Hong Kong share prices are likely to face a volatile week on further profit-taking and are set to continue their correction following recent strong gains, dealers said. They said the stock market has suffered its worst performance in four months as investors grew cautious about a recently rally and oil price volatility.
The sell-off was also accelerated by a large pool of outstanding call warrants and such activity is expected to remain active this week.
With the main Hang Seng Index surging more than 1,500 points or 11 percent in the past few weeks, dealers said more adjustments are expected.
"The market will be quite volatile this week. A further correction is anticipated," said Simon Tam, senior sales manager at Kim Eng Securities.
Herbert Lau, chief investment officer of CASH asset management at Celestial Asia, also anticipates further corrections and investors will also use volatile oil prices as an excuse to take profits.
Oil prices maintained its volatility after protests forced Ecuador to suspend crude exports, underscoring market nervousness over supply disruptions.
Lau expected positive earnings announcements should underpin the market. Hong Kong's telecom giant Hutchison Whampoa and its sister property firm Cheung Kong will release their first-half earnings next Thursday.
"A lot of companies are delivering good results. As long as the trend remains, there's no need to be so pessimistic about (the market performance)," he added.
Lau expects the index to trade at a support level of around 14,900 points.
For the week ending August 19 the benchmark Hang Seng Index tumbled 412.34 points, or 2.70 percent to close on Friday at 15,038.61.
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