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=ASIA MARKETS: Hong Kong Shares Rise In Choppy Trade After Fed Remarks

HONG KONG (Dec 07) -- Hong Kong shares headed higher for the first time in three days on Friday, with optimism over the U.S. economic outlook helping allay concerns about the pace of the Federal Reserve’s rate increases.

The Hang Seng Index rose 0.3% to 26,226.79 by noon after a choppy morning session that saw the gauge change direction a few times. Social-media and gaming major Tencent Holdings added 3% following two days of losses. London-headquartered heavyweight lender HSBC Holdings fell 1.1%. Reuters reported Friday that the arrest of Huawei Technologies’ chief financial officer was part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, and the probe included whether the company used HSBC to conduct illegal transactions involving Iran.

Fed Chairman Jerome Powell said on Thursday the U.S. economy was performing very well overall, stressing on the strength of the labor market. The remarks helped bolster hopes of a slower pace of U.S. rate increases next year. While the U.S. central bank is widely expected to deliver its fourth rate increase of the year later this month, the outlook for rates next year has been a topic of debate. Markets await U.S. nonfarm payrolls numbers for November, due later Friday, for further cues.

U.S. equity markets ended mixed overnight, with the Dow Jones Industrial Average and the S&P 500 Index edging lower and the Nasdaq Composite advancing. The arrest of Huawei CFO Meng Wanzhou has reignited concerns about U.S.-China relations, days after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a temporary truce amid trade tensions.

“The Fed rate factor is more easily discounted into market price calculations than President Donald Trump’s political words,” said Will Leung, head of investment strategy for Hong Kong and greater China wealth management at Standard Chartered Bank. However, “it is still unclear whether the trade friction will increase or not,” he added.

Leung expects the Hang Seng Index to remain volatile until the end of December amid “fragile” market sentiment, although he doesn’t expect a “big fall.”

In the mainland, the Shanghai Composite edged 0.1% higher, while the yuan traded onshore rose 0.2% against the U.S. dollar to 6.8697.

Chinese drugmakers tumbled for a second straight day in Hong Kong on concerns about the impact of price cuts, following a bidding process on Thursday under China’s centralized procurement program for medicines. Sino Biopharmaceutical slid 11.1%, extending Thursday’s 16% slump. The drugmaker said two of the group’s drugs were successfully bid in China’s centralized procurement process for medicines. Its rival CSPC Pharmaceutical Group shed 4.9%.

China Southern Airlines climbed 2.1% after saying its controlling shareholder China Southern Air Holding intends to carry out an equity diversification reform.

Geely Automobile Holdings fell 1.4%. The carmaker on Thursday said November sales volume increased 0.3% on-year to 141,661 units.

China Overseas Land & Investment added 1.7% following a 17% increase in contracted sales for November.

China SCE Group Holdings added 2.9% after saying contracted sales for November more than doubled.

Chinese conglomerate CITIC added 3% after saying its Singapore-listed unit CITIC Envirotech secured two engineering-procurement-construction contracts worth a total of 490 million yuan ($71.3 million).

Dye maker Tsaker Chemical Group surged 53% as trading resumed after a three-day halt. The company said it “vigorously denies” allegations contained in an email received by a market investor that accused it of suspicious accounting to boost profits. The shares had slumped 45.7% on Monday, before trading was halted.

- By Amy Lam; amy.lam@nikkeinewsrise.com; +852 3960 5150
- Edited By Suzannah Benjamin
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