Hong Kong shares are expected to trade in a narrow range this week as fears of a US interest rate hike and a strengthening dollar weigh on investor sentiment, dealers said recently. They said investors would closely watch the dollar's movement on concerns that foreign funds, which provided much of the gains made by local shares at the end of last year, could leave the city. If the US dollar strengthened against major currencies following an anticipated rise in US interest rates, US assets would become more attractive for global investors looking for more attractive returns.
DBS Vickers Director Peter Lai said investors would keep a close eye on key US data which could indicate the pace of a rate hike. The United States was due to release January consumer sentiment data later Friday as well as homes sales and consumer confidence figures next Tuesday.
"We will wait for the key data and that will signal the pace of an interest rate increase," Lai said.
Rising oil prices could also be a concern as world oil markets fretted over the impact of cold weather in the United States and subsequent worries over low heating oil stocks.
However, local retail stocks could be boosted by the booming tourism industry and the days approaching Lunar New Year holidays which has traditionally been a busy period for shops and restaurants, he said. For the week to January 21, the key Hang Seng Index fell 13.76 points or 0.10 percent to 13,481.02.
Average daily turnover was 17.14 billion Hong Kong dollars (2.2 billion US dollars) compared with 19.86 billion Hong Kong dollars last week.