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Nikkei Markets

Hong Kong shares rise ahead of trade deal formalization

Chow Tai Fook gains after China same-store sales rise, while Vinda jumps on outlook

HONG KONG (Nikkei Markets) -- Hong Kong shares edged higher on Monday, buoyed by Chinese financial heavyweights, as investors cheered the imminent signing of the first phase of a Sino-American trade deal.

The Hang Seng Index added 0.8% to 28,874.19 by noon. China Construction Bank and Ping An Insurance Group advanced 1.3% and 1.5%, respectively, contributing to roughly a quarter of the index's gains by points. Internet services heavyweight Tencent Holdings rose 0.7% to HK$401.20, heading for its highest close since June 2018.

Market focus this week will be on the formalization of the first phase of a U.S.-China trade deal, due to take place on Wednesday in Washington. The deal marks a rollback of some U.S. tariffs on Chinese goods, a halt in further punitive trade tariffs, and a Chinese pledge to buy more American agricultural produce. More details will likely be available once the pact is signed. U.S. President Donald Trump has said he will travel to Beijing later to discuss the next phase of negotiations.

"Even though we are still not sure about the exact details of the trade deal, people basically believe that details have been confirmed," said Kingston Lin, managing director for asset management at Canfield Securities.

He expects more volatility for the Hang Seng Index as the second round of trade negotiations begin.

Equities on Wall Street retreated on Friday after data showed U.S. nonfarm payrolls rose 145,000 in December, lower than the 164,000 increase analysts polled by Reuters were expecting. The U.S. Federal Reserve, which cut rates three times last year before signaling a pause, is scheduled to review policy Jan. 28-29.

In the mainland, the Shanghai Composite edged less than 0.1% higher, while the yuan traded onshore jumped 0.2% against the dollar to 6.9010.

Chow Tai Fook Jewellery Group rose 2.9% in Hong Kong after reporting a 2% increase in third-quarter same-store sales for mainland China. The company said same-store sales for Hong Kong and Macao declined 35% during the quarter.

Personal-care and tissue products maker Vinda International Holdings climbed 4.9% after saying it expects profit for 2019 to have risen more than 70% from a year ago.

Geely Automobile Holding added 1.6%. The carmaker has held talks as it considers injecting cash into London-listed luxury carmaker Aston Martin, the Financial Times reported on Friday, citing four people familiar with the discussions. A spokesperson for Geely declined to comment.

Freeman FinTech slid 1%. The company on Friday said it expects the operating environment to remain challenging for the remainder of its financial year ending in March. It reported a net loss of 1.59 billion Hong Kong dollars ($204.7 million) for the six months ended Sept. 30, narrowing from HK$1.76 billion a year earlier.

Forward Fashion (International) Holdings tumbled 22.5% to HK$1.55 as the fashion apparel retailer made its trading debut in the city after raising HK$200 million in gross proceeds from an initial public offering.

-- Benny Kung

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