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Chinese banks shine as Hong Kong shares inch higher

Agricultural Bank jumps 5.4% on preliminary results and fund-raising plan

HONG KONG (Nikkei Markets) -- Chinese banks rallied to help Hong Kong shares erase losses after a choppy trading session on Tuesday, spurred by Agricultural Bank of China's preliminary results and capital-raising plan.

The Hang Seng Index edged 0.02% higher to close at 31,601.45, after dropping as low as 31,461.47 during the day. Twenty-one of the gauge's 50 constituents ended higher, one ended unchanged and 28 stocks declined. Heavyweights HSBC Holdings and China Mobile declined 0.4% and 1.2%, respectively, while offshore energy producer CNOOC shed 1.9% on a retreat by crude oil futures. Apple supplier AAC Technologies Holdings fell 0.4% after rising 7.8% over the last three days.

Chinese banking shares countered those declines. China Construction Bank (CCB), Bank of China (BOC) and Industrial & Commercial Bank of China (ICBC) -- three of the country's four largest commercial lenders and members of the Hang Seng Index -- gained 1.1%, 1.8% and 1.1%, respectively. Agricultural Bank, the fourth lender among China's Big 4 and a member of the 40-member Hang Seng China Enterprises Index, jumped 5.4%, its biggest single-day percentage increase since February 2017.

The gains came after Agricultural Bank on Monday reported a 4.9% year-on-year increase in its preliminary net profit for 2017, while its non-performing loan ratio fell to 1.81% as of Dec. 31 from 2.37% a year earlier. The lender also unveiled plans to raise up to 100 billion yuan ($15.8 billion) from a private placement of its Shanghai-listed A-shares. The company's stock was up 2.5% in mainland trading, while the Shanghai Composite Index slipped 0.5%.

Investors are optimistic about earnings from other Chinese banks after Agricultural Bank "delivered results that show the bad debt situation is getting better," said Jason Lee, vice president for stocks at investment consultancy Investment Strategy Institute in Hong Kong.

Sunac China Holdings slipped 0.5% in Hong Kong after Shanghai-listed HNA Infrastructure Investment Group said the Chinese property developer had agreed to buy two of its units for a total 1.93 billion yuan.

Central China Real Estate gave up 3.7% after it jumped 5% on Monday. The company earlier on Tuesday said its net profit for 2017 more than doubled from a year ago.

Hong Kong Aircraft Engineering Co., a unit of diversified conglomerate Swire Pacific, said during Tuesday's midday break that it posted a net loss of 541 million Hong Kong dollars ($69 million) for the year ended Dec. 31, swinging from a net profit of HK$975 million a year earlier.

China Longyuan Power Group added 3.2% after reporting an 8% increase in 2017 net profit to 3.69 billion yuan and a 10.3% jump in revenue.

Asset manager Value Partners Group jumped 6.7% following a near 15-fold increase in net profit for 2017. Revenue for the year nearly tripled to HK$4.11 billion.

-- Amy Lam

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