Hong Kong share prices will track Wall Street's performance next week as fears over the subprime mortgage crisis and the state of the US economy continue to haunt the market, dealers said. But they said Hong Kong stocks are likely to see a technical rebound after the key index plunged 1,665 points or 6.2 percent to 25,201.87 for the week to January 18.
"US stocks may stabilise a bit next week. Not many companies are reporting earnings and no key economic data are coming out," said Castor Pang, strategist at Sun Hung Kai Financial Group. "There's a chance that Hong Kong stocks will rebound." However, dealers said figures for January's consumer sentiment, to be released later Friday, should give the market some direction next week. "If the data turns out to be weak, US stocks will fall and that will drag down Hong Kong shares," Pang said.
He said expectations that US President George W Bush will announce later on Friday an economic stimulus package aimed at preventing the world's largest economy from slipping into a recession should have some impact on the market. Matt McKeith, head of equity dealing at US fund managers First State Investments, expects the market to be volatile next week.
"The macro environment is far from conducive for providing a stage for a big bounce," he said. "From a technical viewpoint, the market should be positioned for a recovery after recent falls. But I don't think the chance of a rebound is great, with sentiment poor and in the face of lots of uncertainties," he added. Pang said the key index faces a strong resistance level of 26,000 points next week although it should trade at a support level of at least 24,000 points.
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