Hong Kong shares outlook: Lower after MSCI changes; China stocks to outperform
2001-05-22
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Share prices are expected to open lower after Morgan Stanley Capital Investments cut Hong Kong in its index weightings over the weekend, dealers said.
Red chips and H shares will continue to outperform the broader market, with sentiment seen buoyant as a number of stocks in the sectors were included into the MSCI China Index, they added.
On Friday, the Hang Seng Index closed down 178.69 points at 13,459.18, off an early low of 13,449.04 and a high of 13,631.40, on turnover of 8.27 bln hkd.
The Hang Seng May contract last traded at 13,469 points.
The Hang Seng London Reference Index was up 15.03 points at 13,474.21.
The overnight rate opened at 3.5625 pct, compared with its previous close of 3.50 pct while 3-month HIBOR was unchanged at 3.75 pct.
The base rate remains at 5.50 pct.
Patrick Yiu, associate director with Kingsway Securities, said the Hang Seng Index will see some pressure following the MSCI re-weightings.
"The Hang Seng Index will see some selling pressure after the MSCI re-weighed Hong Kong downward in its indices over the weekend," Yiu said.
MSCI said during the weekend that it was cutting Hong Kong's weighting in the All Country World Index to 0.66 pct from 0.93 pct.
Despite the widely expected move as MSCI adopts a free-float calculation,
the news will still put some pressure on the main index today, he said.
"The local market has a lack of fresh leads; the MSCI changes will therefore be in focus," he said, putting the trading range at 13,300-13,700 points.
He said Cheung Kong will see some support at the opening following its re-inclusion in the MSCI index.
"Cheung Kong may test higher today, with its resistance pegged at around 95.00 hkd," he said.
Cheung Kong Infrastructure and Hongkong Electric could also benefit as they are two of the unexpected new entrants in the MSCI index, he added.
st/bmm
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