Hong Kong share prices are expected to trade lower on profit-taking next week after Friday's sharp gains before turning higher later, dealers said. They said the US Federal Reserve's latest statement, which sparked the upturn Friday, suggested it has softened its stance on monetary policy, thereby removing the major immediate concern for investors.
The prospect the US central bank will soon end its two-year cycle of interest rate hikes will continue to boost sentiment after recent volatile trade on worries it would raise rates much further to dampen inflation.
For the week ending June 30, the Hang Seng Index rose 458.81 points or 2.90 percent at 16,267.62, with Friday alone seeing a sharp jump of 2.54 percent.
DBS Vickers sales director Peter Lai said the market is expected to perform better as the US interest rate picture has become somewhat clearer. There are also uncertainties over whether Friday's sharp gains will be sustained, he said.
"The local market takes its lead not only from Wall Street but also from the Tokyo market and China. I don't see any clear-cut factors which will drive up the market next week," he said. "While worries over interest rates will ease in the short-term, there is no telling whether this will help the market sustain (Friday's) strong gains," he said.
Dealers noted that once the euphoria over the Fed's statement fades next week, investors may begin to focus more on expectations that the US economy will slow in the second half.