Hong Kong shares outlook: Higher on technical rebound/Wall Street gains

HONG KONG (AFX-ASIA) - Share prices are expected to open higher on a technical rebound, following the rise in Wall Street last night, dealers said. They said sentiment will slightly improve after the release of weaker-than-expected U.S retail sales data for February, although it remains uncertain whether the U.S. Fed will cut interest rates aggressively next week. Yesterday, the Hang Seng index closed down 283.69 points at 13,493.03, off an early low of 13,277.52 and an early high of 13,517.08, on turnover of 9.88 bln hkd. The Hang Seng March contract last traded at 13,466 points, and the Hang Seng London Reference Index was down 22.65 points at 13,470.38. The Overnight rate opened at 5.125 pct and 3-month HIBOR opened at 5.0 pct, both unchanged from their previous close. The base rate remains at 7.0 pct. Patrick Yiu, associate director of Kingsway Securities, said the market will rebound technically after the sharp losses of the past few days. He said a technical rebound will be most notable in property stocks, as some of them have been oversold. "The Hang Seng Index will mimic the technical rebound in Wall Street last night and sentiment will turn better after the U.S. weaker-than-expected retail sales data," he said. U.S. Retail sales fell 0.2 pct in February, compared with market consensus forecasts of a 0.4 pct rise. The decline was unexpected and it was the first drop since November. "Investors may buy on interest rate hopes, after the weak retail sales data," he said. He said the Hang Seng Index is expected to move between 13,400 and 13,800 points at today's trade. News that Motorola will trim its payroll will have little impact on hi-tech stocks, while HSBC is unlikely to extend losses, although the banking giant will cut jobs in Hong Kong, dealers said. Motorola Inc said it will further cut 7,000 jobs in its global personal communications workforce, while up to 280 employees in HSBC may be laid off, because of the bank's back-office operations to Guangzhou. "The market has been oversold ... most of the negative news would have been factored into the current prices. The market will rebound across the board," said Y K Chan, an analyst with CEF Brokerage.

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