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Nikkei Markets

China market rebound boosts Hong Kong stocks

Beijing Capital Land slides on rights issue plan and profit decline

HONG KONG (Nikkei Markets) -- Hong Kong shares rose on Monday, recovering from their worst weekly decline since November, as Chinese companies listed in the city advanced, tracking a rebound in mainland equity markets.

The Hang Seng Index added 1% to 28,503.30 after falling 2% last week. Tencent Holdings rose 2.3%. The internet services company's online game, adventure-themed Xun Xian, was on the latest list of titles that on Friday received a license for monetization from China's broadcasting regulator. Pan-Asia insurer AIA Group added 2.4%. The two stocks were the biggest contributors to the index's gains by points.

Index operator Hong Kong Exchanges & Clearing advanced 2.1% after saying its unit Hong Kong Futures Exchange has signed a license agreement with index compiler MSCI to launch MSCI China A Index futures contracts, aimed at allowing investors to hedge risks related to their exposure to yuan-denominated A-shares.

In the mainland, the Shanghai Composite Index jumped 1.9%, while the Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong rose 1.1%. People's Bank of China Governor Yi Gang said Sunday that there was room to cut Chinese banks' reserve requirement ratios, but not as much as previous years. The PBOC has cut the ratio of cash that banks must hold as reserves against their liabilities five times in the past year amid concerns of a slowdown in Asia's largest economy. The yuan traded onshore slipped 0.1% against the U.S. dollar to 6.7252.

Other markets in the region traded mixed after U.S. equities extended losses on Friday following a disappointing nonfarm payrolls report. The figures, coupled with weaker-than-expected Chinese trade data, fed into worries about a global economic slowdown. Meanwhile, investors continue to wait for more details on an expected trade deal between the U.S. and China following weeks of bilateral negotiations. The Hang Seng Index shed 13.6% last year amid worries over the impact of the monthslong trade spat. Hopes of a resolution have helped the index rise about 10% so far in 2019.

"Negative outlook for a slowdown in China's economy and international trade has been priced in last year, and the market should now price in the second-half economic recovery," said Frankie Chan, senior research analyst at Emperor Securities. He expects the Hong Kong stock market to gradually rise in the medium term.

Dongfeng Motor Group declined 0.7% in Hong Kong following a more than 18% decrease in February sales.

Guangzhou Automobile Group edged 0.2% lower after reporting an 11% decrease in sales volumes for last month.

Smartphone components provider Sunny Optical Technology Group shed 0.9% on Monday. On Friday, the company reported a 19.5% increase in February shipment volumes for handset lens sets and a 7% increase in handset camera module shipments.

Q Technology Group, which also provides components to smartphone makers, edged 0.3% higher after reporting a 37.5% increase in total camera module sales volume.

Beijing Capital Land slid 13.3% after reporting a 13.6% decrease in 2018 net profit and saying its board approved a conditional plan for a possible rights issue under which no more than five rights shares will be issued for every 10 existing shares of the company.

Hong Kong International Construction Investment Management jumped 13% after saying its controlling shareholder, Chinese conglomerate HNA Group, was selling its 69.5% stake in the company at HK$3.00 a share. The price represents a 14.5% premium over HKICIM's closing price of HK$2.62 on Friday.

Future Land Development Holdings surged 14.3% following a 78% jump in 2018 profit and a 34% increase in revenue from the previous year.

Kasen International Holdings, which makes furniture and deals in property, advanced 8.2% after swinging to a profit of 499.8 million yuan ($74.3 million) from a loss a year ago.

Uranium trader CGN Mining surged 11.3% after saying it expects to have recorded a "significant" increase in net profit for 2018.

-- Amy Lam

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