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Nikkei Markets

Hong Kong shares slip amid lingering headwinds

CK Asset rises after announcing deal to buy British pub operator

HONG KONG (Nikkei Markets) -- Hong Kong shares edged lower after a choppy trading day on Tuesday, with investor sentiment buffeted by worries over global growth and concerns over political unrest in the city.

The Hang Seng Index slipped 0.2% to 26,231.54 after changing direction at least 10 times. Pan-Asia insurer AIA Group declined 1.1% and was the biggest contributor to the gauge's losses by points.

CSPC Pharmaceutical Group jumped 11.1% after the Chinese drugmaker reported a 24.8% surge in profit for the first half of the year. CK Asset Holdings ended 0.8% higher after earlier rising as much as 3%. The developer late Monday announced plans to buy British pub operator Greene King in a deal that values the target's share capital on a fully diluted basis at 2.7 billion pounds ($3.28 billion).

Hong Kong's local benchmark index had risen 4% in a four-day winning streak through Monday, but it is still down more than 5% so far in August as external and internal headwinds keep investors wary.

While a rebound for the Hang Seng Index may continue, "the magnitude will likely be limited, given that fundamental factors have not shown any signs of improvement," said Stanley Chik, head of research at Bright Smart Securities. "More negative macro news, especially a further weakening of the global economy, could drive the index to 25,000 points again."

Among the factors weighing on sentiment was a brief inversion of the U.S. Treasury yield curve last week that raised concerns of an impending recession in the world's largest economy. Investors are awaiting minutes of the U.S. Federal Reserve's latest policy meeting, due on Wednesday, for cues on further rate cuts.

Meanwhile, investors are also keeping an eye on the back-and-forth between Beijing and Washington on trade. The outlook for a resolution to their ongoing trade standoff dimmed after U.S. President Donald Trump earlier this month unexpectedly announced plans to impose tariffs on $300 billion-worth of Chinese goods.

Weeks-long protests in Hong Kong continued over the weekend, with a peaceful demonstration on Sunday drawing an estimated 1.7 million people to the streets. The activists are demanding that the government withdraw its now-shelved controversial extradition bill, conduct an independent investigation into the police's use of force during the demonstrations and implement universal suffrage.

Hong Kong Chief Executive Carrie Lam in a news conference on Tuesday reiterated that the extradition bill was "dead" and said that she would create a platform for dialogue between the Hong Kong people and the government. Lam has not agreed to withdraw the bill.

On the mainland, the yuan fell 0.2% against the dollar to 7.0624 as investors digested the People's Bank of China's move on Monday to tweak the way its benchmark interest rates are set. The central bank will now release a Loan Prime Rate every month as the new benchmark for pricing loans, replacing the previously followed one-year lending rate. The move is expected to lower interest rates.

The Shanghai Composite Index, which advanced 2.1% on Monday, edged 0.1% lower.

WuXi AppTec climbed 3.8% in Hong Kong after the Chinese medical technology platform reported a 20.1% year-on-year increase in profit for the first half of the year.

Fosun Tourism Group, a subsidiary of Fosun International, jumped 8.9% after the company said it swung to a profit in the January-to-June period as revenue rose 35.9% from a year ago.

Xiwang Special Steel tumbled 9.8% after the Chinese steelmaker said it expected profit for the first half to decline 60% to 70% from a year ago.

-- Benny Kung

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