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Nikkei Markets

Hong Kong shares dragged lower by technology stocks

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

HONG KONG (Nikkei Markets) -- Hong Kong shares fell by the biggest magnitude in more than a week on Tuesday, weighed down by losses among technology stocks that had been posting gains recently.

The Hang Seng Index shed 1.2% at 31,152.03, marking its steepest decline since May 4. Tencent Holdings, the most valuable company listed in Hong Kong, fell 3.4% from a one-month high ahead of its quarterly earnings report on Wednesday.

Sunny Optical Technology Group slid 2.5%, trimming its gains this month to 15%. AAC Technologies Holdings lost 4.9%, adding to its losses on Monday, when it reported a weaker-than-expected first-quarter profit.

China Unicom (Hong Kong) rose 1.7% and China Telecom gained 0.3% after their unit, Hong Kong telecommunications infrastructure company China Tower, filed a draft prospectus for an initial public offering. China Mobile, another shareholder, slipped 0.3%.

Uncertainty over U.S.-China trade relations continued to weigh on investor confidence. While President Donald Trump has said that the U.S. was working well with China on trade matters, some participants were skeptical that contentious trade terms between the two nations could be resolved soon.

"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," said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. "Even if the ZTE matter is settled, the U.S. will come up with other new issues."

Trump tweeted on Sunday that he was working with his Chinese counterpart Xi Jinping to give telecommunications-equipment maker ZTE a "way to get back into business, fast." The U.S. Department of Commerce last month banned American companies from selling to ZTE.

Trading in ZTE shares remains halted in Hong Kong as well as Shenzhen.

The Shenzhen Composite Index rose 0.9% on Tuesday, while the Shanghai Composite gained 0.6%. 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 0.9% in Hong Kong after it reported that it carried 11.57 million passengers in April, marking a 14.5% increase from a year earlier. Air China fell 2.1% 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 the March quarter net profit despite a 9% increase in revenue. Pou Sheng International Holdings, a subsidiary of Yue Yuen, surged 11.1% after reporting a 36.1% jump in net profit for the March quarter.

Asia Cassava Resources Holdings fell 3.1% after a unit agreed to acquire a company that owns property and a hotel license in Hong Kong.

Ping An Insurance Group edged 0.4% lower, trimming gains for the month so far to 1.3%. 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 1.5% after reporting a 1.3% decline in gross life insurance premium income in the January-April period.

-- Amy Lam

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