Hong Kong shares outlook: Lower on Wall Street; downside seen limited

HONG KONG (AFX-ASIA) - Share prices are expected to open lower on the back of overnight falls on Wall Street, though losses maybe limited by bargain hunting after recent weakness, dealers said.	    They said red-chips and H-shares will continue to rise on growing optimism over their earnings prospects, while investors' interest in blue chips will be muted ahead of the expiry of the Hang Seng April contract tomorrow.	    Yesterday, the Hang Seng index closed down 36.89 points at 13,274.61, off a low of 13,157.40 and a high of 13,279.33, on turnover of 7.28 bln hkd.	    The Hang Seng April contract last traded at 13,256 points and the Hang Seng London Reference Index was up 24.76 points at 13,299.37.	    The overnight rate opened at 4.0625 pct and the 3-month HIBOR opened at 4.25 pct, both unchanged from yesterday's close.	    The base rate remains at 6.0 pct.	    Patrick Yiu, associate director of Kingsway Securities, said the Hang Seng Index will open with a negative tone, following weaker-than-expected U.S. consumer confidence data which gave rise to profit-taking in Wall Street overnight.	     "However, the Hang Seng Index has been trading downward for the past few days ... bargain hunting may limit today's losses," he said.	    "Investors will continue to put aside the blue-chips, ahead of the expiry of the Hang Seng April contract tomorrow," he said.	    Yiu said the Hang Seng Index will trade between 13,000 and 13,500 points.	    He said China-related stocks will continue to outperform the boarder market, boosted by a spate of solid earnings in the H-shares.	    "Rotational buying will remain substantial within the China-related stocks ... for instance, Yanzhou Coal may rise on expectation that it will benefit from the growing coal demand in China, when a few large-scale infrastructure projects commence on the mainland," he said.	    Dealers said second line banks may suffer from profit-taking after yesterday's gains, although in the near term, the sector should continue to bene fit from potential for further consolidation within the sector. 

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