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Nikkei Markets

Hong Kong stocks jump most in a month on techs, developers

Chinese solar and film stocks decline amid regulatory interventions by Beijing

HONG KONG (Nikkei Markets) -- Hong Kong shares recorded their steepest gain in more than a month on Monday, bolstered by technology companies and property developers.

The Hang Seng Index rose 1.7% to 30,997.98. Apple supplier AAC Technology Holdings and heavyweight stock Tencent Holdings advanced 2.7% each. Tencent affiliate Huayi Tencent Entertainment slumped 17.9%, however, and Alibaba Group Holding unit Alibaba Pictures Group lost 2.9%. This was after Chinese tax authorities said they were launching an investigation into possible tax evasion in the film and television industry.

Wharf Real Estate Investment added 3% and Sino Land gained 1.9%, helping push a gauge of large real estate companies listed in Hong Kong 2.4% higher. KWG Property Holding, which reported a 44.2% year-on-year increase in the value of its pre-sales for May during Monday's midday break, jumped 9.2%. China Aoyuan Property Group gained 6.3% after saying late on Friday that its May contracted sales nearly tripled from a year ago.

Equities jumped across the region on Monday, taking cues from Wall Street, where all three U.S. equity benchmarks recorded solid gains on Friday after the release of monthly government jobs data. The May report showed that the number of jobs increased by 223,000, with hourly wages also edging higher and the unemployment rate dropping to an 18-year low.

The strength of the U.S. labor market helped lift investor sentiment even as the data bolstered expectations that the Federal Reserve will raise interest rates later this month. The Nikkei Asia300 Index of regional companies outside Japan gained 1.2%.

The Hang Seng Index, which posted a 0.3% loss last week, has dropped in six of the past seven weeks amid the toughening U.S. stance on trade, concerns about possible capital outflows from Hong Kong, and most recently, worries about political turmoil in Italy.

In a statement issued over the weekend, the Chinese authorities said the "economic and trade outcomes" of recent U.S.-China trade talks will not take effect if Washington proceeds with new import tariffs, according to a Xinhua News Agency report.

"The market is gradually getting used to the ongoing U.S. trade talks with China, Europe and Mexico, and concerns about Italian politics have dissipated," said Will Leung, head of investment strategy for Hong Kong and greater China wealth management at Standard Chartered Bank. "Every time the Hang Seng Index approaches 30,000 points, there is a technical rebound."

In mainland trading on Monday, the Shanghai Composite rose 0.5%, while the yuan traded onshore strengthened 0.2% to 6.4084 against the U.S. dollar.

Shares of solar energy stocks tumbled in Hong Kong. The Chinese authorities on Friday forbade provincial governments from subsidizing solar farm construction and lowered the feed-in tariffs of new solar farms. Xinyi Solar Holdings gave up 14.7% and photovoltaic-glass producer Flat Glass Group dropped 21%.

Samsonite International gained 3.1%, adding to its 9.9% rise on Friday when the luggage-maker issued a rebuttal to a report by short-seller Blue Orca Capital and announced the replacement of Ramesh Tainwala as chief executive.

Credit Suisse upgraded its rating on the stock to "outperform" from "neutral," saying in an accompanying report that the company's response should remove concerns about dubious accounting treatments and that it expects a "smooth" management transition.

CSPC Pharmaceutical Group climbed 3.2%. The stock became a member of the Hang Seng Index with effect from Monday, replacing personal-computer maker Lenovo Group. Lenovo gained 0.7%.

-- Amy Lam

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