Further gains in store as earnings spice up the market
Hong Kong shares are expected to make further gains this week as the Hang Seng Index nears the 23,000 level and money flows into the market, thanks to an expanded qualified domestic institutional investor scheme.
The second-quarter earnings season is beginning, which may take the focus off macroeconomic issues for a few weeks. Rising finance costs and inflation pressures have nagged the market and a weak US dollar threatens demand for Asian exports. Investors will be watching to see if all those macroeconomic concerns have filtered down to hurt corporate profits.
One speed bump for equity investors could be the price of energy. Oil supplies from Nigeria and Iran may be disrupted due to political issues and worries over lower United States petrol output are pushing oil prices to near last summer's highs.
The International Energy Agency on Friday will make its monthly global market report, which may provide some insight into how much of the black gold is available. Also on the commodity front, the US agricultural department on Thursday will release its estimates on global crop conditions and size. With mainland crop data hard to come by, many investors will look to the department's numbers to see how much their next bowl of rice will cost.
In the property business, developers will begin making bids on a site in Changsha, Hunan province. Rights to the residential development, the biggest single government site offered so far, will net a minimum of four billion yuan.
