Hong Kong shares may rally after the market priced in concerns over the direction of Chinese monetary policy, a dealer said Friday. For the week ended December 18, the benchmark Hang Seng Index was down 6.4 percent to 21,175.88. "We've been knocked about a bit this week," Howard Gorges, vice chairman of South China Securities, told AFP.
"There has been some apprehension about China and its tightening monetary policy. People are being a bit cautious. But I think we may get a surprise on the upside next week with a small rally."
This week's fall can largely be attributed to investors locking in profits before year's end, said Ernie Hon, a strategist at ICBC International.
"The biggest driving force behind the current sell-off, in my opinion, is profit-taking," he told Dow Jones Newswires.
Hong Kong shares also drooped after the financial hub's de facto central bank, the Hong Kong Monetary Authority, warned on Thursday that a stronger US dollar has led investors to repatriate their cash, threatening a major market correction. City real estate prices have soared this year as more than 80 billion US dollars poured into Hong Kong, much of it from speculators betting on the red-hot property market.