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Nikkei Markets

Hong Kong shares rise for second day on political relief

Want Want China and L'Occitane advance after full-year results

HONG KONG (Nikkei Markets) -- Hong Kong shares extended gains on Tuesday, leading advances in the region amid lingering relief over the suspension of a controversial extradition bill by the local government.

The Hang Seng Index added 1% to 27,498.77 following a 0.4% climb on Monday. Financial heavyweights AIA Group and China Construction Bank rose 2% and 1.1%, respectively, while social media major Tencent Holdings ended 1.5% higher.

The gauge was the best performer in the region for a second day after the Hong Kong government on Saturday suspended a bill that, if enacted, would allow for the extradition of criminal suspects from the city to other jurisdictions, including mainland China.

Turnover on the exchange's main board remained lower than usual at 71.04 billion Hong Kong dollars ($9.07 billion).

Political uncertainty eased after the suspension of the bill, and there are hopes that the proposal "will not be raised again this year," said Ricky Huang, an analyst at Luk Fook Financial Services. The low turnover signals that "market sentiment remains cautious," he added.

Hong Kong-based property developers rose for a second day on Tuesday, with Wharf Real Estate Investment Company adding 1.6% and New World Development climbing 1.9%. Sun Hung Kai Properties advanced 2.5%.

Still, despite short-term relief, people are less likely to favor local property developers in the wake of "rising political instability," Huang said.

An estimated two million protesters took to Hong Kong's streets on Sunday demanding the bill's complete withdrawal and Hong Kong Chief Executive Carrie Lam's resignation. Smaller scale demonstrations continued into the week. At the end of the day's trading on Tuesday, Lam held a press conference in the city where she apologized to citizens. She reiterated that the bill remains suspended.

Meanwhile, investors await the outcome of the U.S. Federal Reserve's two-day policy review, which starts later on Tuesday, for further indications that a rate cut may be possible this year. Fed Chairman Jerome Powell had signaled earlier this month that the central bank would act to sustain economic growth while global trade tensions continue. The central bank is widely expected to stand pat at this week's meeting, with futures traders pricing in about a 20% chance of a rate cut, according to CME's FedWatch tool.

In the mainland, the Shanghai Composite Index rose 0.1%, while the yuan traded onshore was little changed against the U.S. dollar at 6.9260.

Food and beverages company Want Want China Holdings added 1.7% after reporting an 11.6% increase in net profit for the year ended March 31.

French beauty products retailer L'Occitane International jumped 8.7% to HK$15, its best single-day performance in two years, after reporting a 22.7% increase in profit for the full year ending in March that beat expectations. Citi Research, which has a "buy" rating on the stock, raised its target price to HK$18.40 from HK$16.40, while Daiwa Capital Markets upgraded it to a "buy" from "outperform."

Extrawell Pharmaceutical Holdings surged 30.4% after saying it expects profit for the year ended March 31 to have increased from a year ago.

Industrial components maker Trio Industrial Electronics Group rose 14.9% following a forecast for a 40% to 70% year-on-year increase in profit for the first half of the year.

Xinyi Solar Holdings slid 11.9% to HK$3.64 after the company's controlling shareholder, Hong Kong-listed Xinyi Glass Holdings, and Xinyi Group Glass agreed to sell 314 million shares, or a 3.90% stake in company, at HK$3.75 each. Xinyi Glass Holdings added 1.1%.

BeiGene slipped 2% after the Chinese biotechnology company said it is ending Celgene's exclusive license to develop and sell BeiGene's tumor treatment outside of Asia ahead of the U.S. company's acquisition by BristolMyers Squibb. Celgene will pay BeiGene $150 million as part of the agreement.

-- Amy Lam

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