Modest GDP figures unlikely to provide stocks stimulus
Second-quarter gross domestic product figures released shortly before the market close on Friday are expected to provide little impetus for stocks in the week ahead, despite Hong Kong edging out of recession with positive growth for the first time since the start of last year.
The economy grew 0.5 per cent compared with the same period last year, up 0.4 per cent from the previous quarter and higher than 0.2 per cent growth in the first quarter, figures announced by Tang Kwong-yiu, the government's chief economist, showed. The full-year growth forecast was raised from 1 per cent to 1.5 per cent.
The Hang Seng Index fell 1.97 per cent, or 201.82 points, in a week of thin turnover to close on Friday at 10,043.87 - down almost 12 per cent this year.
'The GDP numbers were pretty modest and people are more concerned about what is happening now,' said Eugene Law, executive director at CASH Financial Services.
'Lately, the economy has actually lost momentum, that is the worrying part. There was some hope in June-July but the market really lost steam in the middle of July.'
Mr Law said the second quarter figures were a lagging indicator and institutional and retail investors were waiting for new incentives.
Tung Tai Securities associate director Kenny Tang Sing-hing said the GDP figures would help sentiment, but the market had probably factored them in.
'Growth should improve to about 1 per cent in the third quarter and exports in China were strong in the second quarter, which will help re-exports in Hong Kong. But internal demand remains weak and unemployment is still at a record high,' he said.
Tanrich Securities investment manager Kennis Leung said the market would be looking forward in the week ahead, but Labour Day in the United States tomorrow would keep players sidelined.
'The GDP figures will not make the market worse than before but neither will they provide important support,' she said.
'I expect very thin trading - we are very near to the 9/11 anniversary and most investors will still wait and see what is going to happen in the US.'
Interim results due this week could give direction to local stocks, with PCCW and China Unicom reporting on Thursday. Retail sales figures for July are due to be released on Friday.
