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Equities

Hong Kong shares slip with retreat of technology stocks

Unicom and China Telecom climb as network infrastructure JV files for IPO

HONG KONG (Nikkei Markets) -- Hong Kong shares appeared set to end a six-day rising streak on Tuesday, led by losses among technology stocks that had been posting gains recently.

The Hang Seng Index had shed 0.9% to hit 31,256.32 by the noon lunch break, poised for its first drop since May 4. Tencent Holdings, the most valuable company listed in Hong Kong, declined 2.4%. Apple suppliers Sunny Optical Technology Group and AAC Technologies Holdings fell 3.7% and 6%, respectively. Losses for AAC followed a weaker-than-expected first-quarter profit report on Monday.

China Unicom (Hong Kong) rose 2.2% and China Telecom gained 0.8% after telecommunications infrastructure company China Tower, in which the mobile services companies are major shareholders, filed a draft prospectus for an initial public offering in Hong Kong. China Mobile, another shareholder, slipped 0.5%.

Tuesday's losses dragged the Hang Seng down after it closed Monday at its highest level in almost two months. Those gains were spurred by U.S. President Donald Trump's conciliatory remarks on trade relations with China. Trump had also said he is working with Chinese counterpart Xi Jinping to help telecommunication-equipment maker ZTE find "a way to get back into business," after the U.S. Department of Commerce had earlier banned American companies from making sales to the Chinese company.

Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, is cautious about the outlook. "The U.S.-China trade war concerns seem to have eased a bit, but the bilateral trade friction would be a long-term tug of war," he said. "Even if the ZTE matter is settled, the U.S. will come up with other new issues."

Trading in ZTE's shares remains halted.

Wen said that in the near term, the Hang Seng is unlikely to see a large upside beyond 32,000 points or a significant downside below 29,000 points.

In the mainland, the Shanghai Composite edged 0.2% lower on Tuesday morning while the onshore traded yuan dropped 0.1% against the U.S. dollar to 6.3449. Index-compiler MSCI on Monday said it will add 234 yuan-denominated A-shares to its MSCI Emerging Markets Index on May 31.

China Southern Airlines added 0.6% in Hong Kong after reporting a 14.5% increase in passengers carried, to 11.57 million, during April compared with a year earlier. Air China was down 1.9% despite a 12.1% uptick in passengers carried last month to 9.16 million.

Athletic-footwear maker Yue Yuen Industrial Holdings, a unit of Taiwanese shoes-and-clothing maker Pou Chen, lost 2.8% following a 23% drop in March quarter net profit despite a 9% increase in revenue. Pou Sheng International Holdings, another unit of Yue Yuen, surged 11.1% after reporting a 36.1% jump in net profit for the March quarter and a 17.8% increase in revenue.

Ping An Insurance Group edged 0.3% lower, trimming gains for the month so far to 1.8%. On Monday, the insurer reported a 21.3% increase from a year earlier in accumulated gross premium income for its life insurance business during the January to April period.

China Taiping Insurance Holdings slid 1.9% after reporting a 1.3% decline in gross life insurance premium income in the January-April period.

-- Amy Lam

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