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Nikkei Markets

Hong Kong stocks post weekly loss on US-China trade concerns

Tencent also pushes market lower as share price falls nearly 10% over 5-day period

HONG KONG (Nikkei Markets) -- Hong Kong shares suffered their steepest weekly loss in six weeks, weighed by concerns over a trade war between the U.S. and China and a sell-off in market heavyweight Tencent Holdings.

The Hang Seng Index fell 2.5% to close at 30,309.29 on Friday, capping a weekly loss of 3.8%. Tencent, the most valuable company listed in the city, was the biggest percentage decliner on the gauge as it stumbled 9.7% over the five-day period after reporting a quarter-on-quarter decline in its revenue from online games on Wednesday. The stock tumbled 4.4% to HK$420 on Friday after South African media group Naspers, its single largest shareholder, sold 190 million shares in the company at HK$405 each, trimming its stake to 31.2%.

More than 126 billion Hong Kong dollars ($16.1 billion) in Tencent shares changed hands on the stock exchange on Friday, out of the total market turnover of HK$284 billion in Hong Kong.

Stanley Chik, head of research at Bright Smart Securities in Hong Kong, said there has been a "great change in market sentiment" toward the stock in less than a week. "But I am still optimistic about the company's development," he said.

Geely Automobile Holdings and personal-hygiene products maker Hengan International Group were among other notable decliners during the week, dropping 8.9% and 6.1%, respectively, after both reported earnings during the week. On Friday, Geely lost 4.6% and Hengan gave up 4%.

The day's losses were in line with the rest of Asia and followed a sell-off on Wall Street on Thursday, after U.S. President Donald Trump's administration announced plans to impose tariffs on up to $60 billion of Chinese imports. In an apparent response to the move, China on Friday unveiled duties on up to $3 billion of U.S. imports. The Nikkei Asia300 Index sank 2.3%.

"Donald Trump's announcement on tariffs towards China as well as China's response has dragged down the Hong Kong market. It will have a negative impact in the short term, but it is hard to estimate how big" the effect will be, Chik said.

In mainland China, the Shanghai Composite Index shed 3.4% on Friday, its steepest single-day percentage loss since Feb. 9. The yuan traded onshore strengthened 0.2% to 6.3204 against the U.S. dollar.

The Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong dropped 2.4% on Friday.

"Given that U.S. demand accounts for about 3% of China's gross domestic product, higher U.S. tariffs, if implemented, could lead to a 0.15% drop in China's GDP," Standard Chartered economists wrote in a note on Friday. They added that the developments met with their expectations that trade frictions between the nations will intensify, although "a full-blown trade war remains a tail risk."

Global sourcing and logistics company Li & Fung tumbled more than 10% on Friday amid concerns about a trade war. On Thursday, the exporter of clothing and other products reported a 6.5% increase in 2017 net profit from continuing operations, even as revenue fell 8.3% to $13.53 billion. The company recorded an overall net loss of $375 million for 2017, taking into account a one-time non-cash loss for discontinued operations.

PetroChina fell 2.9%, although the energy producer on Thursday reported a near tripling of its 2017 net profit as revenue grew 24.7%.

China Life Insurance slipped 1.6% amid broad market losses. On Thursday, the insurer said net profit jumped 69% last year.

Chinese brokerage and investment bank CITIC Securities fell 4.9%, despite reporting a 10.3% net profit growth for last year, helped by gains from financial assets held for trading and higher income from bulk commodity trading. At an earnings conference on Friday, the company's president said it expects commission and fee income to drop in 2018 amid "fierce" competition.

Modern Land (China) tumbled 10.4% amid broad market losses. On Thursday, the company reported a 15.8% increase in 2017 profit and a 0.6% increase in revenue.

Computer hardware maker Razer slid 3.9% after saying its net loss for 2017 widened to $165.8 million from $59.6 million a year ago, even as revenue grew 32.1%.

-- Carrie Chen

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