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Nikkei Markets

Hong Kong shares rise in September amid trade deal hopes

Trade-sensitive stocks climb while local developers rebound after bill withdrawal

HONG KONG (Nikkei Markets) -- Hong Kong shares rose on Monday to complete their first monthly gain in three, as lingering optimism over Sino-American trade relations and the withdrawal of a controversial extradition bill by the city's government spurred buyers in early September.

The Hang Seng Index rose 0.5% to 26,092.27 on Monday. In September, it added 1.4%, its first monthly advance since June. A chunk of the gauge's gains this month came in the days immediately following Hong Kong Chief Executive Carrie Lam's withdrawal of a legislation that triggered months of citywide protests. Still, demonstrations have continued with citizens demanding democratic rights. Some indications that an upcoming round of U.S.-China talks in Washington could lead to a de-escalation in trade tensions also helped investor sentiment.

During the July-to-September period, the 50-stock gauge slid 8.6% in what was its worst quarterly performance since the same period in 2015.

In September, trade-sensitive stocks AAC Technologies Holdings and WH Group advanced 22.4% and 11.3%, respectively. New World Development rose 4.1%, while Wharf Real Estate Investment Company climbed 0.8%, recovering some recent losses that were triggered by concerns that the protests in the city will hurt real estate prices.

On Monday, AAC Technologies slipped 0.5%, while WH Group added 1%. New World shares ended little changed, while Wharf REIC edged 0.4% lower.

Shares of Budweiser Brewing Company APAC advanced in their trading debut on Monday after the brewer raised 39.2 billion Hong Kong dollars ($5 billion) in gross proceeds from its second attempt at an initial public offering in the city. The stock ended 4.4% higher at HK$28.20, compared with its IPO price of HK$27. About 262 million shares changed hands and the stock was the most actively traded on the Hong Kong stock exchange's main board.

The Hang Seng Index had dropped as much as 0.6% in early trade after media reports on Friday cited sources as saying the administration of U.S. President Donald Trump was considering measures including delisting Chinese companies from U.S. exchanges. The reports came days ahead of high-level Sino-American trade talks, raising some concerns over the outcome of the upcoming meeting.

The U.S. Treasury officials on Saturday said the administration is not "contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time." China said it plans to continue to open up its financial markets and encourage foreign investment, Bloomberg reported, citing a summary from a meeting of the Financial Stability and Development Committee.

Some market participants were not concerned by the news.

"Many geopolitical risk events are developing, but it seems the market is not too worried about them," said Will Leung, head of investment strategy for Hong Kong at Standard Chartered Bank (Hong Kong).

He expects the market to consolidate in the first half of October, but is "rather optimistic" about the second half of the month as uncertainty around Sino-American trade relations and Britain's exit from the European Union will likely become more clear.

In the mainland, the Shanghai Composite Index slipped 0.9%. China's financial markets will be closed from Tuesday through Oct. 7 for National Day holidays, while Hong Kong's markets will be shut Tuesday and on Oct. 7.

A private survey released Monday showed factory activity in China expanded at a better-than-expected pace in September. The Caixin/Markit manufacturing Purchasing Managers' Index came in at 51.4 for the month, higher than the 50.2 reading analysts polled by Reuters were expecting. The latest reading was an improvement over August's 50.4 print.

A reading above 50 indicates expansion, while one below signals contraction.

The official PMI came in at 49.8 for September, showing a contraction, but better than the 49.5 reading analysts polled by Reuters were expecting.

"People are concerned about the downward pressure on the Chinese economy and weighing whether the country will announce more policy to boost the economy," Leung said, adding that while the PMI figures show improvement, concerns remain if the improvement is sustainable.

PetroChina advanced 1.8% in Hong Kong after saying it had made "significant" progress in the exploration of unconventional oil and gas.

Cosco Shipping Energy Transportation tumbled 21.1% as trading resumed after a two-day halt. The U.S. last week imposed sanctions on the company's unit COSCO Shipping Tanker (Dalian). Cosco Shipping Energy said it is assessing the impact.

Sinotrans rose 2.9% after the logistics services provider said it plans to acquire certain European land-transport companies for up to 385.69 million euros ($421.82 million).

Financial leasing services provider Haitong Unitrust International Leasing jumped 17.2% after saying its unit agreed to buy aircraft with rolling encumbered value of $136.76 million from GE Capital Aviation Services.

-- Benny Kung

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