Hong Kong share prices face a tough test next week as investors hope to see the market stabilise after the recent turbulence but know they must first get over a key US employment report due later in the day, dealers said Friday.
They said much will depend on the reaction on Wall Street to the US jobs data, with strong figures likely to help confirm this week's tentative regional recovery.
A disappointing report in turn could kick off another downturn, raising fresh concerns over the US economic outlook ahead of a meeting by the US central bank.
For the week to March 9, the benchmark Hang Seng Index shed 307.13 points or 1.58 percent to finish at 19,134.88, a marked improvement over the previous week's heavy losses of 6.13 percent.
Dealers said that after the US labour data Friday, investors will be looking carefully at more US figures, especially on inflation, to guage what the US Federal Reserve may decide next on interest rates.
"The big sell-off seems to be over but Hong Kong's markets are very much tied to what happens in the US," said Hirokatzu Yuihama, strategist at Daiwa Securities.
"If the (inflation) figures are good we could even be looking at a (US interest) rate cut by the middle of the year, in, say, June," he said. Other key indicators expected next week include US retail sales and industrial output.
Yuihama was confident that Hong Kong's economic fundamentals were intact and that any further losses would be absorbed relatively easily. "Domestic consumption is still robust so there isn't much to worry about," he said.
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