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Nikkei Markets

Hong Kong shares rise as traders weigh US-North Korea summit

CNOOC retreats after crude drops 4%, while PetroChina climbs on pricing reform

HONG KONG (Nikkei Markets) -- Hong Kong shares rose with the rest of Asian markets on Monday, after U.S. President Donald Trump indicated that a planned summit with North Korea's Kim Jong Un may still take place.

The Hang Seng Index was up 0.6% to 30,758.49 by the noon lunch break. Apple suppliers Sunny Optical Technology Group and AAC Technologies Holdings rose 4% and 3%, respectively. Offshore oil producer CNOOC lost 2.1% after U.S. crude futures fell 4% on Friday. But PetroChina jumped 4.3%, defying weaker oil prices, after China's National Development and Reform Commission said it will reform the pricing mechanism for gas for residential users, boosting hopes for higher realized prices.

Despite the day's gains, some participants maintained a cautious view as they considered news related to the U.S. and North Korea. Trump said his administration is having "very productive talks with North Korea about reinstating the summit" on June 12. His tweet on Sunday afternoon came after he had earlier called off the meeting with the North's leader, citing "tremendous anger and open hostility" displayed by the isolated state.

Kevin Leung, director of global investment strategy at Haitong International Securities, said new developments related to the U.S. and North Korea are keeping the Hong Kong stock market range-bound, with volumes low. "There are very few convincing trading ideas now. Even the tech sector has lost momentum, and only pharmaceutical stocks and education stocks are still seeing buying, as they have OK fundamentals that are irrelevant to the trade war," he said, referring to the ongoing trade dispute between the U.S. and China.

Turnover on the Hong Kong stock exchange's main board was at 44.92 billion Hong Kong dollars ($5.72 billion) by the lunch break.

Leung expects MSCI's inclusion of mainland-listed A-shares of Chinese companies in its indexes starting on June 1 to be a catalyst for the Hong Kong stock market. "Foreign capital buying up A-shares, especially heavyweight banking and tech sectors, could boost banking and tech sectors in Hong Kong as well," he said.

In the mainland, the Shanghai Composite Index and its Shenzhen counterpart added 0.2% and 0.4%, respectively, after they dropped more than 1% each last week.

CSPC Pharmaceutical Group climbed 5%. The company on Friday said Wang Zhenguo was named vice chairman and rotating chief executive officer, effective immediately.

Chinese selfie-app maker Meitu advanced 1.3% after saying it will implement a share buy-back plan for up to $100 million.

Circuit-board maker Daisho Microline Holdings climbed 4.6% after saying its units agreed to sell their interests in Da Feng Hua Microline Technology (Huizhou), which owns properties, at a provisional consideration of HK$200 million.

Power-supply unit and charger maker Ten Pao Group Holdings slumped 11.1% after saying it expects a loss for the six months ending June 30, compared with a profit of HK$92.7 million in the year-earlier period.

AK Medical Holdings jumped 9.8% after saying the China Food and Drug Administration approved its certification applications for a femoral internal fixation system.

Spa operator Water Oasis Group surged 24.5% after reporting a 73.2% jump in profit and a 12% increase in revenue for the six months ended March 31.

-- Amy Lam

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