Hong Kong stocks set for bullish start to the Year of the Snake

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.