HSI's Lunar New Year start fourth-best since '98
The first trading session of the Year of the Tiger started with a roar but finished with a whimper yesterday as profit-takers pounced on opening gains following the long holiday break.
The benchmark Hang Seng Index rose as much as 2.1 per cent shortly after trading began but lost steam in the afternoon and finished up 1.3 per cent, or 265.32 points, at 20,534.01.
The local market may have been boosted yesterday by the so-called Lunar New Year effect. The Hang Seng Index has risen on the first trading day in seven of the past 12 new years, averaging a 1.5 per cent increase per session. The advance yesterday was the fourth-best in 13 years, but it paled in comparison with the 14.3 per cent surge at the start of the previous Year of the Tiger in 1998.
Daily market turnover fell below HK$40 billion for the first time this year.
'A lot of fund managers are on holiday,' said Danny Yan, an assistant director at Taifook Asset Management. 'And people are still cautious about the performance of the Chinese market after the Lunar New Year.'
Asian markets have been wracked with worries this year that the low interest rates which helped spark economic recovery last year could start rising. Those concerns were compounded on Friday when Beijing raised the reserve requirement ratio for big mainland banks for the second time in a month.
However, the Hong Kong market took the news in its stride when it reopened yesterday following a holiday break on Monday and Tuesday.
Investors focused instead on an overnight rally on United States and European markets. Wall Street jumped the most in three months after reports of a sharp improvement in New York's manufacturing data.
'As markets enter the Year of the Tiger, a somewhat calmer tone appears to be ensuing, with risk appetite edging higher, helping equities,' Mitul Kotecha, the head of global currency strategy at Credit Agricole, wrote in a report yesterday.
Stock indices advanced around the region yesterday. Japan's Nikkei rose 2.7 per cent, South Korea's Kospi climbed 1.7 per cent, Australia's S&P/ASX 200 index rose 2.2 per cent, and Indonesia's Jakarta Composite Index finished up 0.89 per cent. Mainland markets are closed until Monday.
Hong Kong investors may stick to the sidelines this week, waiting for more trading direction from across the border, Yan said.
The 20,000-point level would provide initial support for the Hang Seng Index because valuations had become more attractive, he said.
