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Stocks

Hong Kong shares rise after new loans boost mainland lenders

HONG KONG (Nikkei Markets) -- Hong Kong shares headed for a sixth day higher, as investors bought into mainland lenders after upbeat loan numbers and energy producers extended gains.

The Hang Seng Index rose 0.6% to 25,301.50 by midday, poised to clinch its longest winning streak since July 2016. Bank of China (BOC) added 1.6% and China Construction Bank (CCB) advanced 0.9%, pacing gains for Chinese lenders after April's new loans rose by a larger-than-expected 1.1 trillion yuan ($159 billion). China Petroleum & Chemical (Sinopec) climbed 1.9% as U.S. crude prices headed for a fourth day higher. AAC Technologies Holdings fell 5.2%, extending last week's more than 10% slump even as it issued a second response to short-seller Gotham City Research's questions about its accounting practices. The Apple-supplier reiterated the accusations, which questioned AAC's profit margins, were "inaccurate and misleading."

The Shanghai Composite rose 0.3% and a gauge of mainland companies listed in Hong Kong climbed 1.2% despite a weaker-than-expected 6.5% uptick in China's factory output last month and cooling urban fixed-asset investment growth. Retail sales grew 10.7% in April, slowing slightly from March. The numbers came after Beijing's efforts to curb leverage and excessive speculation raised concerns about tightening liquidity and sparked losses in Chinese equity markets earlier this month. Chinese Premier Li Keqiang on Sunday said China is capable of maintaining stability in its financial markets and will strike a balance between financial stability, gradual deleveraging and steady economic growth, according to Reuters.

"While all three data points missed consensus, I think a little bit of slowdown is expected after what was a quite a strong quarter from January to March. The market is unlikely to be too concerned about it," said Banny Lam, head of research at Hong Kong-based CEB International Investment. "New loans remain at a high level in spite of the recent tightening, which suggests that recent credit contraction fears may be overblown."

The Shenzhen benchmark rose 0.5% and the onshore traded yuan was little changed against the dollar at 6.899. China on Sunday pledged hundreds of billions of yuan in investments related to its One Belt, One Road plan, a major economic diplomacy initiative by President Xi Jinping that is aimed at improving Asia's connectivity with Europe and Africa.

Local developers were mixed after the Hong Kong Monetary Authority moved to tighten bank lending to homebuilders. The new measures, effective from June 1, provide that banks can lend up to 40% of a site value instead of 50%.

Cheung Kong Property Holdings added 0.4%, while Sino Land rose 1.2%. New World Development slipped 0.2%.

"The impact of the steps is not too big for the large developers as they are quite well funded," Lam said.

Ping An Insurance Group rose 1.4% after reporting total accumulated gross premium income of 18.46 billion yuan for the January to April period.

Tencent Holdings added 0.5%. Yixin Capital, an auto-financing marketplace backed by Tencent, plans a $5 billion initial public offering as early as the end of the year, The Information reported, citing people familiar with the matter.

ZTE advanced 2.1%. Greek telecom company Forthnet and the Chinese telecom-equipment maker have teamed up with Shanghai Gongbao Business Consulting and KaiXinRong Group to finance a fiber optic network in Greece, Reuters reported. Separately, ZTE and Bulgarian Development Holdings are reportedly collaborating to provide information technology solutions for a 1.5 billion-euro ($1.6 billion) entertainment and commercial complex near the nation's capital.

-- 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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