Hong Kong stocks set for bullish start to the Year of the Snake
Hong Kong stocks are expected to climb when trading begins after the New Year holiday break
Hong Kong stocks could open the Year of the Snake on a bullish note as Asian markets rose after US corporate earnings sent the Dow Jones Industrial Average to a five-year high.
The Chinese zodiac calendar flipped over on Sunday, replacing the Year of the Dragon which presided over a 23 per cent surge in Hong Kong's Hang Seng Index. The Hong Kong market reopens today after a three-day Lunar New Year holiday.
Matthew Kwok, chief strategist at the Shenzhen-based firm China Yinsheng Wealth Management, said: "It is likely the market will open higher on the first trading day of the Chinese New Year."
Kwok said the Hang Seng Index could rise as much as 200 points to 23,400 points in the early session. The index closed at 23,215.16 points on the last trading day before the Lunar New Year holiday.
However, Kwok said, after a positive opening, "profit-taking pressure could come in to limit further upside. The index would receive resistance when it reached 23,600 points." He tipped utility stocks and property investment trusts to receive the most support from investors.
Li Kwok-suen, a fund manager at Phillip Capital Management, said he expected the Hang Seng Index would gain 100 points, albeit during volatile trading. "Equity markets remain nervous amid growing pressure for a correction," Li said. He predicted that second and third-tier stocks would be hit by a deeper correction when it comes.
Li said he believed HSBC and China Mobile would be more resilient should the market encounter any downward adjustment. "Property and mainland banks still have upside potential," he said.
The retail sector would also benefit from an influx of tourists to Hong Kong during the Lunar New Year, said another fund manager who requested not to be named. Figures from the Immigration Department show there were more than 385,000 visitor arrivals from the mainland in the four days to February 11, the second day of the Lunar New Year. Australian stocks hit their highest intraday level in nearly three years before ceding some gains. South Korea's Kospi index rose 1.4 per cent to 1,973.48. Markets in Singapore, Indonesia and the Philippines also rose.
The Asian markets' rally came after the Dow Jones Industrial Average rose 47.46 points, or 0.3 per cent, to 14,018.70, the highest level since 2007.
However, Japan's Nikkei index dropped as the yen strengthened against the US dollar after a pledge by finance ministers from the world's major advanced economies to refrain from intentionally weakening their currencies. The Nikkei 225 was down 1.1 per cent to 11,239.56.
Markets in mainland China, Taiwan and Vietnam were closed for the Lunar New Year holidays.
In Europe, the Stoxx Europe 600 Index fell 0.1 per cent to 286.91 when it opened in London yesterday, after adding 0.5 per cent on Tuesday.