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Nikkei Markets

Hong Kong stocks break four-week losing streak on earnings

CSPC Pharma and Geely among top gainers after first-half results

HONG KONG (Nikkei Markets) -- Hong Kong shares rose on Friday, completing their first weekly gain in five weeks, as half-yearly earnings propped up individual stocks even though sentiment was subdued due to external headwinds.

The Hang Seng Index added 0.5% to 26,179.33 on Friday, ending the week 1.7% higher. CSPC Pharmaceutical Group jumped 26.2% during the week, leading gains on the gauge after the Chinese drugmaker reported a 24.8% surge in first-half profit. Geely Automobile Holdings rose 10.1% since last Friday. The Chinese carmaker on Wednesday said it would launch new car models to revive its sagging sales after weak demand hurt its first-half earnings.

On Friday, CSPC advanced 3.4%, while Geely ended 0.5% higher.

Meanwhile, pan-Asia insurer AIA Group added 2% after reporting a 73.4% jump in net profit for the first half and a 20% year-on-year increase in the value of its new business. China Life Insurance climbed 3.2% following a more than doubling of its first-half net profit. Net written premiums for the six months ended in June were up 4.8%, it said.

Hengan International Group slid 3.4%, extending Thursday's 5.3% drop, after the personal-hygiene products maker reported a 3.6% decrease in half-yearly profit.

Hong Kong's equity benchmark, which jumped 2.2% on Monday, has traded in a narrow 406-point range since Tuesday, as investors contend with a number of headwinds that show few signs of abating. Global risk appetite was hurt last week when a brief inversion of the U.S. yield curve fueled concerns of an impending recession in the world's largest economy. Investors are looking to U.S. Federal Reserve Chairman Jerome Powell's speech at Jackson Hole, Wyoming, on Friday, for clues on whether the central bank will ease monetary policy further after a rate cut in July.

Meanwhile, the outlook for U.S.-China trade relations remains uncertain even as the administration of U.S. President Donald Trump signaled it was still planning a round of talks with China in September. White House economic adviser Larry Kudlow on Thursday said a call between deputy-level trade negotiators this week was "quite constructive."

"Sentiment is still cautious," said Stanley Chik, head of research at Bright Smart Securities. "Sino-American trade negotiations are still the biggest variable. It remains uncertain whether they can kick-start a new round of talks in September."

"Investors are consolidating and trying to protect capital," Andrew Sullivan, director at Pearl Bridge Partners in Hong Kong, wrote in a note. "Key overhangs include the Hong Kong protests, which if they remain peaceful, are a huge concern to Beijing after it tried to label them 'terrorist.'"

Protests in Hong Kong, which started peacefully in June, had turned violent more recently as the police and activists clashed. However, last Sunday, a peaceful demonstration drew an estimated 1.7 million people to the streets. Protestors have called for the creation of human chains along three railway lines across the city on Friday for about an hour.

On the mainland, the Shanghai Composite Index rose 0.5%, while the yuan traded onshore slipped 0.1% against the dollar to 7.0930.

Supply-chain and logistics major Li & Fung jumped 3% in Hong Kong after reporting a profit of $20.53 million for the first half of the year, compared with a net loss of $86.09 million a year ago. Revenue fell 8.4% to $5.36 billion.

Anhui Conch Cement rose 1.6% after reporting a near 18% increase in first-half net profit and a 56.6% jump in revenue.

Hisense Home Appliances climbed 7.3% after reporting a 21% increase in net profit for the first half of the year.

-- Benny Kung

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