Hong Kong shares outlook: Higher on extended bargain hunting; upside weak

HONG KONG (AFX-ASIA) - Share prices are expected to open higher, building on yesterday's gains on continued bargain hunting after the sharp losses seen earlier this week, dealers said. However, cautious sentiment will limit the upside, with the technical rebound in hi-tech stocks likely to run out of steam after the falls in NASDAQ and the profit warnings from Compaq and Oracle overnight, they said. Yesterday, the Hang Seng index closed up 173.33 points at 13,504.17, off an early low of 12,947.59 and a day's best of 13,553.22, on turnover of 9.36 bln hkd. The Hang Seng March contract last traded at 13,545 points. The Hang Seng London Reference Index was down 24.77 points at 13,479.40. The overnight rate opened at 5.25 pct, compared with 5.125 pct at yesterday's close and the 3-month HIBOR opened at 4.8125 pct, against 4.875 pct. The base rate remains at 7.0 pct. Patrick Yiu, associate director of Kingsway Securities, said follow-through buying may support the Hang Seng Index at the opening, although underlying sentiment remains fragile. "The U.S. stockmarkets were mixed last night ... NASDAQ was lower and there was the profit warning from Compaq. Hi-tech stocks will be out of favor," he said. He said the Hang Seng Index is likely to trade 13,350-13,700 points today. Dealers said Sun Hung Kai Properties may trade mixed, ahead of its six months to December results due in the afternoon, reflecting some of the caution and uncertainty on the outlook for the sector. Analysts expect the company to report a net profit of around 5.0 bln hkd for the first half, compared with 5.25 bln in the previous year. "Sun Hung Kai Properties shares have been strong recently. Profit taking set in at strong resistance of 80.00 hkd ... it will drift at 78.0-80.0 hkd in the near term," a dealer from a local brokerage said.

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