Hong Kong stocks firm, but trade and protest worries cap gains

Hong Kong stocks closed higher on Tuesday, tracking gains in mainland China on stimulus hopes, though uncertainties around Sino-U.S. trade talks and worries over protests in the island city curbed gains.

The Hang Seng index rose 0.3%, to 25,893.40, while the China Enterprises Index gained 0.5%, to 10,201.34. Prospects for progress in U.S.-China trade talks dimmed on Monday after Washington blacklisted Chinese companies over Beijing's treatment of predominantly Muslim ethnic minorities, and President Donald Trump said a quick trade deal was unlikely.

Trump and his top economic adviser, Larry Kudlow, spoke in generally upbeat terms about this week's discussions with China, the first such high-level talks in more than two months, but Trump insisted he would not be satisfied with a partial deal. Hong Kong's embattled leader Carrie Lam said on Tuesday the government had no plans at present to use colonial-era emergency powers to introduce more new laws, after a long weekend of violent protests saw widespread defiance of a ban on face masks.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.57%, while Japan's Nikkei index closed up 1%. The yuan was quoted at 7.1305 per U.S. dollar at 08:14 GMT, 0.24% firmer than the previous close of 7.148. The top gainers among H-shares were CSPC Pharmaceutical Group Ltd, up 6.88%, followed by China Resources Beer Holdings Co Ltd, gaining 3.27%, and Geely Automobile Holdings Ltd, up by 2.88%.

The three biggest H-shares percentage decliners were Hengan International Group Company Ltd, which was down 1.49%, ENN Energy Holdings Ltd, which fell 1.28%, and SINOPHARM GROUP CO LTD, down by 0.99%. At close, China's A-shares were trading at a premium of 29.79% over Hong Kong-listed H-shares.

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