BROKERS expect the local stock market to rise further this week following the return of international players showing strong buying interest.
However, the index will meet resistance at 9,800 points as it has risen more than 15 per cent in the last two weeks, brokers say.
The decision by local banks to raise interest rates by half a percentage point has been interpreted as a positive signal by the market because it has lessened the likelihood of higher interest rates in the second half of the year.
The news of Morgan Stanley increasing the market weighting of Hong Kong shares was another boost to the index. Heavy turnover indicated the change of market sentiment.
Renewal of China's most favoured nation (MFN) trading status by the US is top of the market's agenda and brokers are positive about the issue as both countries cannot afford to put their trade positions at risk.
In the longer term, interest rates, MFN, property prices and the Sino-British negotiations on the new airport are major factors facing the stock market.
Edward Chan, sales director of Nomura International (HK), said there were positive indications on the direction these four factors would take.