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Nikkei Markets

Hong Kong shares supported by hopes for US-China trade talks

Bosideng International slides after short-seller report

HONG KONG (Nikkei Markets) -- Hong Kong shares edged higher by midday on Monday, helped by gains for financial heavyweights as optimism over U.S.-China trade talks lingered.

The Hang Seng Index was up 0.2% at 28,538.39 by noon after rising as high as 28,634.48 earlier. Mainland lenders China Construction Bank and Industrial & Commercial Bank of China added 0.5% each, while pan-Asia insurer AIA Group edged 0.3% higher.

The city's benchmark index rose 5% last week amid optimism over Sino-American trade talks, hopes for a rate cut in the U.S. and easing political tensions in Hong Kong. The White House on Friday said a scheduled speech by U.S. Vice President Mike Pence on China's human rights record would be postponed due to "progress in conversations" between President Donald Trump and Chinese President Xi Jinping. The two presidents are expected to meet at a Group of 20 summit in Osaka, Japan, later this week.

Still, analysts expect gains for Hong Kong's market to slow this week.

"Investors are in a wait-and-see mode over expectations for the upcoming G-20 summit," said Banny Lam, head of research at CEB International Investment, adding that no "breakthroughs" are expected from the Trump-Xi meeting.

The market also has "no clue how the U.S. will escalate its sanctions on Iran," Lam said.

Military tensions between the U.S. and Iran have escalated after Tehran shot down an unmanned U.S. military surveillance drone with a surface-to-air missile. Over the weekend, Trump on Twitter said "major" additional sanctions would be imposed on Iran on Monday.

In the mainland, the Shanghai Composite Index slipped 0.1% in midday trading. The yuan traded onshore declined 0.1% against the dollar to 6.8755.

Apparel maker Bosideng International Holdings slid 24.8% to HK$1.73 in Hong Kong before trading was halted. Short-seller Bonitas Research on Sunday published a report on the company alleging financial impropriety. The report said Bosideng inflated its financial performance "to generate investor interest," adding that Bonitas had gone short on Bosideng's stock, which it considers to be "worthless."

Bosideng management is weighing its response to the report, according to an official in the company's investor relations department.

China Gas Holdings rose 4.7% after reporting a 34.9% increase in profit for the full year ending March 31 and a 12.4% increase in revenue.

Hongkong and Shanghai Hotels fell 2.9% following a forecast for a "substantially" lower profit for the six months ending June 30.

Embry Holdings lost 3.2%. The lingerie maker said it expects net profit for the six months ending June 30 to have decreased from a year ago.

Lisi Group (Holdings) climbed 1.2% after the household products maker said it expects to report a significant increase in earnings for the year ending March 31.

Gas-related services provider Elife Holdings slid 1.4% after saying it expects to report a loss for the year ending March 31.

Japanese pachinko hall operator Niraku GC Holdings jumped 5.4% after saying it agreed to acquire properties in Fukushima for 3.77 billion yen ($35.1 million).

-- Carrie Chen

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