Hong Kong stocks are at the top of their range and vulnerable to bad news, analysts say.
ING Barings sales director James Osborn said: 'All we are doing is quickly going from the low end of the range to the top end. To argue that we are heading to new highs is premature.' The Hang Seng Index closed above the 13,000-point level yesterday for the first time since early March. Analysts placed the index's current range at 12,800-13,200.
With little positive news at home, Hong Kong remains dependent on Wall Street for inspiration.
Wage figures released this week showed that US inflation remains under wraps, despite stronger than expected gross domestic growth figures. US employment numbers, to be announced later tonight, will give a clearer picture of whether interest rates will have to be increased later this month.
Dharmala Securities research director Ben Kwong said: 'If the data is not favourable, it will be a good opportunity to take profits.' Property stocks have been the largest contributor to the recent rally, rebounding from a correction that saw some developers fall more than 30 per cent.
Owing to their interest-rate sensitivity, property counters would be the first to fall in case of bad news, analysts said.
Mr Kwong said he believed a recent resurgence in the number of covered call warrants issued could increase the severity of a downward correction.