Although the Hong Kong stock market had drifted listlessly in the past four trading days, analysts believe the rally will resume next week after the short Labor Day holiday break.

For unexplained reasons, May has never been a lucky month for Hong Kong stocks, market experts said in jest, adding that investors should take a long spring break to avoid being caught in the spell.

But this year, fate may have taken a new twist, and May could have broken free from the witch's curse, thanks to the magic wand of mainland funds.

"The continuous fund inflow into Hong Kong will drive the benchmark index to as high as 29,000 points in May from 28,133 on Thursday," said Castor Pang, Core Pacific-Yamaichi's head of research.

The strongest stimulus for Hong Kong stocks will come from further monetary easing measures by the central government, he said. "The scheduled launch of the Shenzhen-Hong Kong Stock Connect program later this year, as well as the effects of the mainland's 'One Belt, One Road' initiative, are expected to spark a new round of investment interests," he said.

Hanna Li Wai-han, a strategist at UOB Kay Hian (Hong Kong) Ltd, said the mainland's central bank is widely expected to cut interest rates again in May and June to spur economic growth, resulting in a renewed inflow of capital into the stock market.

Li added that a bullish stock market will facilitate the restructuring of State-owned enterprises, which is pivotal to financial reform.

Meanwhile, there are signs that the US Federal Reserve will keep interest rates at current low levels longer than previously expected. This would reduce the risk of a capital outflow from emerging markets.

"There is no urgency for the US to raise interest rates when economic growth in the first quarter was only 0.2 percent, far below expectations," Li said.

According to analysts, the risk factor for Hong Kong stocks is the lack of fundamental support for the rally, which could lead to massive profit-taking sales after the weekend holiday break.

Patrick Shum Hing-hung, investment director at Tengard Fund Management Ltd, said: "Everyone is excited over government policies, but nobody seems to care about corporate earnings potential."

Contact the writer at chengyingqi@chinadaily.com.cn

(HK Edition 05/01/2015 page6)