Hong Kong share prices could enjoy a rebound, but confidence remains fragile after the market's recent tumble, dealers said. Stock markets across Asia are expected to lead a recovery after they suffered the steepest falls so far this month in the past week, with Hong Kong off around 16 percent.
"It's time for the market to rebound," said Francis Lun, general manager at Fulbright Securities. "There is no other bad news coming out, so it's time for bargain-hunting." The benchmark Hang Seng index closed Friday at 26,541.09, down 1,073.34 points or 3.9 percent on the week.
The local stock market has been on a downward trend since posting its biggest one-day decline of 5 percent on November 5, when Chinese Premier Wen Jiabao said China will impose conditions before implementing a programme to allow its citizens to trade Hong Kong stocks directly.
Since its peak on October 30 when the Hang Seng index nearly hit 32,000, the market has shed nearly 6,000 points However, Peter Lai, sales director at DBS Vickers, remained more cautious about next week's trading.
"We think the market will find support between 25,800 and 26,100. You have found a little bit of support there but it has not been concerted. It might even correct to 8,000 points down on the high (around 24,000)," he said.
"In the short term it depends on the Dow Jones, especially if any figures come out on the subprime market - whether the debt is spread around and the extent of how it is spread." Lai also said performance would depend on any monetary-tightening policies from Beijing, which could limit liquidity in the market.
He said the recent drop has been because of dampened expectations on the individual investor programme, dubbed the "through train."
"The 'through train' is the main element that has driven up the market. Now the main element has diminished, the market should have fallen to its correct position and the market will be more healthy." Lai said he remained optimistic about the medium and long-term prospects for the bourse.
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