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Nikkei Markets

Hong Kong shares snap six-week winning streak

Tencent has worst week since December, while Geely climbs after sales

HONG KONG (Nikkei Markets) -- Hong Kong shares ended lower on Friday, driving the Hang Seng Index's first weekly loss of the year, as uncertainty related to ongoing Sino-American trade talks in Beijing weighed on risk sentiment.

The Hang Seng Index fell 1.9% to 27,900.84 on Friday, declining 0.2% for the week. Social-media and gaming company Tencent Holdings fell 2.3%. It has shed 3.4% since last Friday, its worst weekly performance since December. Geely Automobile Holdings rose 7% during the week despite a 5.3% slide on Friday. The carmaker reported better-than-expected January sales earlier this week.

Among heavyweights that dragged on the index Friday, China Construction Bank and pan-Asian life insurer AIA Group fell 2.6% and 2.1%, respectively. Apple supplier AAC Technologies Holdings lost 5.3%, leading percentage losses on the gauge. Pork producer WH Group advanced 1.4%.

Investors await the outcome of a round of high-level trade talks in Beijing that are being led by Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. China's President Xi Jinping is scheduled to meet members of the U.S. trade delegation on Friday, the South China Morning Post has reported, citing sources close to the matter.

The two countries "have made little progress so far," Bloomberg reported on Thursday, citing people familiar with the discussions.

The Japanese yen, considered to be a safe haven, climbed 0.1% against the dollar.

Some investors are taking profit following news that there has been little progress in trade talks, said Frankie Chan, senior research analyst at Emperor Securities. He does not expect the two nations to reach a consensus on trade before the March 1 deadline.

Friday's losses in Hong Kong followed a retreat for the Dow Jones Industrial Average and the S&P 500 Index overnight after data showed U.S. retail sales unexpectedly fell in December.

News that President Xi is meeting U.S. trade representatives "actually signals that trade talks are not" getting worse, Chan said. He expects the Hang Seng Index to be frequently influenced by political volatility this year.

On the mainland, the Shanghai Composite Index fell 1.4% on Friday, while the yuan traded onshore slipped 0.1% to 6.7790 against the dollar. Data released Friday showed China's producer price inflation came in at 0.1% in January, slower than the 0.2% pace expected by analysts in a Reuters poll. Consumer inflation was at 1.7%, also slowing from December's 1.9% print.

The weaker-than-expected data is more an "excuse to sell, rather than the main driver" for the weakness," he said.

BAIC Motor fell 3.2% in Hong Kong. The carmaker on Thursday said it expected net profit for 2018 to have increased by more than 95% from a year ago. Guotai Junan Securities said the estimate was below market expectations.

Great Wall Motor fell 2% despite reporting a 1.5% increase in January sales volume and a 6.4% rise in production. Analysts at Guotai Junan said they remained cautious as the improvement in sales relied mainly on new models, which are vulnerable when the "new vehicle effect" fades.

China Merchants Land tumbled 8.5% after saying it expects net profit for 2018 to have fallen about 25% from a year ago.

Semiconductor Manufacturing International declined 2.9% following a 44.4% decrease in fourth-quarter net profit.

New Concepts Holdings plunged 44.7% as trading resumed after a halt of more than seven months. The construction company on Thursday reported a net loss of HK$224.8 million ($28.6 million) for the year ended March 31, compared with a profit a year earlier. In a separate statement, it reported a net loss of HK$17.6 million for the six months ended Sept. 30.

Property developer Winfull Group Holdings fell 1.8% after saying it expects a "significant" decline in net profit for the six months ended Dec. 31.

-- Amy Lam

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