The Hang Seng Index may face pressure today amid rumours that HSBC Holdings' US$14.2 billion takeover plans for United States consumer credit firm Household International may be unravelling.
HSBC, which has gained 3.7 per cent since announcing the deal, hit HK$91 on Friday, its highest close in more than 13 weeks. The heavyweight banking share helped lift the HSI, which closed 2.02 per cent or 199.67 points heavier on Friday at 10,065.32, to its highest close since August 28.
While rumours that the deal may have fallen apart would probably prompt some selling of HSBC, analysts said the index might see another strong week as investors started betting on a year-end rally.
'The market has been held up by HSBC's strength,' said Ben Kwong Man-bun, associate director of KGI Asia. 'If the deal is called off, there will be a negative impact on HSBC because it will provide an excuse for profit taking, which will indirectly drag down the HSI.'
But Mr Kwong said the market would be held up by strength on Wall Street and expectations of a year-end buying spree.
Fund managers and investors 'don't want to miss the year-end rally and will continue to support the market. Any pull-back will be followed by buying again because cash positions are relatively high.'
