Hong Kong share prices will face further volatility next week as the global credit crunch continues to bite, dealers said. The market dipped 3.6 percent on Friday on fresh credit concerns, and continues to be sensitive to bad news from the United States or major banks, especially announcements linked to the subprime mortgage market. "It will fluctuate a lot.
There is a lack of direction, it's still very news-driven," said DBS Vickers sales director Peter Lai. Lai said he expects the market to see support at 21,700 points and resistance at 23,800.
But Francis Lun, general manager of Fulbright Securities, was more pessimistic, predicting the Hang Seng index could fall below 21,000. "It's a hopeless ride down to the pits," he said. "Corporate earnings are excellent, but they have been ignored. There's no logic to it."
Strong earnings released this week by local blue chips provided only a brief boost to the market.
The Hang Seng index closed Friday at 22,501.33, down 1,830 points for the week, and down 5,311 points for the year to date. Castor Pang, strategist at Sun Hung Kai Financial Group, said Hong Kong and the wider region would continue to be affected by volatile trade on Wall Street in the coming week.
"US data is still having an impact on Asian stocks, which will continue to be dampened by the Dow," he said. China stocks will also come under further pressure next Tuesday when Beijing releases February inflation data that could prompt new monetary tightening measures.
"Market activity will depend mainly on two things - CPI (consumer price index) data that China will report and a clearer guidance from the US Federal Reserve" on interest rate prospects, said Dennis Poon, research head at South China Securities.
"A high CPI figure will certainly make most investors worried about additional tightening measures that Beijing might adopt," he said. "The market hates uncertainties, and the sooner that the Fed gives clear hints of another rate cut or the sooner that this is done, the better it will be for market sentiment."
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