March 10, 2016 / 8:09 AM / 10 months ago

Hong Kong stocks dip on political, trade uncertainty

Sept 27 (Reuters) - Hong Kong stocks dipped on Friday, weighed down by the persisting political crisis in the city and caution over U.S.-China trade relations.

** The Hang Seng index closed down 0.3% at 25,954.81 points, while the China Enterprises Index fell 0.6% to 10,148.77 points. The benchmark posted a weekly decline of 1.8%, after dropping 3.4% last week.

** Political uncertainty in the island is likely to continue, with the island bracing for a weekend of unrest as pro-democracy protests are likely to mount in the China-ruled territory ahead of the 70th anniversary of the founding of the People’s Republic on Tuesday.

** Markets were also cautious ahead of the top-level trade talks between Beijing and Washington in early October.

** China said on Thursday it is in close communication with the United States over trade talks, while a top diplomat said Beijing is willing to buy more U.S. products.

** However, investors were sceptical at prospects of a major breakthrough due to the substantial differences between the two sides.

** Compounding worries are further signs of weakness in China’s economy. Profits at China’s industrial firms contracted in August, reversing the previous month’s brief gain, as weak domestic demand and the trade war with the United States weighed on corporate balance sheets.

** “Given strong growth headwinds and elevated U.S.-China trade tensions, we expect the economy to worsen before getting better and believe Beijing will likely ramp up its policy stimulus,” analysts from Nomura said in a note.

** On Friday, industrials and consumer stocks rose, but technology and energy shares dragged the feet. (Reporting by the Shanghai Newsroom; Editing by Aditya Soni)

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