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Nikkei Markets

Hong Kong stocks near seven-week high as trade fears ease

Hopes lifted by Trump's tweets on engaging China in talks and help for ZTE

HONG KONG (Nikkei Markets) -- Hong Kong shares climbed to their highest level in almost seven weeks on Monday, as President Donald Trump's comments that the U.S. is working well with China on trade matters eased concerns of escalating tensions between the two nations.

The Hang Seng Index added 1.4% to 31,541.08, its highest close since March 20. Financial heavyweights were among the biggest contributors to Monday's advances. AIA Group rose 2.1% while China Construction Bank and Industrial & Commercial Bank of China added 1.8% and 2%, respectively. Tencent Holdings, due to report its March quarter results on Wednesday, rose 0.7%.

Investor sentiment was boosted after Trump tweeted that China and the U.S. are working well together on trade, even as he highlighted that past negotiations were "one-sided in favor of China." The tweet came after talks in Beijing earlier this month ended inconclusively. In addition, the U.S. president said he was working with Chinese counterpart Xi Jinping to help telecommunication-equipment maker ZTE find "a way to get back into business."

In April, the U.S. Department of Commerce banned American companies from making sales to China's ZTE.

Sunny Optical Technology Group jumped 7.9%, its steepest single-day jump since March while MOBI Development, a wireless communication gear maker that counts ZTE among its large clients, soared by a record 32.2%. Locally listed affiliates of Taiwan's Hon Hai Precision Industry, also known as Foxconn Technology Group, also climbed, with FIH Mobile rising 19.1% and FIT Hon Teng gaining 7.7%. Another affiliate, Foxconn Industrial Internet, on Monday filed a preliminary prospectus for an initial public offering in Shanghai.

Daniel So, a strategist at CMB International Securities, said Trump's comments alleviated broader concerns of a trade war, adding that smartphone suppliers were gaining on his tweet about ZTE.

"At least the negotiations on ZTE bore some fruit while negotiations on other matters may take some more talks to resolve," he said. The Hang Seng is likely to move toward 32,000 points in the near term, he added.

AAC Technologies Holdings was among the most heavily traded stocks as the Apple supplier reversed morning-session gains to tumbled 4.9%. During the midday break, the company reported a weaker-than-expected 6% increase in first-quarter net profit from a year ago as the yuan's appreciation and a change in its product mix weighed on margins.

On the mainland, the Shanghai Composite added 0.3%, while the yuan traded onshore was little changed at 6.3356 against the U.S. dollar.

Global Brands Group tumbled 8.2% in Hong Kong after the fashion retailer said it expects a net loss of $70 million to $75 million for the year ended March 31, compared with a net profit of about $90 million a year earlier.

Union Medical Healthcare rose 1.7% after the aesthetic medical service provider said that an Asia-focused private equity fund operated by OrbiMed Advisors had acquired 63.8 million shares, equivalent to a 6.49% stake.

Construction-materials company Cherish Holdings fell 1.4% after saying it expects to report a "substantial" decrease in revenue and net profit for the year ended March 31.

Pacific Textiles Holdings slid 3.4% after saying it expects about a 25% drop in profit for the year ended March 31.

-- Amy Lam

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