Hong Kong share prices will struggle again, as the dearth of confidence in the United States financial sector continues to pummel investor sentiment, dealers said on Friday. For the week ending March 6, the benchmark Hang Seng Index fell 6.9 percent to 11,921.52, sparking worries it could retest its October trough of 10,676 in the medium term amid the gloom over the global economy.
Howard Gorges, vice chairman of South China Securities, said confidence in Hong Kong would continue to ebb until Washington was seen to have a grip on the situation. "There is so much uncertainty these days," he told AFP. "Hong Kong is very influenced by what is happening on Wall Street... We want to see a bit of confidence coming back in the US banking system."
HSBCs struggles were affecting local sentiment, he added. The banking giant has had a dire 2009, with an apparently endless stream of negative analyst reports pushing down its share price from a peak of more than 100 Hong Kong dollars to close to 40 dollars this week. "Obviously, the bank still has a lot of influence - it is still the one foremost in local investors minds," said Gorges, adding it would continue to struggle if coverage did not improve. "It is certainly getting quite a bad press, it has become almost a fashionable target for research houses."
Gorges said China stocks may benefit from signs of confidence coming out of the annual meeting of Chinas parliament. DBS director Peter Lai told Dow Jones Newswires that short-term prospects were looking bleak for the Hang Seng. "Selloff pressure is not expected to end soon, as the outlook over Wall Street and regional markets remains bearish," he said.