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Nikkei Markets

Hong Kong stocks erase most weekly gains after China data

Drugmaker shares slump on concern about sales, while Fosun Tourism drops on debut

HONG KONG (Nikkei Markets) -- Hong Kong stocks fell for the first time in four days on Friday, almost erasing their weekly gain, as investors digested a clutch of weaker-than-expected Chinese economic data.

The Hang Seng Index lost 1.6% to close at 26,094.79 on Friday, trimming its weekly advance to 0.1%. Heavyweight Tencent Holdings sank 3.1% and pork producer WH Group slumped 6.2% on Friday. Smartphone component makers AAC Technologies Holdings and Sunny Optical Technology Group declined 4.9% and 5%, respectively, after the Nasdaq Composite shed 0.4% on Thursday. Swire Pacific added 1.3% after saying it agreed to dispose its entire stake in its paint business for an expected gain of HK$2.7 billion ($345.7 million).

The Hang Seng China Enterprises Index of large mainland companies listed in the city shed 1.9%, while the Shanghai Composite Index slid 1.5% in the mainland amid worries over slowing growth in Asia's largest economy. Data released Friday showed retail sales in China rose 8.1% last month, slowing from October's 8.6% pace and missing the 8.8% growth expected by economists in a Reuters poll. Industrial output increased 5.4% in November from a year ago. Economists polled by Reuters were expecting growth of 5.9%, which was also October's pace.

The data, taken together with trade and credit numbers released earlier, suggest China's "growth slowdown is faster than expectation despite the recent easing measures," analysts at BBVA Research wrote in a note. The analysts noted the "confluence of factors" weighing on growth, including U.S.-China trade tensions and fading effects of front-loading exports.

Kevin Leung, director of global investment strategy at Haitong International Securities in Hong Kong, was less pessimistic about China's economic data.

"While the industrial production figure was worse than October, I think people expected a general downtrend in the economy," he said. "The economic stats are not too bad and, therefore, room for a big decline in the near term is also limited."

Meanwhile, markets are watching developments between the U.S. and China for signs that trade tensions between the two nations may be easing. President Donald Trump's administration is making its decision to delay a tariff hike on $200 billion in Chinese goods official, Bloomberg reported, citing two people familiar with the matter. The report follows an agreement between Trump and Chinese President Xi Jinping to put a trade war on hold.

Leung said the market is sensitive to the tone of progress related to trade talks, and "active market participants are fearful of holding positions too long." Still, he expects "some upside" in the market between now and the end of December.

CSPC Pharmaceutical Group tumbled 12% and Sino Biopharmaceutical slid 4.8% on Friday amid concerns that drug sales in the industry could be hurt by increased scrutiny of certain medicines. China's National Health Commission this week directed authorities nationwide to strengthen drug management practices of adjuvant drugs, which are meant to enhance the effectiveness of medical treatment. The scrutiny was also aimed at controlling "unreasonable growth" in medical expenses at public hospitals and easing the "burden of medical treatment" on patients, the NHC said.

Shares of Fosun Tourism Group fell 4% to HK$14.98 on their trading debut in Hong Kong after the tourism and leisure services company raised HK$3.34 billion ($427 million) in gross proceeds from an initial public offering. Its parent and Chinese conglomerate Fosun International fell 3%.

Civil aviation company AviChina Industry & Technology slid 5.4% to HK$5.05 after saying it agreed to place 279 million shares at HK$4.90 each. It expects to receive net proceeds of about HK$1.35 billion from the placement.

Sinotrans Shipping climbed 1.1%. The dry bulk and container shipping company said its independent shareholders approved a proposal to privatize the company at a court meeting. Controlling shareholder China Merchants Group had in September offered to take Sinotrans private.

China LNG Group fell 5.2%. The company on Thursday said Keung Chi Lap resigned as its chief financial officer.

-- Amy Lam

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