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=ASIA MARKETS: Hong Kong Shares End Week Flat As Traders Await Party Congress

HONG KONG (Oct 13) -- Hong Kong stocks posted their smallest weekly move in six months on caution ahead of China’s Party Congress next week.

The benchmark Hang Seng Index ended at 28,476.43 on Friday, rising less than 0.1% for both the day and the week. The weekly move was the gauge’s smallest in either direction since the week ended April 14.

Cathay Pacific Airways was the week’s top gainer, rising 6.5% as it climbed for a second straight day after Goldman Sachs expressed a positive view on the airline and maintained a buy rating. Galaxy Entertainment Group was among the worst performers, sliding 4.2% this week to halt a six-week winning streak. Its competitor Sands China retreated 4.3% for the week, also giving up some recent gains.

Hong Kong stocks are likely to “continue this motionless picture until Oct. 18 when the Party Congress will be held in Beijing, unless some big moves appear in global markets,” said Vicks Poon, head of investment advisory at Fubon Bank (Hong Kong).

The 19th Party Congress to be held next week is a meeting for selecting the Communist Party’s, and China’s, top leadership for the next five years. While it is political by nature, market participants have been keenly awaiting it as it is widely expected to strengthen President Xi Jinping’s hold on power and set a stage for party leaders to signal their strategic policies and initiatives.

With Xi likely to retain his current position, “the government will probably continue to pursue a reasonable growth level of around 6% over the next three years,” analysts at UBS CIO Wealth Management wrote in a note this week. “The new generation of leaders will be less burdened by politics and are more likely to focus on developing the economy following the Party Congress, providing a more benign investment environment in China.”

Economists at Capital Economics said the pace of implementing reforms is likely to accelerate after the congress, but cautioned the event also carried risks. “There are downside risks from consolidation of power around an individual that should not be overlooked,” the economics research house said in a report.

The Shanghai Composite rose 1.2% this week as trading resumed after last week’s National Day holiday and giving investors an opportunity to respond to the decision by the People’s Bank of China, the central bank, on Sept. 30 to spur lending to small businesses. The gauge climbed 0.2% on Friday.

Tsingtao Brewery was among Friday’s notable movers, rising 4.3% after Japan’s Asahi Group Holdings said it is considering selling some or all of its 19.99% stake in the company.

Xiabuxiabu Catering Management China Holdings, which operates hot-pot restaurants across mainland China, tumbled 5.8%. The company said on Thursday it has subscribed to financial products from Shanghai Pudong Development Bank with a principal amount of 310 million yuan ($47 million).

Shandong Xinhua Pharmaceutical jumped 6.9% after saying on Thursday it expects net profit for the nine months ended September to rise between 70% and 120%.

China Resources Phoenix Healthcare Holdings gained 4.4%. The hospital-services provider appointed a new chief executive and new chief financial officer on Thursday.

CSPC Pharmaceutical Group dropped 2.7%. The company said it raised HK$2.35 billion ($301 million) from a placement of 189 million shares on Thursday at HK$12.44 apiece, a 6% discount to Wednesday’s closing price. Trading in the shares was suspended on Thursday, pending the placement.

The Nikkei Asia300 Index of regional companies outside Japan added 0.2% on Friday.

- By Amy Lam and Carrie Chen;; +852 3960 5102
- Edited By Vipin Nair
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