VOLATILITY may have ruled the roost last week but the Hang Seng's new master this week will be uncertainty, with brokers as much in the dark as investors.
The biggest wild card is the Sino-British talks on political reform for Hongkong. A tight news blackout in Beijing caused a flurry of rumours on progress to blow through the market and it was not until Saturday an announcement was released that there would be a second round of the talks on Wednesday and Thursday this week in Beijing.
Brokers had been waiting anxiously for news of any on progress in the talks.
''I think it really hinges on the talks, so we will have to wait and see how they go,'' said Mr Stuart Gregory, an institutional broker with Morgan Grenfell (Asia) Securities. ''I'm not listening to the rumours.'' What brokers can comfortably predict is that interest in second-and third-line stocks will continue as many investors shy away from blue-chip stocks because of high prices.
Dao Heng Securities research director Alex Tang said Hutchison Whampoa and Cheung Kong (Holdings) would stand out among the 33 blue-chip counters because they were still market laggards despite good performances last week.
Mr Tang, who expected the index to hover between 6,500 and 6,800 this week, said rotational trading would begin as investors became more uneasy about the outcome of the Sino-British talks.
Another unsettling development is the future of China's Most Favoured Nation (MFN) trade status with the United States after a Bill attaching conditions to its renewal was introduced into both houses of Congress on Thursday.