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Nikkei Markets

Hong Kong shares retreat from seven-month highs

Healthcare stocks up after 32 drugs win bids for China's centralized procurement

HONG KONG (Nikkei Markets) -- Hong Kong shares fell on Monday, as investors appeared to pause after optimism over Sino-American trade relations lifted the city's main equity benchmark to multi-month highs.

The Hang Seng Index shed 0.9% to 28,795.91, coming off the seven-month high it touched on Friday. Among heavyweights, pan-Asia insurer AIA Group fell 2.1%, while China Construction Bank slipped 1.8%.

Meanwhile, Sino Biopharmaceutical jumped 4.9%, while CSPC Pharmaceutical Group added 1.4%. Gains for drugmakers came after China's state-owned Xinhua News Agency on Saturday said 32 drugs won bids for the government's centralized procurement of medicines. CSPC on Saturday said three of its drugs won tenders. YiChang HEC ChangJiang Pharmaceutical jumped 19.4% after the company said three of its drugs won bids for the program.

Monday's pullback came after the Hang Seng Index sealed its seventh consecutive weekly advance on Friday as risk sentiment improved after the U.S. and China agreed to the first phase of a trade deal. Investors are now watching for further negotiations between Beijing and Washington as the two nations move forward following 18 months of back and forth on bilateral trade.

"We are seeing some profit-taking ahead of Chinese New Year, and there is not enough momentum to shoot up," said Louie Shum, chief executive at Sincere Securities. "I think the market is overbought now and it has a chance for a correction."

Chinese markets will be closed from Friday until Jan. 30 for the Lunar New Year holiday, while Hong Kong's financial markets will be shut on Jan. 27 and Jan. 28.

In the mainland, the Shanghai Composite Index added 0.7%, while the yuan traded onshore was little changed against the dollar to 6.8602.

The People's Bank of China on Monday held its one-year and five-year loan prime rates steady. The unexpected pause came after data on Friday showed China's economy grew at its slowest pace in 29 years during 2019. While the reading was within expectations, some participants remained circumspect.

"We are skeptical that the latest uptick in economic activity marks the start of a sustained turnaround," Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note. "Instead, with growth likely to come under renewed pressure, we think the PBOC will resume its rate cuts before long."

Angang Steel fell 2.8% in Hong Kong after the Chinese steelmaker said it expects net profit for 2019 to have plunged 80% from a year ago.

China Minsheng Financial Holding lost 2.1% after saying it expects to swing to a consolidated loss of at least 400 million Hong Kong dollars ($51.5 million) for the year ended Dec. 31, compared with a profit of HK$143 million a year earlier.

SRE Group slumped 13.6%. The developer on Monday said it was naming Zhu Qiang as its acting chief executive officer after receiving information that Chairman and CEO Peng Xinkuang is being investigated by China's Public Security Bureau over "personal matters."

Electricity company Kong Sun Holdings slid 1.3% after saying it expects to report a net loss of at least 490 million yuan ($71.4 million) for the year ended Dec. 31, compared with a profit of 15.42 million yuan a year earlier.

Mobile top-up services provider NNK Group jumped 15.4% after saying it expect to report a significantly narrower loss for the year ended Dec. 31 or a return to profit.

-- Benny Kung

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