The Hong Kong dollar will remain depressed in the short term, given that capital flight will likely continue with further US rate hikes and speculative attacks on the local currency on the horizon. But a pause in the US monetary tightening cycle later in the year is possible, a strategist at CLSA forecast.

Home prices in the Hong Kong Special Administrative Region will fall by 10 percent in 2016, while the outlook for H shares would stay neutral, the investment banking firm and brokerage, a wholly owned subsidiary of CITIC Securities Company, said in Hong Kong on Monday.

The Hang Seng Index, the local stock market benchmark, gained 1.54 percent or 294 points to 19,374.67 as of 3:20 pm on Monday, whereas the Hang Seng China Enterprises Index of H-shares edged up 0.8 percent to 8,169.88.

Christopher Wood, equity strategist at CLSA Ltd, said capital outflow from Hong Kong will continue because of the interest rate spread between the SAR and the US. He maintained neutral prospects on share prices of Hong Kong-listed Chinese mainland companies due to their "low valuation", and declared Hong Kong domestic shares "underweight"; saying continuous capital flight from the city will likely hit them harder.