HK & China - Market Direction 01 (May08 - Oct08)

[winston]

Dont quite understand HK today.

Dow was weak but HK is not flat. Market decoupling ? I dont think so. Maybe the shorts are covering their positions after being caught in the rally yesterday.

[millionairemind]

W,

Could it be we are nearing the Olympics and there is "invisible hand" from central gahmen propping up both SSE/HSI????

Normally HSI will tank with the US....

mm

[winston]

The Chinese banks are very strong today. Very strong earnings. I think there is alot of short covering.

There has been rumor of the Stabilization Fund for a long time.

Too dangerous to short HK & China now, in view of the Olympics..

[winston]

From Reuters:-

"Though the U.S. markets dropped more than 2 percent overnight, Hong Kong shares have barely reacted. The turnover has also been improving over the past few sessions, suggesting that investors are starting to buy back into the market," said Patrick Shum, strategist with Karl Thomson Securities.

Market watchers reckon the main index will breach the 22,000 level convincingly next week and rally up to 25,000, buoyed by pre-Olympic excitement.

The China Enterprises Index .HSCE of top locally listed mainland companies outperformed to rise 1.9 percent.

Top insurer China Life (2628.HK: Quote, Profile, Research) climbed 2 percent despite a 1.5 percent pullback on the Shanghai bourse.

"Judging by the strong volumes in the A-share market over the last few days it seems like the momentum in this rally will be sustained and the market may move higher in the short term," said Castor Pang, strategist with Sun Hung Kai Financial.

The Shanghai Composite Index .SSEC gained 9.4 percent in the three trading days to Wednesday amid expanding turnover.

But blue chips dragged on Thursday, with investors locking in gains on Wednesday's 2.8 percent rally as worries over the global credit crisis resurfaced after a slide on Wall Street.

Coal stocks climbed on media reports that Beijing has put on hold tax reforms on the commodity, which may have resulted in a higher levy, in view of rising inflation.

Brokers also attributed the strong buying in locally listed Chinese shares to an article by the head of the China Securities Regulatory Commission's Jilin branch in the Shanghai Securities News, urging the creation of a fund to stabilise the stock market.

[winston]

Hope despite the gloom
Friday, July 11, 2008

The movement in the Hang Seng Index yesterday was quite encouraging. Despite sharp falls on Wall Street on Wednesday, the Hong Kong benchmark ended the day 15 points higher at 21,821.

Some positive factors have finally emerged.

First, for two consecutive days, market turnover was above HK$70 billion.

Second, we saw to a certain extent a decoupling of the US and Hong Kong markets.

Third, the HSI looks likely to clear 22,000 and will soon test 22,275 (19-day moving average).

Fourth, mainland A shares - despite closing lower yesterday on selling pressure - had rebounded in the previous six sessions. The Shanghai Composite Index should rise before the Olympics and my target is around 3,400 points. It closed at 2,875 yesterday.

Fifth, the price of crude oil has fallen from a record high just over a week ago.

Finally, the market turmoil since July 2 reminds me of a similar pattern in mid-March. After big fluctuations, the market rebounded. Hopefully, it will be the same this time.

Of course, there are still some negative factors and the market remains volatile.

Dr Check has recommended buying quality shares when the benchmark is low.

If you had taken action when the Hang Seng Index fell to 21,098 on Tuesday, you could have profited from a 700-point gain in the benchmark at the end of trading yesterday.

On July 3, Dr Check suggested buying China Railway Construction Corp (1186) when its shares were near HK$10.12. The next day it fell to a low of HK$9.96.

Yesterday, the shares closed at HK$11.58 - a 14.4 percent gain in four trading days.

[winston]

Hong Kong Stocks Complete Biggest Weekly Increase in Two Months
By Hanny Wan

July 11 (Bloomberg) -- Hong Kong's stocks rose, pushing the benchmark index to its biggest weekly advance in more than two months. China Construction Bank Corp., the nation's second- largest, led financial stocks higher after saying first-half profit may have surged by more than 50 percent.

Aluminum Corp. of China Ltd., or Chalco, the nation's biggest producer of the metal, climbed to a three-week high after the country's producers agreed to cut output by as much as 10 percent. Foxconn International Holdings Ltd. jumped as investors judged excessive a slump that made the stock the index's worst performer this year.

The Hang Seng Index added 362.77, or 1.7 percent, to close at 22,184.55. The measure, which dropped as much as 0.3 percent in the morning session, has climbed 3.6 percent this week. That's the gauge's sharpest weekly advance since the week ended April 25.

``Earnings are still positive in terms of year-on-year growth in this region,'' said Mark Konyn, chief executive officer of RCM Asia Pacific Ltd., which manages about $20 billion of Asian equities. ``International investors have certainly pulled back from the markets, but our experience here in Hong Kong, also in Korea and Taiwan, is that things are holding up pretty well.''

The Hang Seng China Enterprises Index, which tracks so- called H shares of mainland Chinese companies, rose 2.1 percent to 12,306.99, its highest close since June 20.

Possible Takeover

Construction Bank rose 2.2 percent to HK$6.50, its highest close since June 16. Bank of Communications Co., part owned by HSBC Holdings Plc, rose 2 percent to HK$9.56, its highest close since June 11. A gauge tracking financial stocks on the Hang Seng Index accounted for 34 percent of the benchmark's gains today.

Construction Bank said yesterday first-half profit may have surged by more than 50 percent as interest and commission income increased ``relatively rapidly.''

Industrial Bank Co., a Shanghai-listed bank partly owned by a unit of HSBC, said this week its first-half profit may have jumped more than 70 percent. China Merchants Bank Co., the nation's most profitable lender, said on July 4 its first-half profit may have more than doubled.

[winston]

From Lahore Times:-

HK shares likely to rebound as Olympics approaches

* Hang Seng Index closed up 760.73 points at 22,184.55 on July 11

HONG KONG: Hong Kong shares are likely to continue to rebound next week, on expectation of a stronger Wall Street and measures from China to revive its bourses ahead of the Beijing Olympics, dealers said.

For the week ending July 11, the benchmark Hang Seng Index closed up 760.73 points at 22,184.55, the first time it has risen above the 22,000-point level since June 30.

“I believe that the Dow Jones index has dived bottom or is near bottom. Also, I do not think China wants to kill the market ahead of the Olympics,” Peter Lai, analyst at DBS Vickers, told AFP. Lai believes the index will rise to 23,000 next week.

He said the trend would continue until it reaches the range of 24,500-25,000 points just before the Games in August. But the market will also be affected by the home sales and retails statistics to be released in the US next week, he said. ICEA Securities Asia strategist Ernie Hon told Dow Jones Newswires that the index could head toward 23,000 points as investors are returning to the market.

He said the rebound will likely continue “on expectation of the central government’s intention to create a good atmosphere ahead of the Olympic Games.”

But other analysts warned it could only be a technical rebound. “If there are no positive leads, current gains may not last for long,” said Jackson Wong, an investment manager at Tanrich Securities. afp

[winston]

Lee bullish on last quarter rebound
(07-16 17:15)

Tycoon Lee Shau-kee predicts the weak stock market will become steady in September and says the Hang Seng Index would likely rebound to 25,000 points by year-end.

"I prefer defending rather than further buying in this slack month," Lee said in response to the current tumble of Hong Kong shares. "Now, the [Hang Seng Index at] 21,000 level is unlikely to fall further."

He said he believes the market will recover in September when external circumstances become stable.

"I will not defend any more in September and will buy more. [But] surely I won't sell my shares at the current 21,000 level. I ignore how much the US market is going to fall as it has already dropped a lot," Lee said.

STAFF REPORTER

[winston]

Caution as punters eye 23,000
BenjaminScent; Monday, July 21, 2008

The Hang Seng Index is expected to continue its upward trend this week, advancing to almost 23,000 points by the end of the week, but some investors may remain cautious today as they wait to see if positive news will continue.

"The Hong Kong market trend will remain quite positive," said KGI Asia chief operating officer Ben Kwong Man-bun. "Sentiment is improving." The Hang Seng Index will continue to test higher resistance levels but is expected to face strong resistance at 23,000 points, he said.

The continuing decline of oil prices and the relatively stable performance of the US stock market are contributing to a more positive investor sentiment, he said. However, trading today may be locked in a narrow range, with gains capped for now at 100 to 200 points higher.

"Investors are still a little bit skeptical about the recent rebound," Kwong said. "But overall, I think the sentiment is better than before."

American depositary receipts of blue-chip heavyweight HSBC (0005) rose 2.2 percent to the equivalent of HK$123.13 in New York trading on Friday. China Mobile ADRs fell 0.9 percent.

The Hong Kong market rebound will continue, but its strength depends on whether the US economic data to be released this week is better or worse than expectations, said Sun Hung Kai Financial strategist Castor Pang Wai-sun. "The Hang Seng Index still has the chance to have a retreat," Pang said.

[winston]

Keep an eye on HSI before locking in gains
Thursday, July 24, 2008

Some veteran investors have said they prefer to exit the market because it is so unpredictable. Their comments came as the Hang Seng Index rebounded after swinging wildly between 21,000 and 22,300 points.

We know it is not easy to make money in the stock market. However, we should not lose confidence or interest if we really want to improve our knowledge in stock investment in the hope of long-term gains.

Dr Check believes in relying on examining market valuations and studying the charts.

When the HSI was near 21,000, or trading at around 16 times 2008 price-earnings ratio, we should have been aware that valuations can be attractive.

Second, the chart showed that 21,000 should be an unbreakable support if the market were to not enter the third stage of the bear market right away. That is why I suggested bargain hunting.

On Monday the local benchmark cleared and broke through 22,360 - confirming the start of the rebound.

Yesterday it again cleared 22,900 - the high in late April - and closed at 23,135, a dramatic gain from the lows earlier this year.

I am a bit conservative as earnings from US regional banks have not been good. This may become an excuse for the Hong Kong market to take a breather.

If you want to lock in some profit, you may consider exiting at 23,262 (50-day moving average) or 23,687 (50 percent recovery of loss).

If you are not bothered by market fluctuations, maintain your holdings until the HSI climbs to 24,324.