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Nikkei Markets

Outflow worries drag Nikkei Asia300 lower for fifth day

Tencent retreats after disappointing 2Q, set for worst week in almost 7 years

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan retreated on Thursday amid concerns over capital outflows from emerging markets, even as signs of fresh negotiations between the U.S. and China helped pare some losses.

The Nikkei Asia300 Index ended 0.8% lower at 1,273.90, after sliding as much as 1.3% in intraday trading. Tencent Holdings fell 3% in Hong Kong following a 2% decline in second-quarter net profit amid surging costs and a slowdown in mobile gaming revenue. The stock, down 11.9% since last Friday, is on course for its worst weekly loss since November 2011, as investors react to news that Chinese regulators have frozen approvals for game licenses. The also pulled a recently-launched game from its WeGame platform this week.

Losses in Asia came after technology stocks led losses in the U.S. overnight, with major equity benchmarks ending lower. Samsung Electronics and SK Hynix lost 2% and 1.6% in Seoul following a 1.2% slide for the technology-heavy Nasdaq Composite overnight.

Regional investors have been concerned over capital outflows from emerging markets amid broad strength in the dollar and expectations of further rate increases in the U.S.

"Admittedly, the near term outlook for emerging markets and Asia remains challenging under the strong dollar environment and the ongoing normalization by major central banks," Tai Hui, chief market strategist for Asia Pacific at J.P. Morgan Asset Management, wrote in a note. "The tension on trade between the U.S. and China... doesn't make things easier."

The U.S. and China are set to impose punitive tariffs on imports worth $16 billion from one another next week. China's Ministry of Commerce on Thursday said vice commerce minister Wang Shouwen plans to visit the U.S. in late August for talks with U.S. Under Secretary of Treasury for International Affairs David Malpass.

Hui said the recent correction had "restored value" in a number of emerging markets. "Reasonable valuation, when met with improvement sentiment, can be an important catalyst for emerging markets to catch up."

Energy stocks in the region pulled back after Brent crude futures declined 2.3% on Wednesday. China Petroleum & Chemical (Sinopec) shed 1.9% in Hong Kong, while Sapura Energy lost 0.9% in Kuala Lumpur and PTT Exploration and Production declined 1.1% in Bangkok.

Indian conglomerate Reliance Industries fell 0.9% in Mumbai. The company has declared force majeure on gasoline exports from a plant in the western Indian state of Gujarat, Reuters reported on Wednesday, citing four people familiar with the matter.

Ping An Insurance Group fell 0.5% in Hong Kong despite reporting a 21.7% increase in accumulated gross premium income for its life insurance business for the January-to-July period.

China Unicom (Hong Kong) slipped 1.3% amid broad market losses. The mobile operator on Wednesday said profit for the first half more than doubled on-year to 5.91 billion yuan as revenue grew 7.9%.

Pork producer WH Group slumped 7.5%. A spokeswoman for its subsidiary Shuanghui Group said the unit will shut down its Zhengzhou slaughterhouse in eastern China for six weeks after a pig was found to be infected with African swine fever.

Personal computer maker Lenovo Group rose 3.4% after returning to a profit of $77 million for the first quarter, compared with a year-ago loss of $72 million. Revenue increased 19% to $11.91 billion.

The Nikkei Asia300 ASEAN Index declined 0.4% on Thursday.

-- Amy Lam and Suzannah Benjamin

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