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Nikkei Markets

Hong Kong shares slide amid weakening global risk appetite

Cathay extends losses amid protests, while China Literature tumbles on earnings

HONG KONG (Nikkei Markets) -- Hong Kong shares headed for a third day lower on Tuesday following a retreat on Wall Street, as a rout in Argentine financial markets, ongoing Sino-American trade worries and political unrest in the city weighed on risk appetite.

The Hang Seng Index shed 1.9% to 25,345.65 by noon. Financial heavyweights AIA Group and HSBC Holdings declined 2.8% and 2%, respectively, while internet services company Tencent Holdings slipped 1.3%. The three stocks contributed to about a third of the index's losses by points.

Tencent-backed China Literature sank 14.7% after the online publishing company reported a 22.4% drop in first-half net profit amid higher marketing expenses.

Extended losses for Hong Kong equities came after all three major U.S. equity indexes fell 1% or more overnight.

The drop is stemming from a "combination of factors," said Daniel So, a strategist at CMB International Securities. "Local issues and what happened in Argentina also escalated worries about emerging market assets. This could affect sentiment in the short term."

Risk appetite soured after financial markets in Argentina tumbled on Monday following a shock defeat for President Mauricio Marci in primary elections over the weekend. This, coupled with ongoing worries over deteriorating Sino-American trade relations and mounting concerns over weekslong anti-government protests in Hong Kong, dampened sentiment in Asia. Spot gold prices rose 0.3% to $1,515.32 an ounce on Tuesday as investors flocked to safe-haven assets.

CMB International's So said short-covering could help the Hang Seng Index rebound to a range between 26,000 and 26,300. The index should find support at 25,000 points, he added.

Meanwhile, a decision by the Airport Authority Hong Kong to cancel most flights departing from or arriving into the Hong Kong International Airport in the latter half of Monday also weighed on sentiment. More than 300 flights were canceled on Tuesday, the South China Morning Post reported.

Cathay Pacific Airways was down 4.4% in, declining further from a decade low, in the wake of a Chinese regulator's move to impose restrictions on the airline's crew that participated in or supported protests in Hong Kong.

Some state-run Chinese companies have told employees to stop flying by Cathay Pacific, Bloomberg reported on Monday, citing people familiar with the matter. Swire Pacific, Cathay's single largest shareholder, declined 1.2%.

China Resources Power fell 3.5% following a 10% decline in total net generation of subsidiary power plants during July.

Flexible printed circuit maker AKM Industrial declined 3.9% after reporting a 74.5% plunge in net profit for the first half of 2019.

Television and monitor maker TPV Technology jumped 28.2% to HK$3.50 after electrical equipment maker CEIEC (HK) offered to take the company private at HK$3.86 per share.

Online games developer NetDragon Websoft Holdings climbed 3.5% after saying it expects to report a "substantial" increase in net profit for the first half of the year.

In the mainland, the Shanghai Composite Index fell 0.7%. Elsewhere in Asia, Singapore's Straits Times Index was down 0.8% after the government cut its full-year economic growth outlook. The Nikkei Asia300 Index was down 1%.

-- Benny Kung

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