Hong Kong shares outlook: Higher on Fed rate cut; banks, properties in focus

HONG KONG (AFX-ASIA) - Share prices are expected to open sharply higher on the back of gains on Wall Street overnight following the surprise 50 points rate cut by the Federal Reserve, dealers said.	    They said property and financial stocks are likely to lead the initial gains on expectations that the Hong Kong Association of Banks will announce a similar interest rate reduction at its weekly meeting tomorrow.	    Yesterday, the Hang Seng index closed up 366.35 points or 2.91 pct at 12,972.80, off a low of 12,761.41 and a high of 12,988.15, on turnover of 9.73 bln hkd.	    The Hang Seng April contract last traded at 12,936 points while the Hang Seng London Reference Index was down 26.80 points at 12,946.00.	    The overnight rate opened at 4.25 pct, down from yesterday's close of 4.50 pct and 3-month HIBOR opened at 4.375 pct, down from 4.75 pct.	    The base rate was lowered to 6.0 pct from 6.50 pct.	    Patrick Yiu, associate director of Kingsway Securities, said the Hang Seng Index will open sharply higher, buoyed by the surprise rate cut in the U.S. 	    "Interest rate sensitive stocks will benefit from the interest rate cut but buying interest should spill over to the other sectors," Yiu said.	    He said the interest rate cut should prompt a large-scale technical rebound for the Hang Seng Index, which has been lingering below the 13,000 level for a month and could now trade 13,250-13,750 points.	    Dealers said investors will also continue to favor H-shares on optimism about their business prospects after their positive earnings.	    "Buying in H-shares should continue until investors are fully confident about the U.S. and the local stockmarket ... By then, they will switch back to the blue chip stocks," a dealer from a local brokerage said. 

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