A tumble in the global markets and a reserve-ratio hike by the central government over the holiday weekend are expected to hurt local stocks today.

Analysts expect many shares to open down substantially.

The US stock markets were heavily hit by record-breaking oil prices and the suffering job market.

The Dow Jones Industrial Average marked its worst day in 15 months on Friday, sending Asian shares down yesterday.

Indian shares fell 3.3 percent, Japan's Nikkei 225 Stock Average lost 2.1 percent, Taiwan's main TAIEX lost 1.8 percent and the Korea Composite Stock Price Index ended down 1.3 percent.

Automakers and technology companies led the slide on concern of surging oil prices and the worry of stagflation in the US.

The mainland, Hong Kong, Australia and the Philippines avoided the turbulence on Monday as their markets were closed for the holiday.

Analysts expect the Hong Kong stocks to track the global-market slump.

"Even if the US stocks recover tonight (Monday), it is unavoidably that Hong Kong stocks will follow with a slide," said Patrick Shum, an executive director at Karl Thomson Investment.

He predicted the benchmark Hang Seng Index (HSI) will open at least 400 to 500 points lower than Friday's close of 24,402.18. "Whether the HSI will plunge further or not, we have to keep an eye on the mainland stock markets," Shum said.

He expects the heavyweight plays to lead the slide, and he predicted the tumble in coal producers and mainland financial shares will pull the index down further.

The 23,300-point level will be the next support, he said.

The mainland's central bank raised the reserve requirement ratio by a full percentage point, 17.5 percent, for big banks after the increase will be implemented in two steps - up by 0.5 of a percentage point, on June 15 and June 25.

Compared with the fears of the US slowdown, Shum said the unexpected tightening policy on the mainland will have a more negative impact on Hong Kong.

As the May consumer price index (CPI) will be announced on Thursday, Shum noted that the central government raised the reserve ratio in advance, which may hint at a higher-than-expected inflation.

Castor Pang, a strategist at Sun Hung Kai Financial, said the inflation in the whole nation may be worse than expected after the Sichuan earthquake, as he said the one percentage point reserve-ratio hike is quite surprising.

He expects the HSI to open 700 points lower than its Friday close, the index will find investor support at 23,600 point level.

Heavyweight China Mobile is unavoidably dragged by the overall market trend, Pang said, adding that the mainland financial shares will plunge on the fears of further tightening efforts.

Pang also said oil stocks will dim as a result of the high oil prices.

Oil producers such as CNOOC may not benefit, as the oil windfall tax will offset the profits.

(HK Edition 06/10/2008 page2)