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Nikkei Markets

Hong Kong shares set for new three-month high on trade bets

Fosun Pharma climbs after saying it plans to list Indian unit in Mumbai

HONG KONG (Nikkei Markets) -- Hong Kong shares jumped on Monday, as further indications of progress in Sino-American trade talks boosted investor sentiment.

The Hang Seng Index added 1.3% to 27,448.24 by noon, on course for its highest level since Aug. 1. Pan-Asia insurer AIA Group climbed 2.4%, while China Construction Bank rose 1.4%

Hopes that Washington and Beijing will sign a preliminary trade agreement this month continued to boost risk appetite. U.S. Commerce Secretary Wilbur Ross on Sunday reportedly said he was "optimistic" the first phase of a Sino-American trade deal will be signed. Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer had a phone call on Friday. After the call, the U.S. Trade Representative's office and China's Ministry of Commerce said talks were making progress.

Meanwhile, U.S. President Donald Trump on Sunday told reporters that a trade agreement, if reached, will be signed in the U.S. The preliminary agreement was earlier meant to be signed by Trump and Chinese President Xi Jinping in Chile during a summit that was canceled due to local unrest.

"The market has already discounted the signing of phase one of a deal, leaving little room for upside," said Steven Leung, executive director at UOB Kay Hian (Hong Kong). "With the Hang Seng Index at this level, I will turn a bit bearish. We still could see a certain degree of uncertainty on trade talks."

The Hang Seng Index closed at a three-month high on Friday. The gauge's 14-day relative strength index, a measure of momentum, is at 67, a few points shy of the 70 threshold that some technical analysts consider to be overbought.

In the mainland, the Shanghai Composite Index added 0.8% by midday on Monday, while the yuan traded onshore rose 0.1% against the U.S. dollar to 7.0266.

Shanghai Fosun Pharmaceutical Group, a unit of Fosun International, rose 2% in Hong Kong after saying it plans to list its Indian unit, Gland Pharma, in Mumbai.

Forgame Holdings slid 5.1% as trading resumed after being halted on Thursday. The web and mobile game developer said it was unable to contact its chief executive, Li Luyi. Li founded the lending platform Beijing Haitouhui, which, according to Forgame, is reportedly under police investigation.

Property developer China Aoyuan Group rose 2.6% following a 55% year-over-year increase in October contracted sales.

KWG Group advanced 3%. The developer on Friday reported a more than doubling of its October presales value.

-- Benny Kung

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