Hong Kong share prices face volatile trade next week on concerns over US economic outlook and China's possible measures to cool down its economy, dealers said Friday.
China is widely expected to adopt further macro-economic tightening measures after first quarter gross domestic product growth and March inflation came in stronger than expected.
"Because of the strong Chinese data, investors are worried that the government may further tighten monetary policy and hike interest rates. This would affect the Chinese markets," said DBS sales director Peter Lai. "In the short term, I expect the Hong Kong market to be volatile and will be more sentiment and news driven," he added.
But Michael Chan, head of research at CSC Securities, said any announcement on new monetary measures could have muted impact next week. "The (rate) increase has been discounted by the market. Moreover, investors are unfazed... because of strong liquidity in the market. They feel a rate hike will have little effect on market performance while liquidity is strong," Chan said.
Dealers said investors will closely watch the economic data coming out of the US to gauge the state of the country's economy. "Traditional blue chips could affect the performance of Wall Street and this will affect the Hong Kong market," Lai said.
Data to be announced next week includes first quarter gross domestic product, consumer confidence for April, existing home sales for March and weekly jobless claims.
In the week to April 20, the benchmark Hang Seng Index rose 225.62 points or 1.1 percent to 20,566.59. Lai expects the main index will trade at a support level of 19,800 points.
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