Hong Kong's blue-chip index closed below the key psychological level of 10,000 points on the final trading day last week.
Profit taking on stocks was expected after such a sharp rally since the October 10 lows. Shares of BoC (Hong Kong) and Esprit were among the biggest losers of the Hang Seng Index, dropping 0.6 per cent and 2.71 per cent respectively on profit taking.
With investors betting that the economic outlook for the territory and the United States are improving, positive sentiment remains in the market.
Whether a year-end rally will occur in Hong Kong depends heavily on near-term macroeconomic concerns - including the possible war with Iraq, which has until today to provide a full account of its weapons of mass destruction and related missile programmes.
Despite a 0.91 per cent plunge in the HSI in the past two weeks, my portfolio constituents have outperformed the index. Portfolio stocks such as Tack Fat Group, Yue Yuen Industrial and Li & Fung, performed relatively well, surging 13.72 per cent, 7.62 per cent and 2.42 per cent respectively.
Recent Hong Kong export figures are encouraging, suggesting robust growth for export plays. With a recovery in tourist arrivals from countries such as the United States and Japan and a growing influx of visitors from China, Hong Kong's export growth year on year in the third quarter was a healthy 11.4 per cent, while exports of services jumped 14.1 per cent in the same period. The overall export growth forecast for the year has also been revised up from 5.4 per cent to 7.1 per cent. The October export growth reached 12.9 per cent year on year.