Hong Kong share prices closed 0.38 percent higher on Tuesday, as strong investor confidence helped overturn earlier losses, dealers said. The benchmark Hang Seng Index closed up 65.69 points at 17,153.64, after dropping into negative territory in the morning session. Turnover was 78.10 billion Hong Kong dollars (10 billion US). The index fell 1.74 percent on Monday, ending a seven-session surge that had seen it jump 19.5 percent.
Traders said the overbought local market would likely reverse course soon, adding however that a dramatic plunge was unlikely. "I expect the local index to see more pullback in the near term as the market is extremely overbought," Peter Lai, a director at DBS Vickers, told Dow Jones Newswires.
"But a steep correction is unlikely to take place immediately, unless there is a strong liquidity outflow." Prudential Brokerage Associate Director Kingston Lin said there has been no sign of large outflows from the stock market, and the near-term range for the benchmark index is likely to be 16,000-18,000.
The banking sector led Tuesday's gains, with global giant HSBC rising 1.8 percent to 67.30 dollars on the better-than-expected first-quarter results of its US consumer lending unit, HSBC Finance Corp. HSBC Finance's first-quarter pretax profit was 614 million US dollars, compared with a 2.77 billion dollar loss in the fourth quarter, and a profit of 549 million a year earlier.
China Construction Bank rose 1.6 percent to 4.98 dollars. Hong Kong bourse operator Hong Kong Exchanges and Clearing fell 5.9 percent to 109.40 dollars on profit-taking, after rising 34.8 percent in the previous seven sessions.