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Stocks

Hong Kong shares perched at 22-month highs thanks to casinos, insurers

HONG KONG (Nikkei Markets) -- Hong Kong shares crept up to new 22-month highs on Tuesday, as gains by casino operators and insurers helped overshadow losses for the city's property developers.

The Hang Seng Index added less than 0.1% to 25,403.15, its highest level since July 2015. Galaxy Entertainment Group jumped 4% and Sands China advanced 1% on bets they will benefit from the growth momentum in Macau gaming revenues. China Life Insurance rose 0.8% and Ping An Insurance Group climbed 0.6% amid speculation their yields will get a boost after authorities reportedly gave insurers a greenlight to invest in infrastructure projects related to the One Belt, One Road initiative.

Hong Kong property developers remained under pressure for a second day after the city's central bank increased curbs on residential mortgages. Cheung Kong Property Holdings fell 0.6% and New World Development dropped 1%.

Investors appeared to heave a sigh of relief as global equities belied concerns that growing political turmoil surrounding U.S. President Donald Trump will a cast a long shadow on risk appetite. The Hang Seng Index, which rose for a third day on Tuesday, ranks among Asia's best-performing benchmarks this year.

"You had a hiccup last week, but there has been no follow-through selling and that is a good sign for now," said Louis Tse, asset management director at Hong Kong-based VC Brokerage. Tse said he expects another "strong" month for Macau's gaming revenue, but does not see that translating into gains for casino stocks amid their high valuations.

Galaxy and Sands China are trading at over 28 times their annual earnings, according to data from Thomson Reuters.

The Shanghai Composite fell for a second day, shedding 0.5%, while its Shenzhen counterpart slumped 2.1% for its worst performance in a month. The onshore traded yuan slipped 0.1% to 6.889 against the dollar.

Baoshan Iron & Steel rose 2.1% in Shanghai. Standard & Poor's Global Ratings affirmed the steelmaker's BBB+ credit rating, saying the company will likely remain a "core subsidiary" of state-owned China Baowu Steel Group for at least the next two years despite Baowu's merger with Wuhan Iron & Steel.

Weichai Power fell 1%. The diesel-engine maker bought 4.02 million shares in German robotics-maker Kion's 9.3 million new share issue at 64.83 euros apiece, keeping its shareholding steady at 43%.

Silver Base Group Holdings jumped 20% after the liquor distributor said it entered a new product distribution agreement with Guojiu Moutai Marketing and a new exclusive distribution agreement with Yibin Wuliangye Liquor Sales, both major suppliers to the group. Silver Base is able to exclusively sell Kweichow Moutai's four new products, among others.

Hsin Chong Group Holdings late Monday said it missed a coupon payment on May 18 and is seeking to raise funds to pay the interest. Trading in Hsin Chong shares has been suspended since April 3.

Tongda Group Holdings slumped 9.5% on Tuesday. The stock is down more than 22% this month after the electrical-fitting maker said a substantial shareholder sold a 6.4% stake in the company. Tongda on Tuesday said it is not aware of any reasons for a decrease in share price and increase in trading volumes, adding that it may consider a share buyback.

Huarong International Financial Holdings surged 11%. The stock jumped nearly 15% on Thursday after the company entered a loan agreement for $500 million with its parent China Huarong International.

Lottery-services provider MelcoLot surged 25% after saying its parent, Melco Lottventures, is in talks to sell its stake in the company. Melco International Development, which controls Melco Lottventures, jumped 8.9%.

Taiwanese noodle-maker Tingyi Holding slid 3.3% after saying it expects gross profit margins to remain under pressure due to rising raw-material costs. The company reported a 15% increase in March quarter profit on Monday.

China Merchants Bank rallied 3.9% to HK$22.80. Jefferies raised its price target to HK$38.50, citing "vast" growth potential for its retail business.

Separately, China Vanke said it will set up two funds worth 12.9 billion yuan ($1.9 billion) with the lender. Shares of Vanke closed 0.3% higher.

Hong Kong consumer prices rose 2% in April from a year earlier, quickening from a 0.5% increase in March, official data showed Tuesday.

-- Nimesh Vora and V.Phani Kumar

--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.

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