HONG KONG (Thomson Financial) - Hong Kong shares are expected to open higher
on Wednesday after U.S. stocks rose overnight on falling oil prices and easing
credit worries.
"Upbeat readings on the financial sector in the U.S. and sliding oil prices
should perk up shares a bit," said Francis Lun, general manager at Fulbright
Securities. "Stocks have been oversold and so investors may just look into some
of the battered sectors in the last trading sessions."
The Dow Jones industrials gained more than 150 points overnight as crude
prices tumbled $5.33 to settle at $136.04 a barrel on the New York Mercantile
Exchange, bringing oil's two-day drop to more than $9.
Investors on Wall Street also found relief from speeches by key policymakers
including Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry
Paulson, who gave some reassurance about the financial sector.
On Tuesday, the Hang Seng index gave up 692.25 points or 3.16 pct to close
at 21,220.81 after investment banks downgraded select heavyweights as they
predicted a slowdown in global demand.
Bank of East Asia slumped after Morgan Stanley downgraded the stock to
"underweight" from "equalweight." HKEx slid after Morgan Stanley cut its target
price for the local stock market operator by 30 percent, while Foxconn tumbled
over 10 percent after CLSA downgraded the handset maker to "sell" from
"underperform."
"These stocks will be in focus again today after their appalling performance
yesterday," said Lun.
Among other stocks to watch are CNOOC Ltd, PetroChina Co Ltd, China
Merchants Bank and other mainland lenders.
CNOOC Ltd, the mainland's largest offshore oil producer, is expected to fall
sharply after crude oil prices pulled back further from their peak. PetroChina
and China Petroleum and Chemical Corp (Sinopec) - China's oil refiners - will
also be actively traded due to the oil factor.
Financial stocks including China Merchants Bank may rebound following
Tuesday's slump.
"Easing credit concerns and expectations of strong results from these banks
will still support the sector," said Lun.
China Merchants' announcement that its first-half net profit will more than
double from a year earlier supported a rally in the stock Monday.
leonora.walet@thomsonreuters.com
.
lw/nt
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