THE market appears destined for a further correction this week as uncertainty continues over interest rates and the dollar's slide, brokers say. ''The Hang Seng Index will again test its all-time low for the year at 8,200 to 8,300,'' said Samuel Lau, research director at Seapower Securities. Even though the market is undervalued in terms of fundamentals, brokers believe the short-term correction will persist. ''The uncertainties are the US interest rate hike, the US dollar's downfall and the local property market clampdown,'' said Mr Lau. He added it was reasonable to believe that the index would trade in a range between 8,300 and 9,000 in the next four weeks. The downside risk is limited, as reflected by the resurgence of the index last week on the strength of a technical rebound at the 8,200 to 8,300 level. ''In the short term, it looks like another dull week,'' said Eugene Law, research director of Standard Chartered Securities. This week all eyes will be directed towards key indicators emerging from the US, such as the Consumer Price Index due out on Wednesday and industrial production figures due on Friday. ''This will keep investors and punters alike on the sidelines,'' said Mr Law. The market is desperately short of any impetus to drag it out of the mire, and in the absence of a much-needed fillip, attention will continue to focus on US interest rates. The index traded broadly downwards throughout the week with extremely low turnover indicating severe caution among investors. The Hang Seng Index dropped 201.41 to close at 8,432.96, down 2.33 per cent for the week. Traders reacted bitterly to the introduction of a new spread arrangement and longer trading hours, claiming the new system was hostile to established trading practices. In addition, the index was unnerved by the fear of a US interest rate rise. Despite rumours that an agreement on Container Terminal Nine (CT9) was close, foreign institutions maintained a defensive posture. Among blue chips, property counters were badly hit. H shares under-performed the market while the debut of Luoyang Glass, whose share price plunged below the issue by 20 per cent, was another H-share flop.
