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Nikkei Markets

Hong Kong shares slip while China stocks climb on rate cut

Lenovo jumps after reporting increase in third-quarter profit

HONG KONG (Nikkei Markets) -- Hong Kong shares gave up early gains to end lower on Thursday as investors assessed China's widely expected rate cut to mitigate the economic impact of the new coronavirus.

The Hang Seng Index slipped 0.2% to 27,609.16 after rising as much as 0.4% in the opening minutes. Pan-Asia insurer AIA Group edged 0.2% lower while social media and gaming major Tencent Holdings declined 0.3%.

Casino operators Sands China and Galaxy Entertainment Group lost 0.8% and 0.5%, respectively. The losses came as some casinos in the Asian gaming hub of Macao reopened on Thursday after a two-week shutdown to contain the spread of the virus. Macao so far has reported 10 confirmed cases of the infection.

On the mainland, the Shanghai Composite Index added 1.8% after the People's Bank of China on Thursday lowered its benchmark lending rate, as had been widely expected. The central bank reduced the one-year loan prime rate to 4.05% from 4.15% and cut the five-year LPR to 4.75% from 4.80%. The PBOC earlier this week lowered the rate on its medium-term lending facility as it seeks to support the economy.

"The LPR cut being within expectations became a reason for profit taking," said Dickie Wong, executive director of research at Kingston Securities. "Now that the medium-terming lending and LPR cuts have been announced, the market no longer has hopes, aspirations and expectations" to ride on, he added.

Worries over the economic impact of the coronavirus outbreak still linger, meanwhile. China on Thursday reported 349 new infection cases, lower than the roughly 1,700 new cases reported at the end of Tuesday, after the nation revised its national guidelines for counting infections. The total death toll from the outbreak in Asia's largest economy rose to 2,118.

"Even though people may think the government could flex more muscles to help with recovery in the future, it is inevitable for earnings to go down and economic growth to slow down," Wong said. "These things are not changeable and reversible."

Lenovo Group jumped 7% in Hong Kong after the world's largest personal computer maker reported an 11% rise in quarterly net profit on the back of strong growth in its PC and smart devices business.

Ko Yo Chemical slid 5.4% after the chemical products and fertilizer maker said it expected its loss for 2019 to have widened to 617 million yuan ($87.9 million) from 348 million yuan a year ago.

Construction works company Tysan Holdings declined 1.1% after saying it swung to a loss of at least HK$750 million ($96.5 million) for the year ended Dec. 31, compared with a profit of HK$360 million a year ago.

Ausnutria Dairy added 6.4%, extending a 9.6% jump on Wednesday after the company said it expected net profit for 2019 to have increased 33.6% to 38.3% from a year ago.

-- Benny Kung

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