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Hong Kong shares slide after US pulls out of North Korea summit

Chinese energy producers decline while Lenovo gains on upbeat outlook

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower on Friday as risk appetite weakened after U.S. President Donald Trump cancelled a summit meeting with North Korea's leader.

The Hang Seng Index had slipped 0.3% to 30,681.12 by noon. Social media and gaming company Tencent Holdings fell 0.6%. Offshore oil producer CNOOC dropped 2.5% and PetroChina shed 2.6% after Brent crude futures snapped a three-day rising streak overnight.

Personal-computer maker Lenovo Group gained 5.9%. Company officials said at a press briefing late Thursday that they expected Lenovo's mobile business unit to return to profit in the current financial year while projecting revenue at its PC division to grow at a double-digit rate.

Uncertainty over U.S.-China trade relations and the back-and-forth between U.S. and North Korean officials over the denuclearization of the Korean Peninsula have clouded global investor sentiment of late. On Friday, the safe-haven Japanese yen climbed 0.3% against the U.S. dollar after Trump called off a June 12 meeting with North Korea's Kim Jong Un, citing "tremendous anger and open hostility" emanating from the isolated state. Separately, the Trump administration launched a probe into car and truck imports that may possibly pave the way for new tariffs.

"The Hang Seng Index has been in a consolidation zone for two months, as market participants turned their focus away from blue chips and focus on mid-and small-cap stocks and hot themes," said Andy Wong, chief investment strategist at wealth management company Harris Fraser (International).

Wong added that he has been switching some Hong Kong equity positions in his client portfolios to U.S. and European stocks amid the stronger U.S. dollar and concerns of a slowdown in global growth.

"I have heard many fund managers are conserving cash and waiting for a chance in June to buy cheaper Hong Kong stocks," he said, referring to speculation that the inclusion of mainland-listed shares of Chinese companies in MSCI's indexes from next month may spark a selloff in the Hong Kong-listed shares of companies with stocks trading in both places.

In the mainland, the Shanghai Composite lost 0.1% while its Shenzhen counterpart shed 0.4%.

Samsonite International fell 12.2% in Hong Kong as trading in the shares resumed after it was halted Thursday morning. The luggage maker said that allegations made in the report published Thursday by short-seller Blue Orca Capital's report were "misleading" and the conclusions drawn incorrect. The company said it will provide more information in due course.

Shares of property developer Wuzhou International slumped 84.9% to 6.8 Hong Kong cents Friday morning before trading was halted. A company spokesman declined to comment on the share move.

Union Medical Healthcare rose 1.2% after saying it expects to report a more-than 30% increase in profit after tax and revenue for the year ended March 31. The medical-services provider also said it plans to establish specialist clinics in Hong Kong's Central and Mongkok districts, with a capital investment of over 100 million Hong Kong dollars ($12.7 million).

China All Access Holdings lost 1.4% as trading resumed after a two-day halt. The communications-solutions provider said a unit had agreed to acquire 83.33% of Qinghai Juguang High New Technology Group for up to 800 million yuan ($125.3 million). China All Access had tumbled 58.6% on Monday.

Guangdong Kanghua Healthcare declined 2.1% after saying it is in talks to acquire a controlling stake in Zhonglian Cardiovascular Hospital, a hospital already under its management.

Lee's Pharmaceutical Holdings climbed 9.3% after reporting a 51.3% surge in first-quarter net profit to HK$70.18 million as revenue rose 24.6% to HK$281.91 million.

Modern Beauty Salon Holdings slumped 4.8% after saying it expects to report a loss for the year ended March 31, compared with a profit last year, due to a "substantial" decline in revenue.

--Amy Lam

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