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Nikkei Markets

Hong Kong shares slide as anti-government protests escalate

WH Group climbs after China exempts US pork from additional tariffs

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Monday, after anti-government demonstrations extended into a 15th weekend, adding to concerns about the city's economic climate.

The Hang Seng Index had fallen 1% to 27,079.16 by noon. Heavyweights Tencent Holdings and AIA Group shed 2.1% and 1.6%, respectively, contributing to more than a third of the gauge's losses by points. Hong Kong Exchanges & Clearing declined 2.1% after the London Stock Exchange Group on Friday rejected its 29.6 billion pound ($37 billion) acquisition bid. HKEX said it plans to continue engaging with LSEG shareholders.

Local sentiment was weak after violent protests in Hong Kong on Sunday marked a 15th consecutive weekend of political unrest in the Asian financial center. More than 10 days after Hong Kong Chief Executive Carrie Lam announced the withdrawal of a controversial extradition bill that have sparked protests since June, activists continue to stage demonstrations across the city as four of their five demands remain unmet.

"Local political issues showed signs of escalation over the past weekend," said Louie Shum, chief executive at Sincere Securities. Meanwhile, "the market has already priced in Sino-American trade talks. Unless there is something certain and concrete," people are not expecting much, he added.

Chinese pork producer WH Group rose 1.6% after Beijing said on Friday that it would cancel additional tariffs on imports of pork and soybeans from the U.S. WH Group, which has significant business interests in the U.S., has been caught in the crosshairs of the Sino-American trade war that started early last year, with the stock shedding 31.6% in 2018.

China's move was the latest in a series of recent indications that tensions between the U.S. and China are easing ahead of trade talks in October. Last week, U.S. President Donald Trump said he was postponing the imposition of a 5% additional tariff on Chinese goods by two weeks, while China released a list of U.S. goods that would be exempt from a 25% extra import tariff that was imposed last year.

Energy producers CNOOC and PetroChina jumped 6.2% and 5.5%, respectively, amid a surge in global oil prices after an attack on Saudi Arabia's oil infrastructure thwarted the country's oil production. Brent crude futures were last up 9.9% at $66.20 a barrel after jumping as much as 19.5% in early Asian trading.

The jump in global oil prices weighed on airline stocks on Monday, with Air China shedding 4.4% in Hong Kong and China Southern Airlines declining 4.5%. Cathay Pacific Airways lost 3.9%.

China Mengniu Dairy slipped 2.9% after announcing an agreement to buy infant formula maker Bellamy's Australia for 1.46 billion Australian dollars ($1 billion).

In the mainland, the Shanghai Composite Index edged 0.1% higher, while the yuan traded onshore rose 0.1% against the U.S. dollar to 7.0707. Data released on Monday showed China's industrial output rose 4.4% in August, slowing from July's 4.8% pace and falling short of the 5.2% growth analysts polled by Reuters were expecting. Retail sales in Asia's largest economy grew 7.5% last month. Analysts polled by Reuters were expecting a reading of 7.9%.

-- Benny Kung

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