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Nikkei Markets

Uncertain trade talk outlook leaves Hang Seng little changed

Jewelers Chow Tai Fook and Luk Fook slide on lower Hong Kong retail sales

HONG KONG (Nikkei Markets) -- Hong Kong shares recovered a chunk of their early losses to trade little changed by noon on Tuesday, as investors await updates on a Sino-American trade deal.

The Hang Seng Index declined less than 0.2% to 26,405.96 by the midday break after falling as low as 26,063.02 earlier. Heavyweight Tencent Holdings slipped 0.7%, recovering from a slide of as much as 1.9% earlier. AIA Group, which had also dropped 1.9% in early trade, recovered to a 0.2% loss.

Tuesday's initial pullback came after U.S. equities retreated overnight following weak manufacturing activity data from the world's largest economy. Concerns over global trade relations had also weighed.

U.S. President Donald Trump on Monday said he plans to reimpose tariffs on steel and aluminum imports from Brazil and Argentina. The Trump administration also proposed the imposition of 100% tariffs on up to $2.4 billion in French goods. Meanwhile, the U.S. and China have yet to sign a preliminary trade agreement. If no deal is reached by Dec. 15, Washington may move to impose a 15% levy on $156 billion worth of Chinese products.

The Hong Kong stock market has already factored in new uncertainty in Sino-American trade relations, said Castor Pang, head of research at Core Pacific Yamaichi International (H.K.), adding he didn't believe the day's initial drop made sense.

Investors have been concerned that a U.S. move to enact the Hong Kong Human Rights & Democracy Act would dampen trade relations between Beijing and Washington. Since the bill was signed last Wednesday, China has suspended the arrival of U.S. Navy ships and aircraft into Hong Kong, and unveiled sanctions against some American human rights groups.

The only thing China can do to retaliate against the U.S. is to "condemn, condemn and seriously condemn," Pang said. "They will be doomed if there is no fresh capital coming into the country. They can't lock up the country. They must encourage money coming in."

In the mainland, the Shanghai Composite Index slipped 0.1%.

Data released on Monday showed Hong Kong's retail sales by value slumped 24.3% in October from a year ago. The drop came amid an ongoing political crisis in the city that has thwarted tourist arrivals and weighed on the retail sector.

Chow Tai Fook Jewellery Group dropped 1.9% while Luk Fook Holdings International slid 3%.

Sa Sa International Holdings lost 0.6%. The cosmetics retailer said it plans to close all its stores in Singapore to focus on Hong Kong, Macao, mainland China and Malaysia.

Century Ginwa Retail Holdings surged 27.5% to 32.5 Hong Kong cents as trading resumed after a day's halt. The company said substantial shareholder Maritime Century entered an agreement with Xi'an Qujiang Cultural Financial Holdings (Group) and Qujiang Cultural Financial International Investment to sell 336.17 million ordinary shares in the company, or about 29.24% of its total issued shares, at HK$0.2123 per share. Century Ginwa shares had jumped 21.4% on Friday.

China Vanke edged 0.2% lower after the property developer reported a 6.5% decrease in contracted sales for November. Guangzhou R&F Properties declined 1.3% following a 24.6% fall in November contracted sales.

Zijin Mining Group added 0.7%. The Chinese miner late Monday said it has agreed to buy Canada's Continental Gold for 1.3 billion Canadian dollars ($1 billion).

--Benny Kung

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