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Nikkei Markets

Trade worries drag Hong Kong shares to three-week low

Chinese drugmakers retreat after expansion of drug procurement program

HONG KONG (Nikkei Markets) -- Hong Kong shares declined on Wednesday, as worries over U.S.- China trade relations and political uncertainty in Washington weighed on investor sentiment in Asia.

The Hang Seng Index shed 1.3% to 25,945.35, its lowest closing level since Sept. 3. Social media and gaming major Tencent Holdings fell 2.2% while pan-Asia insurer AIA Group declined 2%. The two stocks contributed about a third of the gauge's losses.

Sino Biopharmaceutical and CSPC Pharmaceutical Group fell 5.3% and 3.7%, respectively, after China on Tuesday announced the expansion of its centralized procurement of medicines. Authorities have asked drugmakers to submit bids to supply 25 generic drugs to hospitals across the country. In December's pilot program, one company was picked to supply drugs in 11 cities. This program will name as many as three companies.

Concerns over the outlook of Sino-American trade relations grew after U.S. President Donald Trump in a speech at the United Nations General Assembly on Tuesday said he would not accept a "bad" trade deal. His comments precede a round of high-level talks expected to take place in Washington next month.

"The first thing people are worried about is the trade war. Trump's comments indicate he doesn't just want a deal, he wants a good deal for the U.S.," said Ronald Wan, chief executive at Partners Capital International. "I'm not sure whether a good deal can be achieved for the U.S. A good deal for the U.S. means it will be a bad deal for China."

People are also concerned that the U.S. may take a strong stand against China with regards to the Hong Kong situation, Wan added.

Trump on Tuesday said how China handles the situation in Hong Kong "will say a great deal about its role in the world in the future."

Anti-government protests in Hong Kong have gone on for 16 consecutive weekends as activists' calls for broader democratic rights continue.

Meanwhile, U.S. Speaker Nancy Pelosi on Tuesday said the House of Representatives is opening a formal impeachment inquiry of Trump amid allegations of abuse of power by the president.

Markets in the rest of Asia also fell, with the Nikkei Asia300 Index shedding 1.2%. In the mainland, the Shanghai Composite Index declined 1%.

Packaging paper maker Nine Dragons Paper Holdings fell 5.5% in Hong Kong after reporting a 50.8% decline in net profit for the fiscal year ended in June.

Hong Kong-based property developer NWS Holdings, a unit of New World Development, dropped 8.2% following a 33.4% decline in profit for the year ended in June. New World Development shares edged 0.2% lower after reporting a 22.2% decline in full-year profit.

Footwear maker Stella International Holdings jumped 9.1% to HK$12.68. Daiwa Capital Markets upgraded the stock to "buy" from "hold" and raised its target price to HK$18 from HK$13.60 amid expectations for a rebound in earnings.

Chinese catering company Longhui International Holdings slid 35.4%, extending a 61.8% slump on Tuesday. The company late Tuesday said its controlling shareholder Shui Chak Group disposed of 305 million shares, representing about 4.79% of total share capital of the company.

-- Benny Kung

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