Hong Kong is enjoying a period of "unbridled optimism" over potential mainland investors that could see the main index top 25,000 points next week following a record total on Friday, dealers said.
The benchmark Hang Seng index briefly topped 24,000 points Friday as investors continued to feast on the prospect of mainland investors being allowed to purchase Hong Kong stocks for the first time, as China gears up to launch the trial programme.
Next week could see even more gains, despite lingering worries over the US subprime market, dealers added. "Happy days are here again," Francis Lun, General Manager at Fulbright Securities in Hong Kong told AFP.
"I think investors have put worry aside this week and concentrated on the good points that mainlanders will be allowed to buy shares some time soon. So investors had no fear," he added.
"There is a real expectation that Chinese investors will swarm the market (in Hong Kong). It is possible that we could see the 25,000 point mark crossed. It only takes two days, in fact it could only take one day."
"There is unbridled optimism at the moment." The rise followed a sharp falls in August on fears that the credit crunch sparked by the US subprime mortgage market could spark a prolonged global downturn.
Onlookers also struggled to establish how exposed Asian lenders were to the repackaged debt from loans to high-risk homeowners in the United States. "Two weeks ago everyone thought it was the end of the world, we have now moved from despair to optimism," Lun added.
"Of course the US subprime problem is always there. It will take some time before that has settled down, but China and Hong Kong remain good markets to invest in.
Matt McKeith, head of equity dealing at US fund management house First State Investments, said that the volatility seen throughout August may spill over into September, at least for two to three weeks. "There are still too many unknowns out there and the market will react to news flow. It will move depending on numerous variables such as US economic data and what damage has been done, if at all, to the credit markets," McKeith said.
For the week to August 31, the benchmark Hang Seng Index rose 1,062 points or 4.6 percent to end at 23,984.14, following a 12.43 percent rise the previous week. For the month of August it was up 799.2 points or 3.45 percent.
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