Weak rally trims equity market expectations
Updated: 2009-12-23 07:42
By George Ng(HK Edition)
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HONG KONG: Share prices rebounded yesterday, ending a five-day losing streak, after Wall Street's strong overnight showing triggered some bargain hunting.
However, the rally was weak as many investors opted to remain on the sidelines ahead of the holidays, while a weakened Shanghai market also dented sentiment for the local bourse, market watchers said.
The benchmark Hang Seng Index rose 144 points, or 0.7 percent, to close at 21,092.04.
Turnover was thin, shrinking to HK$46.0 billion from about HK$50 billion on Monday, a sign that investors were generally reluctant to chase share prices higher.
Analysts have mixed views about the outlook for the local bourse, sounding a generally cautious note.
"Share prices will likely resume their slide after a short-lived rally," said Linus Yip, a strategist with First Shanghai Securities Ltd.
Stock prices have been retreating recently, with the benchmark index falling from a high of around 23,000 points on November 18, after signs that some money is flowing out of the city.
"I am not convinced that the rally will be sustained, as no fresh money is flowing in as evidenced by the weak momentum," Yip said.
The market is undergoing a medium-term correction after climbing for nine months and accumulating huge gains, the analyst said, adding that "share prices will continue to seek a bottom".
Stock prices have rebounded about 91 percent from their lows in March after ample liquidity generated by monetary easing by governments worldwide following the global economic downturn flooded the market.
Dickie Wong, research director at Kingston Securities Ltd, is more optimistic about the outlook for the local bourse.
"The market could find a short-term support at around 20,800 points after making up a technical gap around this level," he said.
The rally in the US dollar, which is widely blamed as the culprit for the correction in the equity market recently, is running out of steam now, the analyst suggests.
Patrick Yiu, Associate Director at CASH Asset Management Ltd, meanwhile, believes that the local bourse has "sufficiently" corrected from its overbought position.
"I don't see further significant fall in share prices unless overseas markets slump and the US dollar surges," he said.
Local banks were snapped up after the Hong Kong Monetary Authority said banks operating in Hong Kong performed better than expected during the first three quarters and "some banks may even perform better this year compared with last year".
HSBC rose 0.75 percent to HK$87.15; Hang Seng Bank inched up 0.54 percent to HK$111.70; BOC Hong Kong Holdings Ltd climbed up 2.5 percent to HK$ 17.280.
Mainland banks were also higher as worries about possible capital-raising moves by lenders eased.
Industrial & Commercial Bank of China Ltd jumped 2.6 percent to HK$6.27; China Construction Bank rose 2.1 percent to HK$6.41; Bank of China was up 1.0 percent to HK$4.09.
(HK Edition 12/23/2009 page4)