Hong Kong stocks are likely to move in a narrow range this week as investors remain cautious after an interest rate hike following changes to the territory's currency peg, dealers said. Trading overall will stay sluggish amid a lack of fresh news to drive the market forward as investors digest how the change aimed at curbing inflows of speculative funds betting on a Chinese yuan revaluation, will impact on the local economy in the long term. The Hong Kong Monetary Authority introduced Wednesday an upper ceiling in the peg system and extended the lower limit to provide a fixed trading band of 7.75-7.85 to the US dollar.
DBS Vickers Director Peter Lai said investors will turn to the United States for leads and track Wall Street's performance as well as the outcome of key economic data this week including first quarter GDP.
Oil prices will return to focus after they rose amid speculation that OPEC might cut production.
Rate-sensitive property stocks will remain under pressure this week while Lai believes retail shares would be a good buy in the run-up to the September opening of the Hong Kong Disneyland.
He expects a trading range of between 13,500 points and 14,100 points. For the week ending May 20, the Hang Seng Index fell 149.39 points, or 1.1 percent, to 13,717.42.
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