probably "continue to lower tax and administrative expenses" and focus on individual sectors, said Conita Hung, investment strategy director at Tiger Faith Asset Management.

The policies that Beijing has been launching since the end of last year did not lead her to believe that they could "offset the impact of the trade war," she added.

Official figures released on Friday showed China's industrial output in September grew a better-than-expected 5.8% in September. Analysts were expecting a reading of 5%. Retail sales for September grew in line with expectations at 7.8% from a year ago.

Cathay Pacific Airways fell 2.2% after saying it expected second-half earnings to be lower than those reported for the first half of the year. The Hong Kong-based airline also reported a 7.2% decline in passengers carried during September as political unrest in the city hurt inbound traffic.

Jewelry company Luk Fook Holdings International fell 2.5% after saying second-quarter retail business same-store sales growth declined 37% on the year amid higher gold prices, social unrest in Hong Kong and dampened sentiment due to the Sino-American trade war.

Foxconn Interconnect Technology or FIT Hon Teng, an electronic connector and cable maker controlled by Taiwan-based Hon Hai Precision Industry, jumped 8.8%. The company said it was proposing a capital injection of $60 million into unit FIT Singapore to finance the unit's acquisition of certain preferred shares in Japanese smartphone components maker Kantatsu.

Pharmaceutical company Sanai Health Industry Group fell 5.6% after saying the Fujian Food and Drug Administration withdrew its good manufacturing practice certificate for one of its drugs last month. The company said its unit had ceased production of the drug on Sept. 5 following the withdrawal.

Sportswear maker Xtep International Holdings slid 11.7%. The company on Thursday reported same-store sales growth of 10% for the July-to-September period, slower than the low-teens growth it had reported in the April-to-June quarter.

Yanzhou Coal Mining fell 0.6% following a 2% year-on-year decline in third-quarter sales volume for salable coal.

-- Benny Kung

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