Hong Kong stocks are likely to move in a narrow range next week on uncertainties after China hiked official lending rate and signs that US interest rate hikes could be near their peak, dealers said Friday.
China's central bank announced Thursday it is raising benchmark lending rate by 27 basis points in the first rate hike since October 2004 in an effort to prevent an overheating of its economy.
The news initially sparked panic-selling but came off its early sharp falls at the close amid hopes the Chinese rate hike may not cause a significant slowdown in growth.
Dealers expect range-bound trade in the short term due to the uncertainties, especially with China-related property stocks.
"Until investors are used to this new move, I believe Chinese stocks will be volatile," said DBS Vickers sales director Peter Lai. However, most local property stocks are expected to benefit from US Federal Reserve chairman Ben Bernanke's hints of a pause in the central bank's cycle of interest rate increases.
"I can see investors are still buying (property stocks) and in some cases, in large amount," Lai said. For the week ending April 28, the Hang Seng Index dropped 250.85 points or 1.48 percent, at 16,661.30.
In the holiday-shortened week, the main index is expected to trade at a support level of 16,200-16,500 points.
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