The Hang Seng Index may settle above the 20,000-point level in the coming weeks after Friday's US jobs data sent stock markets soaring across Asia yesterday.
Hong Kong's benchmark index rose 1.7 per cent to a three-month high of 19,998 points, after hitting an intra-day high of 20,091. With China's trade figures for July expected to show signs of improvement, analysts said the HSI may gain another 300 to 600 points in the coming weeks but added the index would encounter strong selling pressure at those levels.
Elsewhere in Asia, stocks rose 1 to 2 per cent. South Korea's Kospi Index rose 2 per cent to a seven-week high on expectations of a rate cut this week, while Japan's Nikkei 225 Stock Average closed 1.6 per cent higher. Even the struggling Shanghai Composite Index gained 1 per cent.
Analysts foresee better market sentiment this month as investors anticipate a long-expected cut in interest rates and the bank reserve requirement ratio (RRR) by Beijing.
'These moves would provide the market a short-term boost but you won't have such announcements every day and the euro-zone debt crisis is yet to be resolved,' said Simon Lam Ka-hang, of Christfund Securities, adding the Hang Seng could at best go up another 300 points before slipping back.
But Castor Pang Wai-sun, of brokerage firm Core Pacific-Yamaichi, was more optimistic. 'The market certainly will not go up a lot, but it is indeed healthier to climb slowly and regress a bit before bouncing back again. The HSI could push 20,600 in the short run.'