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Nikkei Markets

Hong Kong stocks extend losses on trade, yield worries

Apple suppliers lead Hang Seng losses while Ping An drops before results

HONG KONG (Nikkei Markets) -- Hong Kong shares fell for a second day on Thursday as rising U.S. Treasury yields and Sino-American trade tensions kept investors on edge.

The Hang Seng Index lost 1.1% at 30,007.68. Ping An Insurance Group fell 3.8% and China Life Insurance slipped 0.9% ahead of their first-quarter earnings announcements.

Stock-exchange operator Hong Kong Exchanges & Clearing gave up 1.9%. During the midday break, the company said it had appointed Laura Cha, a director at HSBC Holdings and a former vice chairman of the China Securities Regulatory Commission, as its new chairman.

Property developer China Vanke declined 4.1% despite reporting a 28.7% increase in first-quarter net profit to 894.88 million yuan and a 68% jump in revenue for the period.

Technology shares broadly extended their recent losses after The Wall Street Journal reported, citing people familiar with the matter, that U.S. authorities were investigating whether unlisted telecommunications-equipment maker Huawei Technologies had violated sanctions imposed on Iran.

The Chinese company said in an emailed response to queries that it complied with all relevant export-control and sanctions laws in the U.S. Huawei-backed software company Chinasoft International tumbled 15.9%, while Sunny Optical Technology Group slid 7% and Q Technology Group gave up 4.2%.

Trading in Chinese telecommunication equipment-maker ZTE remained suspended. The company on Wednesday said it plans to take "certain actions" under U.S. laws after authorities there earlier this month banned American companies from selling parts to the Chinese company.

Lingering concerns about U.S.-China trade relations, weakness among technology companies and rising U.S. borrowing costs have all contributed to market declines recently. The yield on the 10-year U.S. Treasury bond closed at 3.024% on Wednesday, ending the day above the 3% mark for the first time since January 2014.

"Traders are closely monitoring the U.S.-China trade friction news and are acting on that news, creating day-to-day volatility in the Hong Kong market," said Jason Lee, vice president for stocks at investment consultancy Investment Strategy Institute in Hong Kong. He expects the Hang Seng Index to "shoot up" if a deal is reached when U.S. Treasury Secretary Steven Mnuchin visits China, expected soon.

The Shanghai Composite lost 1.4% in mainland trading, while the yuan traded onshore slipped 0.1% to 6.3292 against the dollar. Southbound trading, through links connecting the Hong Kong market with mainland stock exchanges, will be closed from April 26 through May 1.

Lee said the trading suspension "is actually reducing selling pressure in the Hong Kong market."

Gree Electric Appliances slumped 9% in Shenzhen. Late Wednesday, the air-conditioner maker reported a 44.9% jump in 2017 net profit, but said it did not plan to distribute a final dividend. It paid an interim dividend of 1.80 yuan a share last July. On Thursday, the Shenzhen Exchange posted on its website a letter requesting that Gree's board explain its reasons for suspending the payout.

Construction materials company BBMG slid 2.4% in Hong Kong after saying it swung to a loss in the first quarter as revenue slipped 12.3%. For the three months ended March 31, BBMG reported a loss of 212.6 million yuan ($33.6 million), compared with a profit of 440.6 million yuan a year ago.

China Communications Construction added 1.1% after saying the value of its new contracts rose 20.5% on the year in the first quarter to 179.32 billion yuan.

Sinopec Oilfield Service, an affiliate of China Petroleum & Chemical, rose 0.9% after saying it swung to a profit of 30.12 million yuan in the first quarter from a loss a year ago.

Casino operator Sands China climbed 0.6% after reporting a 59% jump in first-quarter net profit and a 17% increase in revenue, according to figures released by U.S. parent company Las Vegas Sands.

-- Amy Lam

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