Hong Kong share prices are likely to drop further next week as the market will continue to be dragged down by the weak performance of the Shanghai bourse, dealers said on Friday. For the week to June 13, the Hang Seng Index was down 1,809.88 points, or 7.42 percent, to 22,592.3.
Fulbright Securities analyst Francis Lun told AFP that Hong Kong shares still had room to fall further as there was little sign the Chinese government would step in to boost Shanghai stocks.
"The Chinese government did not ask fund managers to buy shares as investors had wished. It did ask them not to sell. But the request has fallen on deaf ears," he said. Chinese shares fell for the eighth consecutive day on Friday. The benchmark Shanghai Composite Index ended down 3.0 percent at 2,868.8, its lowest level since March 6, 2007. The index has fallen more than 17 percent since June 2, the day before the latest selloffs began.
"Many people believed that 3,000 points was the iron bottom for Shanghai bourse. But the iron bottom proved to be only as strong as a piece of paper," he said.
"After the Shanghai index convincingly broke below the 3000 level, investors are gradually beginning to believe that the government won't step in to boost the market this time," Wang Junqing, an analyst at Guosen Securities, told Dow Jones Newswires. Lun expected a trading range of between 20,000 and 23,000 points for Hong Kong next week. He advised investors to "sell, and don't look back" next week.
Analysts also expected the market to remain under pressure in the near term on concerns over the economic effects of high crude oil prices and the US economic outlook. "The global stock market will continue to be overshadowed by concerns over inflation and a (US) rate hike in the short term," said Ernie Hon, an analyst at ICEA Securities.
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