HONG KONG stocks are set to stay buoyant in 1996 but do not expect a raging bull run, say Hongkong Bank's top economists.
In its February monthly economic report the bank said expectations of further declines in interest rates would maintain liquidity levels in equities.
'With local share prices remaining at attractive levels, foreign investors will continue to divert funds into the local market,' the bank said.
'However, as economic growth is expected to be moderate and only a mild recovery is foreseen in the property market, a strong bull run on the stock market, such as in late 1993, is unlikely.' Assuming interest rates fall another 25 basis points and monetary easing continued in China, the bank expected the Hang Seng Index to reach 12,000 this year.
This relatively bullish view of the prospects for stocks comes on the back of a bear call by the bank's investment arm, HSBC Investment Management.
The fund manager, with about US$35 billion under management, is bracing itself for a short-term correction and has gone underweight in Hong Kong stocks in its regional unit trusts.
The Hang Seng Index has seen most of its gains for the year and should peter out about 11,800 points, it believes.
