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SCMP Reporter

FRAGILE stock market sentiment in Hong Kong and around the globe is expected to keep many large institutions on the sidelines in the week ahead.

   Big institutions remained relatively inactive last week as they watched regulators and the media poke over the jetsam and flotsam of the sunken Baring Brothers.

  Not to be robbed of something to worry about, big investors began to become concerned about the state of the United States dollar, as other concerns of a huge global financial collapse, triggered by the Barings crash, subsided.

  On Friday, the US dollar fell to a new post-World War II low of 93.75 against the Japanese yen. This fall came despite significant central bank action in European and North American trading on Friday.

  The Dow Jones Industrial Average was hurt initially in trading on Friday, but recovered on domestic optimism towards technology stocks to take the yardstick up 9.68 points to 3,989.61.

  Fears of another round of interest rates rises to support the US dollar were countered by Federal Reserve Board Governor Susan Phillips saying that progress in the US economy is the main concern of the central bank.

  Bloomberg reported the governor saying: 'The dollar is one of the things we watch. But the US has a very large domestic economy and I think that domestic economic considerations are in many ways primary.'   Last week, the Hang Seng Index rose 0.72 per cent, according to data from Bloomberg. On the month it is up 3.64 per cent and on the year-to-date it is only 0.7 per cent down.

  Some analysts are beginning to take a more optimistic view of local stocks, taking the extremely under-valued state of the index as a starting point for buy recommendation arguments.

  Falls in the local property market appear to be well discounted with analysts believing that the residential market has a further five per cent to 15 per cent to go before the bottom is hit.

  The strong interest in the sale of new units by Sino Land and the viewing of Sun Hung Kai Properties units will be welcomed by analysts who believe that the bottom in the property market has been hit.

  In the week ahead there will be strong interest in the expected announcement from the Mass Transit Railway Corp announcement on Thursday.

  Bloomberg reports the that the corporation is due to announce plans for the allocation of nine new hotel developments at Howarth's Sixth Annual Hotel Investment Conference.

  Another key event affecting local sentiment among equity investors will be the statements coming from the National People's Congress.

  'China watchers will be more interested to witness what is omitted from speeches, regarding economic reforms, rather than what is being said,' said a broker.

  Also, in the week, index stocks due to announce results are Hongkong Electric and Hong Kong Aircraft Engineering Co.

  The March issue of the Estimate Directory shows that analysts are expecting two per cent profit growth from Hong Kong Aircraft Engineering Co to $455 million. Earnings per share are expected to rise by the same margin to $2.46. In 1995 analysts are expecting profit growth of 10 per cent to $500 million with earnings per share up by nine per cent to $2.69.

  At Hongkong Electric, analysts are expecting nine per cent profit growth to $3.69 billion. Earnings per share is expected at $1.83. In 1995 profit is expected to rise by 11 per cent to $4.1 billion with earnings per share up by the same margin to $2.03.



Investors intimidated by fragile sentiment