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Nikkei Markets

Retreat by carmakers drives Hong Kong shares lower

FIH Mobile extends gains amid Foxconn chairman's Taiwan presidential bid

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Thursday, as automakers pulled back and investors turned cautious ahead of a long holiday weekend.

The Hang Seng Index had fallen 0.6% to 29,942.83 by noon after ending little changed on Wednesday despite better-than-expected economic growth data from China. Financial markets in Hong Kong will be closed on Friday and Monday for Good Friday and Easter Monday. Mainland Chinese markets will be open both days.

The Hang Seng Index "is relatively quiet as the holiday approaches," said Linus Yip, chief strategist at First Shanghai Securities, adding that investors are focusing on "individual hot themes" instead.

Geely Automobile Holdings fell 4.6%, leading percentage losses on the index, after a 12.8% surge on Wednesday that was trigged by speculation that China is considering measures to stimulate consumer demand for autos.

Other Chinese automakers listed in Hong Kong also fell, with Guangzhou Automobile Group sliding 3.5% and electric carmaker BYD shedding 4.3%, after each rose 10% or more on Wednesday.

Yip said the rally for automakers on Wednesday was overdone. "There is still hope for stimulus -- just that yesterday's reaction was too aggressive," he said.

Meanwhile, gains for the Hang Seng Index have slowed in recent days after it officially entered a technical bull market in early April, rising 20% from an October low. Investors still await progress on Sino-American trade talks and continue to watch for signs of a slowdown in global growth.

Yip expects the gauge to "trend up a little bit more in May," amid expectations for a higher weighting for A-shares in MSCI's indexes, more macroeconomic improvements and a final trade deal between the U.S. and China.

In the mainland, the Shanghai Composite Index had slipped 0.2% by noon.

Sands China fell 0.8% in Hong Kong. The casino operator posted net income of $557 million for the March quarter, unchanged from a year ago, according to its U.S.-listed parent Las Vegas Sands' results statement. Revenue rose 8%.

Handset maker FIH Mobile jumped 19.2%, heading for its sixth consecutive gain. Terry Guo, chairman of the company's Taipei-listed parent Hon Hai Precision Industry, or Foxconn, on Wednesday announced his plans to run for Taiwan's president in 2020. FIH shares are up more than 80% so far this week.

"The speculation is overdone," First Shanghai's Yip said. "Even if he wins the presidency, the impact on company earnings is uncertain. Investors should act cautiously."

Telecommunications-tower operator China Tower climbed 5.2% after reporting a more than threefold jump in first-quarter net profit and a 0.6% increase in operating revenue.

Chow Tai Fook Jewellery Group advanced 1.7% after the company reported a 24% increase in fourth-quarter retail sales in China.

Hong Kong-based telecom operator HKBN jumped 9.2% after saying the Hong Kong Communications Authority approved its proposed acquisition of WTT Holding. "We see potential synergies and expect smooth execution from HKBN," Yang Liu, an analyst at Morgan Stanley, wrote in a note.

Property developer Times China Holdings dropped 6.6% to HK$14.92 ($1.90) after saying it is placing 108 million shares at HK$14.54 apiece.

-- Amy Lam

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