The Hang Seng Index may fall as many as 800 points to 26,000 today, the 100-day moving average, following the slump on Wall Street on Friday due to worries the United States economy may be heading into a recession, experts say.
'The Hong Kong stock market downturn since last month is not yet complete,' said Ben Kwong Man-bun, the chief operating officer at KGI Securities.
'The Hang Seng Index may fall 500 to 600 points [today] and will not rebound significantly until the US government launches new measures to boost the economy at the end of this month or the Federal Reserve further cuts interest rates.
'Mainland stocks may also face pressure in the short term as investors still worry that Beijing will impose more tightening measures to rein in the overheated property and stock markets.'
Mr Kwong said the index would probably remain above 25,800 points, a level that had seen strong support in the past few months.
On Friday, the Dow Jones Industrial Average sank 1.92 per cent to 12,606.3 points while the Nasdaq Composite Index dropped 1.95 per cent to 2,439.94 points.
It was the third consecutive week of falls for US stocks, the longest streak since August, after forecasts from AT&T and American Express bolstered speculation the six-year economic expansion is ending.
The Hang Seng Index dived 363.85 points or 1.34 per cent to close at 26,867.01 on Friday.
'The index may fall as much as 800 points to 26,000 [today] due to the decline in the US stock market on Friday,' said Michael Wong Man-sek, the research director of Hantec Investment International. 'Also, there has been not much favourable news to boost market sentiment recently.'
Mr Wong said investors had already factored in a possible faster and deeper cut in Fed interest rates than expected. 'Market watchers are also expecting weak US corporate performance in the coming results announcement period,' he said.
S&P 500 firms due to report quarterly results this week include Citigroup, JP Morgan and Merrill Lynch.
Analysts expect fourth-quarter profit for index members to fall 10 per cent in aggregate, resulting in the first back-to-back quarterly decline since 2002, Bloomberg data shows.
Analysts expect the index to shed as many
as 800 points today
The Hang Seng Index dived 363.85 points to 26,867 on Friday, a drop of