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Nikkei Markets

Hong Kong shares rise as US-China trade tensions thaw

WH Group and Apple suppliers lead midday gains on Hang Seng Index

HONG KONG (Nikkei Markets) -- Hong Kong shares rose on Monday, as a decision by the U.S. and China to hold off on imposing import tariffs on each other eased concerns of an imminent trade war.

The Hang Seng Index was up 1.3% to 31,439.88 by the noon lunch break. Apple suppliers AAC Technologies Holdings and Sunny Optical Technology Group rose 7.1% and 3.5%, respectively, while China Merchants Port Holdings added 4.3%. Index heavyweights AIA Group, China Construction Bank (CCB) and Tencent Holdings rose 2.4%, 1.6% and 1.2%, respectively, contributing most to gains on the index by points. Pork producer WH Group, which owns U.S.-based Smithfield Foods, jumped 7.1%. The stock had shed 13% from early March through Friday amid concerns that China's proposed tariffs on U.S. imports would hurt Smithfield.

Risk appetite improved after U.S. Treasury Secretary Steven Mnuchin on Sunday said the nation's trade war with China is on hold. The comments came after Chinese and U.S. officials met in Washington last week to discuss a way forward for bilateral trade following weeks of tensions between the two countries. Beijing and Washington have said they will continue discussing measures to help the U.S. narrow its trade deficit with China.

Daniel So, strategist at CMB International Securities, said while trade war risks are temporarily alleviated, "Mnuchin has said this is only a temporary halt of import tariffs, and U.S.-China trade conflicts are more than just a trade deficit issue." He added that "there are still many topics in need of bilateral negotiations, and they continue to pose uncertainties to the financial markets."

Still, he expects the Hang Seng Index to rise to 31,500 on Monday. The index reached an intraday high of 31,464.10 in morning trading.

The Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong was up 0.9% by midday, while the Shanghai Composite Index had advanced 0.8%.

Tencent-backed online publishing company China Literature fell 2.6% in Hong Kong after saying on Friday that it will make joint investments of up to 220 million yuan ($34.5 million) with Xinli Group for production and distribution of films and television series.

Shanghai Pharmaceuticals Holding fell 0.9% after saying it will take control of Techpool Bio-Pharma with a transaction that will increase its stake in the company to 67.14% from 40.80%. As part of the deal, Shanghai Pharmaceuticals (HK), a unit, has agreed to pay $144 million to buy the entire equity interest of Takeda Chromo Beteiligungs, which holds 26.34% in Techpool, from Takeda Pharmaceuticals International, headquartered in Zurich, Switzerland, and wholly owned by Takeda of Japan.

Sany Heavy Equipment International Holdings added 2.8% after reporting a 140% jump in net profit for the March quarter and a 97% surge in revenue.

Eprint Group rose 1.4%. On Friday, the printing services provider said it expects to report a 30% to 40% increase in net profit for the year ended March.

Luxury goods seller Dickson Concepts International climbed 2.6% after saying it expects to record a "solid" increase in profit for the year ended March.

IN Construction Holdings tumbled 10%. The company on Friday said it expects to report a "notable" decrease in its consolidated net profit for the year ended March.

-- Amy Lam

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