Hong Kong shares outlook: Mixed to firmer on Wall Street/range-trading

HONG KONG (AFX-ASIA) - Share prices are expected to open mixed to firmer, with sentiment bolstered by a relatively steady performance on Wall Street overnight, dealers said.

	    They said that in the absence of any compelling fresh leads, the maim market will tend to remain range-bound for most of the day, while red-chips and H shares will continue to attract attention on optimism over their prospects.

	    Yesterday, the Hang Seng index closed down 28.50 points at 13,810.60, off an early low of 13,649.71 and a high of 13,813.26, on turnover of 8.84 bln hkd.

	    The Hang Seng May contract last traded at 13,810 points.

	    The Hang Seng London Reference Index was down 0.63 point at 13,809.97.

	    The overnight rate opened at 3.25 pct, compared with yesterday's close of 3.625 pct, while 3-month HIBOR was unchanged at 3.8125 pct. 

	    The base rate remains at 5.50 pct.

	    "The positive performance on the Wall Street overnight should provide an initial prop for the Hang Seng Index today ... However, due to a lack of fresh leads in the market, it is unlikely the benchmark index will be able to breach its key resistance level of 14,000 points today," said Ben Kwong, associate director with KGI Securities.

	    Kwong said he expects the market to trade 13,800-14,000 points, adding that red chips and H shares may see continued support.

	    "Red chips and H shares will remain as investors' favourite picks on their optimistic growth prospects but the upside will be limited after their substantial gains so far," he said.

	    Additionally, there may be some concern at possible further share placements in the sector and how funds will move after June 1, when the B-share markets on the mainland are completely freed from restrictions on domestic investors.

	    Patrick Yiu, associate director with Kingsway Securities, said the market will be rangebound.

	    "Sentiment remains cautious ahead of the release of GDP in Hong Kong and the U.S. later today," he said.

	    He said laggards such as Henderson China and New World China may attract some attention given their mainland connection.

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