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Nikkei Markets

Trade deal optimism lifts Hong Kong shares amid unrest

Local property developers rebound following steep losses last week

HONG KONG (Nikkei Markets) -- Hong Kong shares rose on Monday, helped by indications that a Sino-American trade deal was imminent, even as worries over intensifying protests in the city lingered.

The Hang Seng Index added 1.4% to 26,681.09. Heavyweights Tencent Holdings and AIA Group rose 3.1% and 2%, respectively.

The Nikkei Asia300 Index rose 0.7% as optimism over Sino-American trade relations helped regional sentiment. White House economic adviser Larry Kudlow last week indicated an agreement was close to being reached. China's Commerce Ministry said Vice Premier Liu He had "constructive" talks on Saturday over a phone call with U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

Meanwhile, anti-government protests in Hong Kong showed no signs of easing over the weekend, with clashes at Hong Kong Polytechnic University spilling into the early hours of Monday. Hong Kong schools were suspended on Monday after being closed on Thursday and Friday. The Hang Seng Index slid 4.8% last week as demonstrations turned increasingly violent following the death of a protester and the shooting of an activist.

Still, local property developers rebounded. Wharf Real Estate Investment Company added 2.7% after shedding 9.6% last week. Sun Hung Kai Properties rose 1.7% following an 11% slump last week.

With local property stocks rebounding "it seems like people think the worst has happened, especially over the last two days," said Andy Wong, fund manager and chief investment strategist at LW A.M. "But property stocks still face structural earnings growth issues, so this is mostly a rebound on cheap valuations."

In the mainland, the Shanghai Composite Index added 0.6%. The yuan traded onshore slipped less than 0.1% to 7.0122. China's central bank on Monday said it is lowering the seven-day reverse repurchase rate to 2.50% from 2.55%.

Sofa maker Man Wah Holdings jumped 8.4% after reporting a 6.1% increase in net profit for the six months ended Sept. 30 and a 1.9% advance in revenue.

Sparkle Roll Group climbed 8.2% after the distributor of luxury cars and watches said it expects to report a significantly higher profit for the six months ended Sept. 30 from a year ago.

Sinomax Group surged 13.8% after the health and household products maker company said its unit was selling a 51% interest in its polyurethane foam business for 157 million yuan ($22.4 million). The company said it will record a gain of about 33.3 million Hong Kong dollars ($4.3 million) from the sale.

Freeman Fintech tumbled 8.7% after saying it expects to report a loss for the six months ended Sept. 30.

-- Benny Kung

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