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Nikkei Markets

Hong Kong shares set seven-month high amid trade deal hopes

ZTE jumps ahead of 5G phone launch, while Lenovo extends gains

HONG KONG (Nikkei Markets) -- Hong Kong shares recouped early losses and closed at a seven-month high on Friday amid signs that trade talks between the U.S. and China were progressing well in Washington.

The Hang Seng Index ended 0.7% higher at 28,816.30, its highest closing level since July 25. The gauge had slipped as low as 28,430.20 earlier. China Mobile rose 2.3%, the largest contributor to gains on the gauge by points. Insurers AIA Group and Ping An Insurance Group added 1% and 1.3%, respectively.

The city's main equity gauge rose 3.3% during the week, with investors awaiting the outcome of Sino-American trade talks taking place in Washington this week ahead of a March 1 end to a mutually agreed 90-day truce. U.S. President Donald Trump, who has expressed his willingness to extend the deadline, is expected to meet Chinese Vice Premier Liu He at the White House on Friday.

"We have more positive news about U.S.-China coming up, with the terms for the deal," said Francis Lun, chief executive officer at Geo Securities.

"But I think a trade deal between the two countries is a bad thing for Chinese companies because China is giving too many concessions," he said.

China is proposing buying an additional $30 billion a year in U.S. agricultural products as part of the deal being negotiated, Bloomberg reported, citing people with knowledge of the plan.

Separately, Trump on Twitter said he wanted "5G and even 6G technology in the United States as soon as possible," adding that he wants the U.S. "to win through competition."

On the mainland, the Shanghai Composite Index climbed 1.9%.

Chinese telecommunications equipment maker jumped 12.8% in Hong Kong. The company plans to unveil its first 5G device on Feb. 25 at the Mobile World Congress in Barcelona, according to a report in state-affiliated media.

Still, some analysts voiced caution.

"Supporting facilities for 5G are not well established," said Tony Cheung, an analyst at CASH Financial Services Group. "If the prices for 5G phones are expensive, the market won't be that interested. So it is better to wait and see. It might not be as positive as the market is expecting."

Lenovo Group jumped 5% to HK$7, extending an 11.9% surge on Thursday after the personal computer maker swung to a profit in the December quarter. Daiwa Capital Markets upgraded the stock to "outperform" from "hold" and raised its price target to HK$7.60 from HK$5.60.

China New Higher Education Group rose 4.8% following a 13.4% tumble on Thursday. The company on Friday countered allegations of financial misconduct in a report by Empty City Research, saying they were misleading, unfounded and showed a lack of basic knowledge of the higher-education industry.

The report, released Thursday, alleged financial impropriety by the private education company.

Champion Real Estate Investment Trust rose 3.6% after reporting a 8.3% increase in 2018 distributable income to HK$1.61 billion ($205 million).

Property management company A-Living Services jumped 7.2% after saying it expected profit for 2018 to have increased to about 750 million yuan ($111.5 million), from 289.7 million yuan a year ago.

San Miguel Brewery Hong Kong, a unit of Manila-listed San Miguel, slipped 1.7% after saying it expected to have swung to a net loss for 2018.

-- Amy Lam

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