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Nikkei Markets

US-China deal hopes buoy Hong Kong shares

Sunny Optical slips after September shipment volumes miss expectations

HONG KONG (Nikkei Markets) -- Hong Kong shares ended higher amid robust volumes on Monday, as markets cheered indications that a Sino-American trade deal may be forthcoming after the U.S. held off from plans to further increase tariffs on Chinese goods.

The Hang Seng Index added 0.8% to 26,521.85. London-headquartered lending heavyweight HSBC Holdings rose 1.7%, contributing most to the gauge's gains by points. Social media and gaming company Tencent Holdings climbed 1.1%, while pan-Asia insurer AIA Group increased 0.8%.

Sunny Optical Technology Group slid 2.5% after reporting September shipment volumes that were slightly below expectations, according to Citigroup. The smartphone component supplier reported a 43.9% jump in handset lens shipment volumes.

Equity indexes on Wall Street advanced on Friday amid signs that a trade spat between the U.S. and China may be close to a resolution after a two-day high-level trade meeting in Washington last week. U.S. President Donald Trump, who also met Chinese Vice Premier Liu He last week, said the world's two largest economies had agreed to the outlines of a deal that could be signed as early as next month.

Trump said China had agreed to buy $40 billion to $50 billion more in U.S. agricultural products over two years, and the U.S., in return, would not raise tariffs on $250 billion of Chinese goods to 30% from 25% next week.

"I think there is still some room for upside," said Ivan Li, investment research department director at CSL Securities. "But given Trump's track record, it makes sense for the market to have reservations."

Turnover on the Hong Kong stock exchange's main board was higher than usual at 90.34 billion Hong Kong dollars ($11.5 billion) on Monday.

The two nations have been embroiled in a bitter trade battle since early 2018, with both countries imposing punitive tariffs on goods imported from each other. Both economies have shown signs of a slowdown during this period, while corporate earnings haven taken a hit.

Li said upward revisions to earnings were unlikely, although market sentiment was expected to improve.

In the mainland, the Shanghai Composite Index rose 1.2%, while the yuan traded onshore advanced 0.3% against the dollar to 7.0668. Data released Monday showed China's exports fell 3.2% in September, worse than the 3% decline analysts polled by Reuters were expecting. Imports slid 8.5% last month, also wider than a Reuters estimate of 5.2%.

Chinese automaker Great Wall Motor added 1.5% after reporting a 15.3% increase in September sales.

Cansino Biologics jumped 8.1% after the Chinese health care company said it was seeking to list shares on the Shanghai Stock Exchange.

China Suntien Green Energy rose 1.4% after saying its total power generation for the third quarter increased 13.9% from a year ago.

Winemaker New Silkroad Culturaltainment climbed 4.2%. The Chinese company said its unit agreed to sell Canada-based residential and commercial development Mackenzie Creek Securities for 246.9 million Hong Kong dollars ($31.5) in cash.

-- Benny Kung

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