LOCAL share prices will stay captive to rumours surrounding the health of Chinese leader Deng Xiaoping. Investors showed they had not discounted Deng's death in share prices and further volatility is expected should the rumour mill continue. Cheung Kong's flat pre-sale programme is likely to be the major local event, giving another indicator of the strength of the depressed property market. Franklin Lam, senior analyst at Salomon Brothers, said share prices would open slightly lower in the absence of further drama from Deng's bedside. A recovery in the US dollar was the crucial factor needed to stir foreign investors into investing in Hong Kong. There was a wall of Japanese and European money eyeing the territory, but it would hold back until the US dollar stabilised, he said. Wall Street's strong performance would keep US investors focused on their domestic market at the expense of Hong Kong, concluded a Standard Chartered Securities report. The Hang Seng Index would drift toward 8,000 although there was little down-side beyond this level, it said. Other issues will be the house-cleaning against corruption in Beijing and its impact on Hong Kong companies that have either close relationships or projects closely associated with the accused. Seapower Securities expects Hongkong Bank and Hongkong Telecom to lead any recovery. Of H share companies, it suggested those dealing in petrochemical products. On Wednesday, Cheung Kong will release 96 new flats at Laguna City for pre-sale to the public. A response of 200 or more applications would be treated positively, Mr Lam said. Hong Kong was looking incredibly cheap and 'ready for a takeover bid' at current share prices. Retail investors were significant buyers last week and firms such as Amoy Properties had engaged in large-scale share buy-backs - something it had not done before, he said. When foreign investors realised the value offered by Hong Kong they would return in large numbers. Job creation, domestic exports and airport activity were strong, but they were getting drowned out by media headlines that focused excessively on share prices and property sales, Mr Lam said.