Interest-rate flutter ends
Monday, April 23, 2001
DAVID WILDER
Hong Kong markets can expect a choppy week ahead as investors recover from last week's interest rate cut-inspired party.
The Hang Seng Index closed up 3.53 per cent at 13,448.13 for the week.
''After all the hype, the market could consolidate near term,'' Celestial Securities research head Herbert Lau Chung-kwan said.
Analysts expect the market to open weaker this morning in line with the dips on Wall Street on Friday. This followed explosive performances after a surprise interest-rate cut from the Federal Reserve on Wednesday.
The property market, in particular, can expect to take a hit in line with the growing sense that the restorative powers of interest-rate cuts will not be enough to revive a macro-economy which has yet to recover fully from the Asian crisis.
Phillip Securities research head Louis Wong Wai-kit said Friday's unemployment data, showing a 0.1 per cent uptick over the previous month, was a sobering reminder that Hong Kong's economic recovery still hangs in the balance.
''The release of the unemployment data showed it has risen for the second month in succession so it is going to dampen sentiment,'' Mr Wong said.
us98 ''After four interest-rate cuts in the US, people expect a more resounding improvement in the property market but it seems to have been negated by a rising unemployment rate and deflation.''
us100 Sun Hung Kai Properties, seen by many as the purest of the blue-chip property plays, finished down 1.33 per cent at HK$74 on Friday.
Tung Tai Securities associate director Kenny Tang Sing-hing said that investors might also begin to worry this week about why the Fed was cutting interest rates so aggressively.
It has already slashed 200 basis points off the key federal funds rate since the beginning of the year and at least another 25 basis points are expected to come off when the policy-setting Open Market Committee meets on May 15.
''After the positive news from the interest-rate cut, the market could look at the reason behind it. The market may start to worry about that [because] the US economy may be worse than expected,'' Mr Tang said.
Analysts said they would not be holding their breaths before the furesults release from mainland oil giant PetroChina later today.
Mr Lau said investors would be keeping a close eye on this year's results as lower oil prices hit PetroChina's earnings. PetroChina closed up 0.68 per cent at HK$1.47 on Friday.
The market will be scrutinising first-quarter corporate results expected this week from giants such as Compaq Computer, fibre-optics equipment manufacturer JDS Uniphase and wireless play Qualcomm.
''They will bring about volatility but it will not be as ugly as the first quarter. There should be one or two better ones with encouraging results,'' Mr Wong said.
Computing giant IBM cheered the market on Wednesday last week after it announced first-quarter earnings had risen 15 per cent.
Email David Wilder at Davidw@scmp.com.
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