Crude remains king as Gulf stand-off keeps world on edge
Oil is likely to be king for another week. Crude prices pulled back slightly on Friday, but they remain near six-month highs at about US$66 a barrel in New York.
With politicians from Washington to London and Tehran waving their fists at each other, you can bet energy prices will remain the focus of financial markets.
Gold, near US$670 an ounce, is also firmly supported as long as the Iran standoff remains unresolved.
That may not be good news for shares, as seen last week when the market limped under the weight of energy costs.
High oil prices can take their toll on corporate earnings, especially in the mainland where passing higher costs on to the consumer is difficult. Generally though, companies in the business of finding oil and selling oil and gas should benefit. Expensive oil is also good news for alternative energies and the firms that promote them.
Eye on America
The health of Asia's biggest customer, the United States, will also be front and centre this week.
Investors are still worried about inflation, and this week's batch of data on employment and consumer prices could offer further hints on which way things will go.
Markets will also be watching closely for signs of protectionism in the US after it decided on Friday to levy new duties on imports of coated paper from China to compensate for mainland subsidies to exporters. The new policy also opens the way for US textile and steel producers to apply for similar protection. This could cause trade tensions between the US and China, and could hit Chinese firms that rely heavily on the US export market in these areas.
Hong Kong retail sales figures for February to be released today should show the SAR's shopping mentality remains healthy and strong. A tight job market, rising wages and continued strength in the property market are all giving consumers confidence to spend money.
Regionally, the Bank of Japan today is releasing its quarterly tankan survey of business sentiment, with investors hoping for a long-awaited economic revival. Industrial output data from Japan has been encouraging, so expect some bullish news from the survey.
Easter break gives breather
Those partying business folk who are glumly turning on their computers today after the Hong Kong Sevens bash don't have too much to fear, as markets will be closed from Thursday to Monday for the Easter holiday. That could set the tone for the week, with investors likely liquidating any big bets before heading off to hunt for chocolate eggs.
IPOs and earnings
Holiday or not, there are still many companies trying to tap Hong Kong's rich share market.
China Citic Bank, a mainland lender aiming to raise US$5 billion from a simultaneous listing in Hong Kong and Shanghai, will continue its pre-marketing drive. The bank is likely to be the largest initial public offering of the year for the mainland market.
Shares in telecommunications service provider Citic 1616 Holdings, a unit of conglomerate Citic Pacific, will begin trading tomorrow after the company raised US$270 million in its offering. Expect a booming first day of trade, as the offering's 600 times oversubscription indicates plenty of unfilled demand in the retail market.
Mainland property developer Country Garden Holdings will open its US$1.6 billion offering to retail investors tomorrow. Demand so far has been strong, allowing the company to raise the size of its deal steadily.
On the corporate results front, China Netcom Group will reveal its performance today, while Huaneng Power International and ICBC face investors tomorrow. On Wednesday, China Resources International will open its books.
There are a few important people coming through China this week, and although they may not be here for dealmaking, they are important to business anyway.
Saudi Prince Alwaleed bin Talal Abdulaziz al-Saud, founder of Kingdom Holding, will be in Hong Kong tomorrow. His itinerary includes a visit to the stock exchange, a meeting with Chief Executive Donald Tsang Yam-kuen, a meeting with investment bankers at Citigroup, and a visit to Disneyland.
Beijing will be playing host to Guenther Verheugen, vice-president of the European Commission. He will be meeting the press tomorrow to discuss EU-Chinese relations and industrial policies. Russian Defence Minister Anatoly Serdyukov is also in Beijing this week.