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Stocks

Earnings wagers spur casinos as Hong Kong stocks hit five-week high

HONG KONG (Nikkei Markets) -- Hong Kong shares climbed to a five-week high on Wednesday, with earnings expectations from the gambling sector further brightening investor outlook amid optimism over U.S. tax reforms and French elections.

The Hang Seng index advanced 0.5% to 24,578.43, just shy of its highest close since July 2015. Galaxy Entertainment Group jumped 4.7% for its best session in almost two months, and Sands China added 3.7%, cheering better-than-expected earnings by Wynn Macau, which jumped 4%. China Life Insurance and Ping An Insurance Group gained at least 0.8% to pace the financial sector before the two insurance majors report earnings on Thursday.

The advances came against the backdrop of expectations U.S. President Donald Trump's administration will unveil details of his promised tax cuts and that Emmanuel Macron's victory in the first round of French presidential elections could help strengthen the European Union. Wynn's 26% growth in quarterly earnings cemented optimism over the outlook for casino operators in Macau, where gaming revenues have risen for eight consecutive months after more than two years of declines.

"Wynn Macau's numbers were much better than expected," said Louis Tse, asset management director at Hong Kong-based VC Brokerage. "We could see casino stocks rally further" on expectations the strong recent performance in gaming revenues may continue, Tse said.

CLP Holdings added 0.9% amid broad market gains, shrugging off news that the company and Hongkong Electric have reached a 15-year agreement with the local government under which their regulated investment return will be slashed to 8% of their net fixed assets from 9.99% at present. "The level of reduction in the permitted rate of return to 8% is within our expectation," Moody's Investors Service said in a statement on Wednesday, adding that it sees no immediate impact of the agreement on CLP's credit ratings. Shares of HK Electric Investments, which controls Hongkong Electric, slipped 1%.

Heavyweight Tencent Holdings was among the decliners as it retreated 0.5% after climbing to a record on Tuesday.

Energy companies also lagged behind, with benchmark U.S. crude oil prices poised for a seventh decline in eight days. CNOOC slipped 0.1% and PetroChina fell 0.2%.

China Vanke lost 2.6% following reports that authorities in the Chinese city of Xian had halted the company's sales on suspicion of illegal property transactions. The developer's Shenzhen-listed shares fell 0.9%.

In mainland markets, the Shanghai Composite rose 0.2% and the Shenzhen benchmark added 0.4%. The yuan slipped 0.1% to 6.89 against the dollar in onshore trading.

Sa Sa International Holdings advanced 0.3% amid broad market gains, even as the cosmetics retailer said its profit for the year ended March 31 was expected to decline by up to 20%.

Sinopharm Group slipped 0.6%, paring its advance this year to 9.9%. Earlier on Wednesday, the company reported a 22% increase in its quarterly net profit.

Fullshare Holdings remained under suspension on Wednesday after plunging 12% Tuesday following a report by short seller Glaucus Research, accusing the company of manipulating its stock price. Late Tuesday, Fullshare said the "report contains misleading statements and unfounded speculations" against the company and that it was preparing a response.

-- Nimesh Vora and V. Phani Kumar

-- Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.

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