Hong Kong share prices are likely to ease on profit-taking before testing record levels later due to strong liquidity, dealers said. Upward momentum in the local market remains strong with hopes that China may make some favourable policy announcements about Hong Kong to mark the 10th anniversary of the former British colony's return to Chinese rule in 1997.
However, dealers said trade could be volatile in view of recent sharp gains and a US Federal Reserve meeting on Wednesday. For the week to July 22, the Hang Seng Index rose 982.86 or 4.7 percent to at 21,999.91, while over the last six trading sessions it has risen 1,421.16 points or 6.9 percent. Jackson Wong, investment manager at Tanrich Securities, said he expects investors to take profits early in the week.
"There's a chance of profit-taking especially in big Chinese banks. Investors might switch to secondary H-shares," he said. "More funds are still coming to Hong Kong as investors fear there could be more interest rate hikes or new credit-tightening measures from China," he added. Wong said the strong liquidity will continue to support the market next week pushing it towards record levels.
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