Hong Kong share prices are likely to be kept in check by renewed fears that China may announce further measures to rein in its stock markets after they hit new records in the past few days, dealers said.
They said investors are worried about what credit-tightening measures might take to cool down its economy and this will weigh on the market sentiment.
Broader macro-economic controls could be on the way after China's central bank said Thursday that credit growth is still too high, they said. "Investors are waiting on the news, they are worried what kind of measures China might take because the A-share market has gone too crazy," said Jackson Wong, investment manager at Tanrich Securities.
"Hong Kong hopes that China will announce some new policies to adjust the market but we are not sure how heavy-handed they might be," he said, adding the fears are weighing on sentiment.
Castor Pang, strategist at Sun Hung Kai Financial Group, expects volatile trade next week on fears of consolidation in the US and China stock markets and due to release of key US economic data, including consumer inflation figures.
"With scores of investors fearing a significant correction in both (US and China) markets after record highs, I expect the local bourse to come under a lot of pressure," he said.
"But if the Dow touches another high and if Beijing adopts measures which have little adverse impact on the economy, the market might bounce back from today's sharp fall," he added.
Wong said Hong Kong fundamentals are good with ample liquidity but worries for the China and US economies will limit gains here in the short term.
"China's economy is too hot and the US economy might be slowing, this could cap Hong Kong gains here for a while," Wong said. "There's a chance that the sentiment could turn worse next week."
In the week ending May 11, the benchmark Hang Seng Index fell 372.87 points or 1.79 percent at 20,468.21. Wong believes the index could trade at a support level of 20,000 points next week.
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