Oil prices hold the key to whether Hong Kong's leading Hang Seng Index will be able to cling to the 13,000-level this week, with analysts predicting more falls in shares if crude prices stay high.
TCL Communication Technology Holdings Ltd, the mobile phone-making unit of TCL International Holdings Ltd, will debut on Monday but dealers are expecting only a muted response and a share price of between HK$1 and HK$2.30 apiece.
"Local equities will turn weaker this week if oil prices remain high," said Mark Wan, head of research at Tanrich Financial Group.
The benchmark Hang Seng Index fell 1.61 percent to 13,066.84 on Friday, its lowest close since September 9, on the back of poor company results.
On Friday, crude oil prices ended at a record high of $48.88 on renewed supply worries and this affected US stock markets.
The blue-chip Dow Jones industrial average was flat with a 0.08 percent gain while the tech-laden Nasdaq Composite Index fell 0.37 percent.
Hong Kong stocks often move in tandem with their counterparts in the United States, which is the territory's second-largest trading partner after China.
The high oil prices, along with uncertainty over US economic growth, have also offset some of the positive sentiment stemming from favourable economic news at home and in China.
Last week, Hong Kong's consumer price index rose for the second month in a row helped by increased numbers of tourists and a pick-up in domestic spending, which gave retailers room to mark up goods.
Also, China's austerity measures, which appear to be working, have eased concerns the country may have to lift interest rates to curb red-hot economic growth.
However this week investors will also be reluctant to buy into equities on worries they may not be able to trade if any market-moving news emerges during various holidays.
Hong Kong financial markets will be closed for the Mid-Autumn festival on Wednesday and a National Day Holiday on Friday.
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