The worst may be over for Hong Kong stocks with all but the most die-hard bears forecasting a rebound this week no matter what the outcome of tomorrow's United States Federal Reserve Board meeting.
The Hang Seng Index has lost 6.79 per cent this month as caution that rates might be raised turned into resignation that a rise is imminent. Fed chairman Alan Greenspan has dropped one hint after another that the time has come to put rates higher.
Last week, investors ignored promising results from some of the territory's biggest property companies and focused instead on climbing US 30-year Treasury yields and the prospect of higher rates from tomorrow.
The blue-chip index fell 1.94 per cent, adding to the previous week's losses of 4.5 per cent.
The sell-off was overdone, brokers said.
'Hong Kong tends to overdo it,' Howard Gorges, vice chairman of South China Brokerage, said.
'The market is not expecting anything more than a 25 basis point rise in interest rates next week but is factoring in something more.' The long bond yield, which has a strong influence on local share prices, has climbed from 6.35 per cent at the end of November to 7 per cent last week.
