Hong Kong stocks look set to gain ground this week as the apparent resolution of the US-China trade dispute gives investors an excuse to boost the market. A rebound in several heavyweight stocks - Hongkong Telecom, Cathay Pacific Airways and Swire Pacific - should also help the market move higher. Brokers said trade would be subdued, as the three-day week and uncertainty about US long bonds would deter many investors. Last week, the Hang Seng Index lost 331.56 points to close at 10,864.99, a loss of 2.96 per cent. Edwin Cheung, dealing director at Taiwan Securities, said: 'The market should have a better week. 'After the talk of the property rights between the US and China, the concern about this issue should dissipate, and investors might use this as an excuse to push the market up.' US and China trade negotiators yesterday reached an agreement in their dispute over intellectual property rights, meaning the threatened US trade sanctions on China would not go ahead. This will be good news for Hong Kong stocks, as many of the territory's companies would have been caught in the sanctions crossfire. One key index counter likely to gain ground this week is Hongkong Telecom. It slid 6.32 per cent last week after China-backed conglomerate Citic Pacific cut its stake in the utility, and the government said it was pursuing options to end the utility's international call monopoly. Samuel Ho, senior marketing manager at Seapower Securities, said: 'The stock was oversold, and Telecom is one of the heavyweights in the market. If it recovers, the market should be firmer.' Also expected to regain ground are Cathay Pacific Airways and parent Swire Pacific, both of which fell last week on news that shareholder China National Aviation Corp was seeking to sell 90 million Cathay shares. The market could also get a boost this week from easing US long-bonds yields. Kent Rossiter, senior manager for institutional sales at Nikko Securities, said: 'The overriding concern remains interest rates. If long bonds stay at this level, the market could see some upside.' Yields on 30-year Treasuries hovered near 7.2 per cent last week, the highest mark in 13 months, but by late yesterday yields had fallen to 7.08 per cent. New listing Asia Satellite Telecommunications should be a major feature of trading. The issue, which makes its debut on Wednesday, was more than 100 times oversubscribed and most analysts tip it to perform well. The market was closed yesterday for the Queen's Birthday holiday. It will be open today, then closed again on Thursday for the Tuen Ng, or dragon boat, festival.
