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Nikkei Markets

Hong Kong stocks suffer worst weekly loss in three months

WH Group and developers among worst hit amid concerns over trade and liquidity

HONG KONG (Nikkei Markets) -- Hong Kong shares posted their worst weekly loss in three months on tightening liquidity conditions and lingering worries over the impact of an escalation in Sino-American trade tensions.

The Hang Seng Index dropped 3% over the five-day period, its biggest weekly loss since the week ended March 23, although the gauge rose 0.2% on Friday to close at 29,338.70.

Sunny Optical Technology Group was the week's worst performer of the 50-stock index, sinking 11% after it cautioned analysts about pressure on profit margins of its handset lens modules. Pork producer WH Group slid 7.5% on worries its U.S. unit's exports could be affected because of tensions between the U.S. and its major trading partners. Country Garden Holdings dropped 3.6% and New World Development gave up 3.4% amid fears that scarcer liquidity could boost their funding costs.

In Friday's trading, Sunny Optical climbed 2%, WH Group gained 0.5% and Country Garden advanced 0.8%, while New World slid 0.5%.

The mood of investors has been jittery this week after tariff announcements from the U.S. and China. U.S. President Donald Trump on Monday warned of the possible imposition of tariffs on $200 billion of Chinese imports. This followed his move to raise levies on $50 billion of Chinese goods and equal retaliation by Beijing.

"Market participants are still carefully waiting for signs of a turnaround in the U.S.-China tariff measures before they are implemented on July 6," said Will Leung, head of investment strategy for Hong Kong and greater China wealth management at Standard Chartered Bank. "I don't think Trump is eager for a reversal at the moment, as he is eyeing the November midterm elections and will continue bargaining with China. Hong Kong and global equities are being sacrificed in the meanwhile."

In the mainland, the Shanghai Composite Index climbed 0.5%, trimming losses for the week to 4.4%. The yuan traded onshore was down 0.1% against the U.S. dollar at 6.4955 on Friday.

PetroChina and CNOOC lost 1% and 0.8%, respectively, in Friday's trading in Hong Kong after global crude prices retreated overnight.

Light-rail operator MTR added 3.2%, its first advance in seven trading days, after Nomura upgraded the stock to buy from neutral, based on what it described as a stronger earnings growth outlook.

Esprit Holdings rose 0.4% in Hong Kong. The company on Thursday forecast a loss before interest and taxation of 2.17 billion Hong Kong dollars ($276.6 million) to HK$2.27 billion for the year ending June 30.

Pacific Textiles Holdings slid 3.8% after reporting a 24% drop in net profit for the year ended in March, even as revenue edged 1.7% higher to HK$6.1 billion.

Differ Group Holding climbed 10.2% to 65 Hong Kong cents. The financial services company on Thursday said it would issue 610.4 million shares at 53 Hong Kong cents apiece in a private placement, with the new stock equivalent to 12.38% of its enlarged capital.

BeijingWest Industries International advanced 4.7% after the automotive components maker said a unit had agreed to sell a 51% stake in BWI Shanghai for 132.3 million yuan ($20.4 million).

China Environmental Energy Investment fell 4.9% after saying it plans to sell a 23.53% stake in Pure Power Holdings for HK$106 million.

Intimate-wear maker Regina Miracle International climbed 1.3% after saying it expects to post a "significant increase" in consolidated net profit for the year ended in March.

-- Amy Lam

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