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Nikkei Markets

Hong Kong stocks edge higher after choppy trade

Gains by energy producers and telecom shares support Hang Seng Index

HONG KONG (Nikkei Markets) -- Hong Kong shares ended marginally higher on Thursday after changing directions several times as concerns over trade relations between China and the U.S. kept investors cautious.

The Hang Seng Index was up 0.3% to 30,760.41, after swinging within a 200-point range all day. China Petroleum & Chemical (Sinopec) and PetroChina added 2.5% and 1.5%, respectively, for their first gain in three days. Pork producer WH Group, which had rallied 4.9% on Monday amid signs of a thaw for Sino-U.S. trade tensions, was down for a second consecutive day with a loss of 3.2%.

Trading activity was modest, with less than HK$91 billion ($11.59 billion) changing hands on the main board. Mainland Chinese investors, who can access stocks traded in the city through electronic trading links with Shanghai and Shenzhen markets, were net sellers on Thursday.

U.S. President Donald Trump on Wednesday tweeted that while the nation's trade deal with China was "moving along nicely," the U.S. will probably have to use "a different structure in that this will be too hard to get done." The post further unnerved investors who were already uncertain about the dynamic between the world's two largest economies.

Separately, minutes of the U.S. Federal Reserve's latest meeting indicated a rate increase in June but did not signal a faster pace of hikes going forward.

Francis Lun, chief executive at GEO Securities in Hong Kong, said the city's stock market lacked momentum. "People thought the U.S. and China had reached a trade deal, but yesterday's big decline erased gains a few days ago, and shows the market has lost hope now," Lun said. "Only consumption stocks, such as education stocks, could rally in this market situation."

In the mainland, the Shanghai Composite Index fell 0.5%. The yuan traded onshore strengthened 0.1% to 6.3827 against the U.S. dollar. In the wider region, the Nikkei Asia300 Index gained 0.1%.

Shares of aluminum producer United Company Rusal jumped 6.9% in Hong Kong. The company had resumed shipping the industrial metal to some customers last week following an extension of the deadline for companies to wind down their business with the Russian company, Reuters reported, citing sources. The gains came even as the company said Chief Executive Alexandra Bouriko had resigned with immediate effect and Evgeny Nikitin was named acting chief.

The management changes came after the U.S. in April imposed sanctions on Russian oligarchs, including Oleg Deripaska, Rusal's controlling shareholder. In the Thursday statement, Rusal said that on May 22, the U.S.'s Office of Foreign Assets Control had additionally clarified that parties may be removed from the Specially Designated Nationals list by demonstrating a change in the circumstances which led to their SDN designation.

Luggage-maker Samsonite International slumped 9.8% before trading was halted. Short-seller Blue Orca Capital issued a report on the company on Thursday, saying it suspected that Samsonite used improper accounting to inflate its financial performance. An emailed request seeking comment from Samsonite was not immediately answered.

Liquid crystal display maker Truly International Holdings slid 7.5% after saying it expects about an 80% drop in net profit for the January-March quarter.

Lee's Pharmaceutical Holdings climbed 3.1% after saying it received approval from the China Food & Drug Administration to conduct clinical trials of Gimatecan, an investigational cancer product.

Plastic-components maker TK Group Holdings fell 6.9% to HK$5.77 after its controlling shareholder Eastern Mix agreed to sell 40 million shares at HK$5.80 apiece, lowering its stake to 39.79% from 44.59%.

Dynam Japan Holdings, an operator of mechanical games, rose 2.9% after reporting a 16.1% increase in net profit for the year ended March 31 to 803 million Hong Kong dollars ($102.3 million). Revenue fell 3% to HK$11.23 billion.

Property developer HKR International advanced 4.6% after saying it expects a near tripling of its net profit for the year ended March 31.

-- Amy Lam

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