Hong Kong stocks are expected to be stuck in a range this week as investors digest the potential negative fallout from last week's sharp increase in money market rates and a 50 basis point rise in bank lending rates that takes effect today. Lingering expectations of a yuan revaluation should give China-related stocks some support, however, and help limit the downside, analysts said, noting that index heavyweight China Mobile was likely to remain a favourite pick in that regard. 'Investors are moving out of interest-rate-sensitive stocks and into China shares and that is helping the market a bit,' said China Everbright head of research Frederick Tsang. This is likely to remain the case despite last week's introduction of a strong-side ceiling to the Hong Kong dollar peg at $7.75, specifically aimed at curbing the inflow of funds betting on a yuan appreciation. Such inflows had kept short-term Hong Kong interest rates unduly low for more than a year. The adjustment to the peg 'will probably remove 75 per cent of the speculative buying of Hong Kong dollars [in the forward market] as a proxy for a yuan revaluation, but it won't deter speculation on other assets such as equities or properties', argued James Malcolm, currency strategist with Deutsche Bank. Property stocks did come under pressure last week, however, after agents suggested that the lending rate increases, which would feed directly into higher mortgage rates, could be a real dampener on demand for new homes. 'The property sector will be the focus [this week] and sales over the weekend will be telling,' said Philip Chan, head of research at Capital Securities. As property is a pillar of the local economy, a slowdown in the recent brisk housing sales could dent confidence in the market as a whole. Indications last night were that the worst fears had materialised. According to Centaline Property Agency, sales in actively traded housing estates plunged 55 per cent as the number of flat seekers fell by as much as 30 per cent. Analysts expected the Hang Seng Index to continue to hover between 13,500 and 13,850 points, after falling 1.07 per cent last week to close at 13,717.42. Some observers argued that the 50-day moving average trend line just below 13,750 points might put up initial resistance, but others noted the index had actually made two clear breaks in that line in the past month, suggesting it would not take too much effort to breach it. They said more worrying was the fact that trading volumes dropped well below the recent averages last week despite four straight days of gains on Wall Street, indicating investors lacked confidence to build new positions. Aside from local consumer price data for last month, which is due for release after the market closes today, Hong Kong investors will be scrutinising tomorrow's release of the minutes from the latest United States Federal Reserve monetary meeting for clues on how much higher US interest rates are likely to go. Following today's rate increases, Hong Kong interest rates are largely to be in line with those in the US, which means local banks can be expected to follow the Fed's tightening moves closely for the rest of the cycle, analysts say. Data on Hong Kong's external trade last month and first-quarter gross domestic product will be released after the market closes on Friday.