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Nikkei Markets

Hong Kong stocks post weekly gain despite rising virus cases

Alibaba drops on Friday despite strong results as it warns on revenue outlook

HONG KONG (Nikkei Markets) -- Hong Kong stocks posted their second straight weekly advance, as investors appeared to look past the immediate impact of the new coronavirus on businesses and the economy.

The Hang Seng Index added 0.3% to 27,815.60, capping a weekly gain of 1.5%. Financial heavyweights AIA Group and China Construction Bank increased 0.6% and 1.1%, respectively, on Friday, while power-tools maker Techtronic Industries advanced 2.5%.

E-commerce major Alibaba Group Holding slipped 1% after Chief Financial Officer Maggie Wu warned the company's revenue growth during the current quarter would likely be negatively affected by the coronavirus. The company late on Thursday reported a 58% jump in third-quarter net profit and a 38% increase in quarterly revenue.

The virus, first detected in Wuhan in the central Chinese province of Hubei, has rapidly spread to many other parts of the world. It has hurt tourism and a range of establishments in the Asian region, while also forcing several Chinese factories and schools to close. More than 65,000 people have been infected by the coronavirus, which has also claimed nearly 1,500 lives so far.

Still, markets in mainland China and Hong Kong have been relatively resilient during the outbreak, as they have been in recent days.

"I think the market just expects things to improve despite the fact that the number of infections are increasing and hundreds of people are dying every day," said Francis Lun, chief executive at GEO Securities. He added that stocks were also underpinned by speculation that Chinese authorities might ease policies to mitigate the economic impact from the outbreak.

On the mainland, the Shanghai Composite Index advanced 0.4% while the yuan traded onshore weakened 0.1% against the U.S. dollar to 6.9825.

"I think the entire market is irrational," Lun said. "People are looking too far ahead, maybe six months, but it will take time for China's economy to recover from the epidemic."

Hua Hong Semiconductor tumbled 14.3% after the company reported a 47% slump in its fourth-quarter net profit. Its revenue fell 2.5%.

Hong Kong telecommunications and media major PCCW, which on Thursday reported a 24% drop in 2019 net profit, gave up 0.2%.

Geely Automobile Holdings retreated 0.8% and Guangzhou Automobile Group shed 1.8% after the carmakers reported a decline in their respective sales volumes for January.

S-Enjoy Service Group, a property management services company, advanced 6.7% after saying its 2019 profit was expected to have increased by more than 80% from the year before.

-- V. Phani Kumar

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