Hang Seng likely to take wild ride on raft of factors, say experts

Volatility in the stock market is set to continue this week, driven by a spate of factors including uncertainty over new regulations from Beijing, a raft of initial public offerings, profit taking, the warrants market, the Communist Party congress in Beijing, and events on overseas markets, warn analysts.

The Hang Seng Index on Thursday breached 30,000 points for the first time before dropping back to a close of 29,465.05, up 0.57 per cent on the day.

The intraday high came as a media report said Beijing was planning to allow shares of companies traded both in the mainland and Hong Kong to exchange their stocks. The securities regulator in Beijing, however, later said its vice-chairman Tu Guangshao had been misquoted and the statement pushed shares down by the close.

The market opened last week with a record high close of 29,540.78 points on Monday to be followed on Tuesday by a heart-stopping fall of 586.23 points or 2 per cent. Turnover was the second highest ever as prices plunged, with HK$200.8 billion worth of shares changing hands.

'Many people are getting out and taking profit because the market has reached such high levels,' said Patrick Yiu Ho-yin, an associate director at CASH Asset Management.

The HSI has gained 45 per cent in the two months since Beijing announced plans to allow individual mainland investors to buy shares in Hong Kong. The H-share index has risen 65 per cent.