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Nikkei Markets

Sliding financial stocks drag Hong Kong market lower

Noodlemaker Tingyi climbs on jump in quarterly profit

HONG KONG (Nikkei Markets) -- Hong Kong shares retreated Tuesday morning, dragged down by losses among financial heavyweights.

The Hang Seng Index was down 0.6% at 30,601.31 at noon after rising 0.7% on Monday. Insurer AIA Group had slid 1.2% by the lunch break, the biggest drag on the gauge by points. On Monday, the company named Daisuke Iwase as group chief digital officer with effect from July 1.

London-headquartered lender HSBC Holdings and China Construction Bank (CCB) fell 0.7% each. Ping An Insurance Group shed 1.1%, putting it among the top five biggest contributors to the Hang Seng's losses.

Hang Lung Properties declined 1.5% after a subsidiary made a successful 10.73 billion yuan ($1.67 billion) bid for land use rights in Hangzhou, China. Guotai Junan Securities said the estimated 4.6% gross rental yield of the project meant the site was fairly priced but added that it was "definitely not cheap."

The Hang Seng has alternated between gains and losses over the last five days as ongoing trade tensions between the world's largest economies and uncertainty related to the U.S.-North Korea summit have made investors cautious. The index is down 0.8% in May so far, despite rising as much as 2.5% at one point from April's close.

Jason Lee, vice president for stocks at Hong Kong investment consultancy Investment Strategy Institute, said the index has lost momentum recently. "There are no new trading themes, only old themes like education, medical stocks and sporadic themes such as Alibaba affiliates," he said. "The market has been silent, as MSCI's inclusion of A-shares [on June 1] will put weight dilution pressure on other heavyweights and H-shares."

Lee expects the Hang Seng to trade between 30,500 and 31,000 points in the short term. "I think market momentum will improve a bit after early June," he said.

The Nikkei Asia300 Index was down 0.4% on Tuesday while the Shanghai Composite shed 0.6%.

Alibaba Health Information Technology climbed 5.2% to HK$7.12 in Hong Kong. The company is to acquire 100% of Ali JK Medical Products from another unit of billionaire Jack Ma Yun's Alibaba Group Holding in exchange for 10.60 billion Hong Kong dollars ($1.35 billion) in shares.

Shares of China 21st Century Education Group jumped 55.8% as they began trading after the private-education company raised HK$406.8 million in gross proceeds from an initial public offering that was priced at the top end of its indicative range. The stock was up as much as 69% earlier and was the third most actively traded company on Hong Kong's main board as of noon.

Instant-noodle maker Tingyi Holding rose 4.1% after it reported a 64.3% jump in profit and a 5.9% increase in revenue for the March quarter.

Luye Pharma Group added 1.9% after saying it had entered a collaboration and licensing agreement with U.S.-based Elpis Biopharmaceuticals to research and develop immuno-oncology treatments. Under the agreement, Luye will be responsible for the treatments' development and commercialization in China.

Footwear and handbag maker Le Saunda Holdings edged 0.7% lower after saying net profit for the year ended Feb. 28 had fallen 20.4% as revenue declined 17.2%.

Honma Golf slid 5% after it reported a 20.6% drop in net profit for the year ended March 31 compared with a year earlier.

--Amy Lam

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