HK market expected to greet Ox by catching up with global rally

Investors may take the bull by the horns today when trading kicks off in the Year of the Ox after global markets rallied on signs that the United States plans to revive frozen credit markets.

US President Barack Obama increased efforts earlier this week to mobilise support for an US$825 billion stimulus bill aimed at restarting the world's largest economy through a combination of tax breaks and spending initiatives.

And plans to set up a repository bank system that would soak up bad assets in the financial system also moved ahead and could be explained further next week, according to market watchers.

Meanwhile, US stocks extended their gains yesterday. In late morning trade, the Dow Jones Industrial Average was up 1.79 per cent or 146.64 points. European markets also saw solid gains, with London up 2.62 per cent and Frankfurt 4.36 per cent ahead in late trade.

'During the holidays in Asian markets, there have been some developments in the US, and there has been hope that the new administration will set up a so-called bad bank,' said Tetsuo Yoshikoshi, an economist at Sumitomo Mitsui Banking Corp. 'The surge in some Asian stock prices is just reflecting that kind of hope in the US banking sector.'

Regional markets recorded sizeable gains earlier this week as Japan and Australia also announced fresh stimulus measures. Japan jumped 4.93 per cent on Tuesday and added 0.56 per cent yesterday. Australia climbed 1.5 per cent. And after being shut earlier in the week, South Korea closed 5.91 per cent higher.

Local investors may be anxious to catch up with the rally and start the Lunar New Year on the right foot after the Hang Seng Index was closed for the first three days this week.