Hong Kong shares look set to slip to one-month lows this week as the bird flu outbreak in Asia encourages investors to dump stocks, but some analysts see opportunities for bargain hunting.
Wall Street's fall on Friday is also likely to weigh on the blue chip Hang Seng Index and analysts aren't expecting buying interest to pick up until the end of the week with Friday's listing of Shanghai Forte Land.
"This will set the tone for IPOs this year. It's the first big one," said Dale Tsang, head of securities trading at GC Capital (Asia) Ltd.
Forte raised nearly HK$1.5 billion (US $192.2 million) in its initial public offering, according to a banking source.
The property developer, which sold shares at HK$2.35 each, looks set for a strong debut, with the portion of its offering open to the public 400 times oversubscribed as eager investors try and get a slice of China's booming economy.
The Hang Seng lost 3.35 percent to 13,289.37 last week, rattled by the prospect of an interest rate cut in the United States as well as the bird flu outbreak but the index was still up 5.67 percent on the month.
Hong Kong has so far remained free from the lethal strain of avian flu that has ravaged Asia's poultry industry and killed at least eight people in Thailand and Vietnam. But the disease is spreading in neighbouring mainland China and experts worry that it will make the jump to humans there.
Last week saw a sharp turnaround after the index hit a two-and-a-half year high of 13,761.88 on Tuesday but traders are now seeing strong support for the Hang Seng at 12,800 points, a one-month low.
But with the expected declines, some analysts see opportunities for bargains.
J.P. Morgan said it would buy clothing retailers Esprit Holdings Ltd and, Giordano International Holdings Ltd, textile firm Texwinca Holdings Ltd, soy milk maker Vitasoy International Holdings Ltd and beer maker Tsingtao Brewery on any significant share weakness.