Hong Kong shares could face a correction as the recent bull run may lead investors to grab profits, dealers said. For the week ending May 8, the benchmark Hang Seng Index closed at 17,389.87, its highest close since October 3. It rose 12 percent over the trading week and has risen for seven straight sessions.
But while many expect the recent surge to come to an end soon, the high turnover and resilient performance have left some onlookers doubting when the drop will come. "The bull run may be getting a little overdone but that is the nature of bull runs," said South China Securities vice chairman Howard Gorges, who said the market had already defied earlier gloomy predictions. "But it is likely that we will see a profit consolidation or a correction (in the near term)."
Gorges said the market had been able to shake off any bad news such as swine flu, but a change of sentiment could see the market tumbling. He also said the index was being driven by overseas institutional money in major blue chip companies, and local investors were a little more circumspect.
Fulbright Securities General Manager Francis Lun was more bearish and said he expected the Hang Seng to slip back to as low as 14,000 in the coming weeks. "The question is how much longer the rally will continue," he told Dow Jones Newswires. Others were more optimistic. "Now that we're flush with liquidity, there won't be any major correction unless upcoming economic data show a reversal of the recovery trend," said Prudential Brokerage Associate Director, Kingston Lin.