HONG KONG (Nikkei Markets) -- Hong Kong shares rebounded on Thursday to trim the market's monthly loss as investor risk appetite improved after concerns over a political crisis in Italy eased.
The Hang Seng Index climbed 1.4% to end at 30,468.56, its sharpest single-day increase in a month. The 50-stock gauge still ended 1.1% lower for May, weighed down by concerns over U.S.-China trade relations, the back-and-forth between the U.S. and North Korea on a planned summit and fears of fund outflows.
Industrial & Commercial Bank of China (ICBC) and China Construction Bank (CCB) were among the top decliners for the month, falling 6.9% and 4.8%, respectively. Sunny Optical Technology Group, a supplier to Apple, was the Hang Seng's top gainer, rising 22.7% amid expectations of higher sales of its lens sets and camera modules to smartphone makers.
In Thursday's trading, ICBC gained 1.4% and CCB added 1.3% while Sunny Optical advanced 2.4%.
The day's advances came alongside a recovery for regional equities and an overnight rebound on Wall Street after Italy's president met with the anti-establishment Five Star Movement and the right-wing League about forming a new coalition government to avoid fresh elections. Concerns that a snap election could turn into a de facto referendum on Italy's role in the EU have rattled investor sentiment this week. The Nikkei Asia300 Index for stocks outside Japan rose 0.8%.
But despite Thursday's gains, "investors still have concerns over the Sino-American trade war and there is still a big chance the Italian situation will change," said Jackson Wong, an analyst at Huarong International Securities. He added that the soccer World Cup, due to start in June, could divert traders' attention and affect market activity.
Meanwhile, MSCI will with effect from Friday include mainland-listed shares into its regional and global indexes for the first time, a move seen as boosting global investment into Chinese equities. MSCI's indexes are tracked by fund managers with trillions of dollars in assets worldwide.
Market participants broadly agree that the inclusion will be a significant event for global capital markets. HSBC Greater China Chief Executive Helen Wong has said yuan-denominated shares could pull in flows of more than $600 billion over the next five to 10 years.
Some fund managers however have raised concerns. Ross Teverson, head of strategy for emerging markets at U.K.-based Jupiter Asset Management, said inclusion could eventually increase the representation of Chinese stocks in the MSCI Emerging Markets Index to 40% from around 30% at present, based primarily on those listed in Hong Kong and New York.
"This would be a high level of country concentration, and therefore single country risk, for an asset class that comprises over 20 different countries," he wrote in emailed comments. His company manages more than 50 billion pounds ($66.5 billion) in assets.
The Shanghai Composite on Thursday added 1.8% while the yuan traded onshore strengthened 0.2% to 6.4044 against the U.S. dollar.
China Petroleum & Chemical (Sinopec) climbed 6.1% to lead energy producers on the Hang Seng higher after U.S. crude prices rose 2.2% overnight.
Liquid-crystal display products maker Truly International Holdings added 1.2% on Thursday, trimming its monthly loss to 8.9%, after reporting an 80% plunge in first-quarter profit and a 26.3% decline in revenue. The stock had tumbled 7.5% on May 24 after the company warned of the profit decline.
ITC Properties Group slid 4.5% after saying it expects to report a significant decrease in net profit for its financial year that ended in March.
Publisher One Media Group climbed 2.6% after saying its loss for the fourth-quarter ended in March narrowed to 4.02 million Hong Kong dollars ($512,340) from HK$54.3 million a year ago. Revenue for the period increased 3.4% to HK$22.43 million.
Freight-forwarding company China Best Group jumped 6.5% to 8.2 Hong Kong cents after saying it plans to place up to 1.45 billion shares at 7 Hong Kong cents apiece to not less than six investors.
Champion Technology Holdings plunged 28.2% to 51 Hong Kong cents after announcing an issue of about 228 million rights shares at 40 Hong Kong cents apiece.
Willas-Array Electronics added 2.7% after reporting a near-tripling of its profit from continuing operations for year ended March 31 and a 17.3% increase in revenue.
-- Carrie Chen