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Nikkei Markets

Nikkei Asia300 falls in May on Sino-US tensions, geopolitics

Tencent snaps three-month losing streak in May while Samsung retreats

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan advanced on Thursday to trim losses during a month that was marked by trade tensions between the U.S. and China, uncertainty over North Korea's denuclearization and political turmoil in Italy.

The Nikkei Asia300 Index added 0.8% to 1,383.87 on Thursday, narrowing its monthly loss to 2.8%. Investors this month have been watching developments between the U.S. and China as their delegations met in Beijing and Washington to resolve contentious trade matters. U.S. President Donald Trump's administration said this week it will impose import tariffs on $50 billion worth of Chinese goods. Sentiment was also weighed by uncertainty over a proposed meeting Trump and North Korean leader Kim Jong Un that could result in the denuclearization of the Korean peninsula.

March quarter earnings also influenced stock moves this month. Tencent Holdings, Asia's most valuable company and the heaviest weighted stock on the Nikkei A300 Index, rose 2.1% in May, snapping a three-month losing streak, after it reported upbeat results for the March quarter. Tencent rose 1.1% on Thursday.

Samsung Electronics lost 4.3% in May. The stock began trading in May after a 50:1 stock split took effect. It added 2.4% on Thursday.

Sentiment improved on Thursday as Italy's political crisis showed signs of easing amid hopes the nation's anti-establishment Five Star Movement and the right-wing League may possibly work toward forming a new coalition and avoiding repeat elections. Concerns that a snap election could turn into a de-facto referendum on Italy's role in the European Union plagued markets earlier this week.

While markets partly retraced their initial panic reaction to the Italian political crisis, the country's outlook remains uncertain, according to analysts at Citigroup. "We highlight three channels of contagion from concerns about Italy. The first is from position-trimming in response to a volatility shock. The second is from tighter global financial conditions for emerging markets. And the third source of contagion is from stronger direct market linkages, such as from the impact on the renminbi from moves in the euro," analysts including Johanna Chua wrote in a note to clients.

Energy producers in the region advanced after Brent futures jumped 2.8% overnight. The crude oil contract was at $77.18 a barrel on Thursday, down 0.4% from Wednesday's close.

Hong Kong-listed shares of China Petroleum & Chemical (Sinopec) jumped 6.1% on Thursday, while CNOOC and PetroChina gained 2.5% and 3.3%, respectively. PTT and PTT Exploration and Production both increased 1.5% in Bangkok.

Oil & Natural Gas Corp., India's largest explorer, rose 2.2% after reporting a 36% jump in March quarter profit late Wednesday.

-- V. Phani Kumar

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