Stocks recoup losses in volatile trading on hopes of US Fed measures
Hong Kong stocks struggled through a volatile session yesterday amid rising fears of subprime losses in the United States, sliding 3.85 per cent in the morning before staging a rally in the afternoon.
Taking its cue from a drop in US markets on Monday, the Hang Seng Index opened sharply lower before recovering after lunch to close 1.13 per cent higher at 27,771.21 points.
Traders said speculation of an emergency Federal Reserve meeting to discuss market relief measures spurred gains in the afternoon. The Fed was due to release minutes from its latest meeting today.
Hit by concerns over increasing loan defaults in the US subprime crisis and delays to a key mainland investment scheme, the Hang Seng Index is 12.22 per cent below a record 31,638.22 reached on October 30.
Charles Huang, the head of mainland small and mid-capitalised research at BNP Paribas, expects the index to fall to as low as 20,000 points in the next 12 months.
'In the short term, the Hang Seng Index will see more corrections,' Mr Huang said. 'Without strong support from money inflows and if global and mainland markets become more volatile, the index may fall further.'
