Hong Kong shares outlook: Lower on weak overseas lead; HSI seen below 13,000

HONG KONG (AFX-ASIA) - Share prices are expected to turn lower, amid the negative performance on overseas stock markets, with investors likely to stay on the sidelines ahead of the U.S. FOMC meeting next week, dealers said. They said selling pressure will be evenly distributed across the board, and the Hang Seng Index is likely to fall below the initial support level of 13,000 points. Yesterday, the Hang Seng index closed down 162.19 points or 1.2 pct at 13,330.84, off a low of 13,306.94 and a high of 13,616.68, on turnover of 8.46 bln hkd. The Hang Seng March contract last traded at 13,379 points. The overnight rate opened at 5.375 pct, compared with 5.50 pct at yesterday's close and the three-month HIBOR opened at 4.9375 pct, unchanged from its previous close. The base rate remains at 7.0 pct. Patrick Yiu, associate director of Kingsway Securities, said selling pressure will be substantial at the opening, after the falls on stock markets worldwide. "There was a sharp decline on Wall Street overnight... Hong Kong stocks traded in London were lower, and the Japanese stock market was down 3.0 pct this morning," he said. He said the Hang Seng Index is expected to drop below 13,000 points, with the next key support seen at 12,800-900 points. "No single sector can get rid of selling pressure, although HSBC is likely to lead the initial decline, after its weakness in London overnight," he said. HSBC closed down 3.50 hkd at 92.50 in London. Dealers said New World Development may underperform the boarder market on fears that its interim results to be announced today will be weaker-than-expected. New World Development shares have been lower for the past few days. The Securities and Futures Commission is reported to be investigating whether the company has been engaged in insider trading, by warning several brokerages about its lower-than-expected interim results, ahead of today's official announcement.

Related stock : (NIL)