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Nikkei Markets

Hong Kong stocks have best week in more than two months

AAC, Sunny Optical and meat producer WH Group among the best performers

HONG KONG (Nikkei Markets) -- Hong Kong stocks posted their steepest weekly advance in more than two months as some appetite for risk returned after the end of trade talks between U.S. and Chinese officials.

The Hang Seng Index added 0.6% to close at 26,667.27 on Friday, ending the week 4.1% higher. Mobile-components makers AAC Technologies Holdings and Sunny Optical Technology Group were among the week's best performers, climbing 13.4% and 11.8%, respectively. Pork producer WH Group, one of the stocks that were hit hard last year amid worries over Sino-American trade tensions, gained 12%.

In Friday's trading, AAC jumped 5% and Sunny Optical rose 2.7%, while WH Group advanced 0.6%.

U.S. equity indexes completed their fifth consecutive day of gains on Thursday amid lingering optimism over a resolution to U.S.-China trade tensions and fading expectations of more rate increases by the Federal Reserve. A three-day trade meeting between U.S. and Chinese officials concluded in Beijing on Wednesday, with indications that talks were progressing well. Meanwhile, Fed Chairman Jerome Powell on Thursday reiterated that the central bank would be patient with future interest-rate increases.

The market is still not very convinced about the "high possibility of a trade deal between the U.S. and China, but fund managers could not hold onto cash reserved for the year-start for too long," said Jason Lee, vice president for stocks at Hong Kong consultancy Investment Strategy Institute.

They are "buying cautiously" and prefer stocks with high asset quality. The yuan's sharp rebound in the last few days may have speeded fund inflows, he said.

In the mainland, the yuan climbed 0.7% to 6.7375 against the dollar, heading for a third day higher. The currency is trading at its strongest levels since July 2018. The Shanghai Composite Index added 0.7%.

The yuan "has become a thermometer of China-U.S. relations. Now that both nations want a deal, the yuan is climbing and yuan-sensitive sectors are worth looking into."

Chinese airlines, which bear fuel and aircraft acquisition costs in U.S. dollars, extended recent gains in Hong Kong, with Air China jumping 8.2% and China Southern Airlines climbing 6.1%. Each rose more than 16% this week.

CSPC Pharmaceutical Group slipped 1.3% on Friday after a 7.6% surge the previous day. The company said analyst reports saying management indicates a target guidance of 20% to 30% profit growth for 2019 "fairly reflect" its current view. The stock slumped 28.4% in 2018.

Cosmetics retailer Sa Sa International Holdings slumped 4.7% following a 2.2% decrease in third quarter retail and wholesale turnover to HK$2.19 billion ($279.3 million).

Fast Retailing jumped 4.4% even as the operator of Uniqlo clothing stores reported a 5.2% decline in November quarter profit. Revenue for the period rose 4.4% from a year ago.

Property management company Country Garden Services Holdings slid 12.6% to HK$11.28 after saying it agreed to place 168.76 million shares or 6.32% of enlarged share capital, at HK$11.61 per share, which is the lower end of an earlier announced indicative range of HK$11.61 to HK$12.00 per share.

Kingsoft advanced 1.2%. The company said it is in contact with JD.com to discuss a possible business collaboration, but no concrete plan has been formulated.

China Resources Power Holdings declined 0.6% after saying total net generation of subsidiary power plants in December fell 5% on-year.

Huadian Fuxin Energy added 1.1% after saying December's gross power generation rose 5.6% from a year ago.

Huaneng Renewables advanced 2.4% following a 29.5% jump in gross power generation for last month.

Sinopec Engineering climbed 3% after forecasting an up to 50% increase in net profit for the year ended Dec. 31.

-- Amy Lam

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