Hong Kong stocks are expected to trade within a narrow band this week as cautious investors look to a range of US data for guidance, dealers said. The benchmark Hang Seng Index breached the psychologically significant 14,000 mark, completing a week-long recovery from steep falls set off a week earlier by a sudden rise in US inflation and weaker than expected economic data. But with Hong Kong's economy closely linked to that of the United States and its currency pegged to the greenback, more weak US data could send the market tumbling again.
"Little is expected locally so I think investors will be watching the American data," said Conita Hung, head of research at Delta Asia Financial Group.
Hung said the market was awaiting new liquidity as a lack of leads had kept small investors on the sidelines keeping turnover thin and the market only drifting upwards on speculation China would revalue its currency soon.
The Hang Seng Index rose 124.99 points, or 0.89 percent, to 14,033.96 during the week.
Trade at the end of the week was subdued ahead of non-farm payrolls and wages data expected later in the day and Hung predicted this week's trade would follow similar lines. This week, US wholesale trade figures and the March trade balance are expected, as well as April's federal budget.
"I think people are already looking ahead to the next Fed meeting in June and while the data this week is unlikely to affect what (Alan Greenspan) does it will give some indication on the market's future direction," she said.
Hung expected the Hang Seng Index to move within a range of 14,200 and 13,800.
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