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Nikkei Markets

Hong Kong shares retreat as US-China tensions flare

Tencent falls to nine-month low after NBA games telecasts cancelled

HONG KONG (Nikkei Markets) -- Hong Kong shares fell on Wednesday, as optimism over the outcome of upcoming Sino-American trade talks faded after Washington escalated tensions with Beijing.

The Hang Seng Index slid 0.8% to 25,682.81. Heavyweight Tencent Holdings fell 1.7% to HK$318.20, its lowest closing since Jan. 8. Some Chinese National Basketball Association (NBA) fans have asked the internet services company for streaming subscription refunds, Reuters reported. The requests came after an NBA team official's support for the Hong Kong protests resulted in China's state-owned CCTV and Tencent halting the airing of some games in the mainland.

Separately, the company is planning to invest about $500 million in Hillhouse Capital Group's Chinese drugstore business, news website The Information reported, citing a person familiar with the matter.

A Tencent spokesperson declined to comment on both reports.

Hang Seng Bank slid 3.3% among broad losses for Hong Kong financials after Morgan Stanley cut its industry view on the sector to "cautious" from "in-line." The brokerage company said stocks in the sector will underperform amid a slowing economy and falling rates. It trimmed Hang Seng Bank's rating to "underweight" from "equal weight."

London-headquartered HSBC Holdings, whose rating was also lowered by Morgan Stanley to "underweight," slipped 0.6%.

Indexes on Wall Street retreated overnight amid fresh worries over expectations from an upcoming round of U.S.-China trade talks, due to take place in Washington on Thursday and Friday. The U.S. State Department reportedly on Tuesday said it was imposing visa restrictions on Chinese government officials it believes responsible for the detention or abuse of Muslim minorities in western Xinjiang province.

The move came shortly after the U.S. Commerce Department included some of China's artificial intelligence startups to its entity list, restricting companies from exporting American-made goods to those on the list.

Secretary of State Mike Pompeo said the decision to add companies to the list related to Beijing's treatment of Uighur Muslims and other Muslim ethnic minorities.

China, meanwhile, is planning tighter visa restrictions for U.S. nationals with ties to anti-China groups, Reuters reported, citing people with knowledge of the proposed curbs.

"Recent news on trade has been unfavorable," said Daniel So, a strategist at CMB International. He does not expect a "significant deal" at this month's meeting, "let alone a full agreement." He remains bearish on the Hang Seng Index in the near term.

Meanwhile, U.S. Federal Reserve Chairman Jerome Powell on Tuesday said the central bank will resume purchases of short-term Treasury bonds. Powell's comments that the bank will act as appropriate to support growth, the job market and inflation, fueled bets of a 25 basis-point rate cut at this month's policy review.

In the mainland, the Shanghai Composite Index added 0.4%.

Sunac China Holdings added 2.2% following an 18% increase in September sales.

Truly International Holdings declined 7.1% after the liquid crystal display product maker reported a 5% slide in net consolidated turnover for September.

China Jinmao Holdings Group advanced 3.1% after reporting an 82.9% in contracted sales for last month.

Gemdale Properties and Investment, which reported a 36% jump in contracted sales for last month, ended 2.3% higher.

-- Sunny Ng

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