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Nikkei Markets

Hong Kong stocks gain in choppy trade after China-US talks end

Power Assets drops after shareholder CK Infrastructure places shares in utility

HONG KONG (Nikkei Markets) -- Hong Kong shares edged higher in choppy trading on Thursday, poised for a fifth straight day of gains, as investors looked for details after the end of a round of trade discussions between U.S. and Chinese officials.

The Hang Seng Index rose 0.4% to 26,559.48 by noon, after opening lower and dropping as low as 26,212.34. Ping An Insurance Group advanced 2.5% and pan-Asia life insurer AIA Group gained 0.8%. Drugmakers CSPC Pharmaceutical Group and Sino Biopharmaceutical increased 9% and 8.3%, respectively, trimming losses over the past month.

Power Assets Holdings decreased 1.2% to HK$54.90 after saying it was informed that its Hong Kong-listed controlling shareholder CK Infrastructure Holdings had agreed to place 43.8 million shares, or a 2.05% stake in the power utility, to independent placees at HK$52.93 per share. CK Infrastructure, which will hold about 35.96% in Power Assets after the placing, advanced 0.7%.

Few details emerged after a three-day meeting between U.S. and Chinese representatives ended Wednesday in Beijing amid hopes they will set the stage for a resolution of trade tensions between the two countries. China's Ministry of Commerce said the discussions helped improve "mutual understanding to establish a foundation to solve each side's concerns." The Office of the U.S. Trade Representative said the talks focused on China's pledge to purchase "substantial" agricultural, energy and manufactured goods from the U.S. and that its delegation will now "report back to receive guidance on the next steps."

The market already expected that "not many details will be announced after the talks. What is important is the signal that they have reached some consensus," said Andy Wong, chief investment strategist at wealth-management company Harris Fraser.

Wong said stocks are consolidating in the short term as investors look ahead to news related to Brexit, adding that the Hang Seng Index is expected to trade between 25,800 to 27,000 in the near term.

Meanwhile, weaker than expected Chinese economic data fueled speculation that Beijing may consider a further policy stimulus.

Data released Thursday showed China's factory-gate inflation in December slowed more than expected from November's pace. The producer price index for last month rose 0.9% from a year earlier, down from November's 2.7% rate and slower than the 1.6% pace estimated in a Reuters poll. The consumer price index increased 1.9% in December, compared with November's 2.2% pace and below the 2.1% analysts were expecting.

"Slowing inflation is the latest sign of cooling domestic demand and leaves policy makers with plenty of room to loosen policy," Capital Economics wrote in an emailed report.

Meanwhile, China's central bank will inject funds via the targeted medium-term lending facility later this month, People's Bank of China Governor Yi Gang said, according to a statement posted on the central bank's website, aiming to encourage lending to private and small enterprises.

Tsaker Chemical Group, a producer of chemical intermediates, soared 45.8%, following a 71.3% plunge on Wednesday. The company on Thursday said it saw no reason for the recent fall in its share price and that the company was "under normal operations."

Smartphone maker Xiaomi slumped 4.1% as it headed toward a fresh low since its trading debut in July. The stock has slumped more than 23% this month amid some concerns over its sales outlook. A six-month lockup period following its IPO ended on Wednesday.

-- Carrie Chen

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