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Nikkei Markets

Hong Kong stocks climb the most in two weeks

PetroChina gains on natural-gas pricing reforms despite weakened oil prices

HONG KONG (Nikkei Markets) -- Stocks in Hong Kong posted their steepest single-day advance in two weeks on Monday, with Apple suppliers and energy major PetroChina leading gains.

The Hang Seng Index added 0.7% to reach 30,792.26. PetroChina climbed 6.5%, defying weaker oil prices, after China's National Development and Reform Commission said it will revise the pricing mechanism for residential gas users, boosting hopes of higher realized prices. Offshore oil producer CNOOC lost 0.9% as U.S. crude futures fell 1.7% during Asian trading hours, following a 4% drop on Friday.

Sunny Optical Technology Group and AAC Technologies Holdings rose 4.3% and 3.1%, respectively. FIH Mobile, a subsidiary of Taiwan's Hon Hai Precision Industry, jumped 11.7%.

Despite the day's gains, some market participants are maintaining a cautious view as they consider news of discussions between the U.S. and North Korea. U.S. President Donald Trump indicated in a tweet on Sunday that a planned summit with North Korea's Kim Jong Un may still take place on June 12, saying his administration is having "very productive talks with North Korea about reinstating the summit." Last week, he had 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 North Korean developments 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 U.S.-China trade dispute.

Turnover on the Hong Kong stock exchange's main board was 84.38 billion Hong Kong dollars ($10.76 billion).

Leung expects MSCI's inclusion of mainland-listed 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.

The Shanghai Composite Index slipped 0.2% on Monday while the yuan traded onshore weakened 0.1% to 6.3962 against the U.S. dollar.

Global supply-chain manager Li & Fung plunged 11.1% to HK$2.97, its sharpest single-day drop in more than five years. Credit Suisse downgraded the stock to underperform from neutral and cut its price target to HK$2.90 from HK$3.86, citing a challenging outlook for the company achieving its financial targets for the three years through 2019.

Nine Dragons Paper Holdings climbed 1.6%, after a unit agreed to acquire U.S.-based Catalyst Paper Operations for $175 million.

CSPC Pharmaceutical Group climbed 3.8%. The company on Friday named Wang Zhenguo as vice chairman and rotating chief executive, effective immediately.

Chinese selfie-app maker Meitu advanced 2.9% after saying it would implement a share buyback plan for up to $100 million.

Circuit-board maker Daisho Microline Holdings climbed 1.5% after saying its units had agreed to sell their interests in Da Feng Hua Microline Technology (Huizhou), which owns properties, at a provisional consideration of HK$200 million.

Ten Pao Group Holdings, a producer of power-supply units and chargers, slumped 12.1% after saying it expects to report a loss for the six months ending June 30, compared with a profit of HK$92.7 million in the year-earlier period.

Spa operator Water Oasis Group surged 22.5% 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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