HK - Market Direction 01 (Jan 12 - Jul 15)

[winston]

Technically, as expected, the benchmark index closed below the 250 SMA (20774), but the 50 SMA (20791) breakthrough upward 250 SMA (20774), a “Golden Cross” formed, which is a positive signal for the long term trend.

Investors are suggested to close the long position, if the benchmark index closes below the 250 SMA for 3 trading days.

We peg resistance for the HSI at 21000 and support at 20800

Source: Phillips

[winston]

The HSI has support at about the 20,500 level.

Any dip below this will easily trigger selling, pushing it lower and testing support at between 19,800 and 20,000.

Source: Dr Check, The Standard HK

[winston]

DJ MARKET TALK: HK Earnings Revision Cycle About To Reverse - HSBC

1320 [Dow Jones] After seven blue-chip firms reported their FY11 results after Thursday's market close, Hong Kong's hectic results reporting season is finally coming to an end.

While the results overall perhaps can be described as less than ideal, it's the earnings revisions now, rather than the results themselves, that will dictate market direction going forward.

"We think the earnings revision cycle is about to reverse, after seven consecutive months of downgrades.

From a top-down perspective, earnings forecasts look realistic now and HSBC analysts are becoming more positive on selected cyclical sectors,"

HSBC says in a note; the house revises its end-2012 HSI target to 24,000 from 21,500.

Source: Dow Jones Newswire

[winston]

HKSE will be closed on Wednesday, Friday and next Monday.

Turnover is extremely low, so it's not to difficult to move things, both on the upside and downside.

[winston]

China Hedge Fund Credence to Boost Stocks on QFII Quota By Weiyi Lim

Credence Oriental Trade Enterprise Ltd. (CRDOTPL), a China hedge fund that has beaten 98 percent of its rivals, will boost its Chinese stock holdings on the prospect of economic expansion and increased equity purchases by foreigners.

Credence is increasing the percentage of yuan-denominated A shares and Hong Kong-listed H shares it holds in its portfolio to 70 percent from 50 percent, while reducing bets on commodities, Tom Tang, co-manager of the China-domiciled fund, said in a phone interview from Hong Kong on April 4.

Credence, which has 211 million yuan ($33.6 million) in assets, has returned 29 percent in the past three years, outperforming 1,203 China-focused funds, according to data compiled by Bloomberg.

“Equities will be our major investment in the future,” said Tang, 39, who is based in Shenzhen. “There’s less variety in commodities and we want a more diversified portfolio.”

The Shanghai Composite Index (SHCOMP) has risen 4.7 percent this year on speculation the government will ease monetary policies and take measures to prevent stocks from slumping for a third year.

The China Securities Regulatory Commission announced on April 3 that it increased quotas for qualified foreign institutional investors to $80 billion from $30 billion, spurring the biggest gains for the benchmark stocks measure in three weeks. The index was little changed at 2,302.03 at 10:21 a.m. local time.

“This is good news for the stock market,” said Tang. “It will increase trading of blue-chip stocks and improve valuations.”

The benchmark measure for China’s stocks trades at 9.7 times estimated earnings, compared with an average multiple of 18.4 over the past five years, according to weekly data compiled by Bloomberg.

‘Resilient’ Economy

Tang said the Chinese economy won’t have a so-called hard landing and earnings will improve because the the government has scope to support the expansion if growth slows too much.

The 573 companies in the Shanghai index that have published annual earnings reported growth of 15 percent on average, trailing analyst estimates by 1.6 percent, Bloomberg data show.

“I am still positive on this year’s earnings outlook compared to last year,” Tang said. “With regards to the macroeconomy, the government still has quite strong control over it. The economy is still resilient.”

Tang’s comments contrast with JPMorgan Chase & Co. strategist Adrian Mowat who said last month the nation is already in a hard landing. Societe Generale SA said in a March 27 report Chinese corporate profits won’t grow at all this year.

http://www.bloomberg.com/news/2012-04-0 ... quota.html

[winston]

In 2Q12, government polices will lead China’s stock markets. Our top picks are stocks that benefit from government policy and that have good results.

We recommend:
(1) sectors related to economic restructuring that have government support;
(2) sectors that have priced in all policy negatives and are sensitive to interest rates;
(3) sectors that have bottomed and are ready to recover cyclically; and
(4) stocks with steady operations and low valuations.


Our 2Q12 top picks: Daphne (00210.HK), Ajisen China (00538.HK), Springland (01700.HK), Zhongsheng (00881.HK), China Overseas (00688.HK), Zoomlion (01157.HK), Shanghai Petrochemical (00338.HK), China Shipping (02866.HK), Trauson (00325.HK) and Singyes Solar (02727.HK).


Source: KGI

[winston]

ANOTHER LOOK AT THE CRITICAL "CHINA SITUATION"

The past few weeks of trading have been good to China bulls.

We frequently note how China is the center of a great financial debate. Some world-class analysts, including Jim Chanos, say the country is a powder keg of government malinvestment… which will cause a huge economic slowdown.

On the other hand, you have many "China bulls," who say the bearish arguments are overblown and overhyped.

Since China is a key cog in the global financial engine, what happens here is extraordinarily important to your investments.

There are several ways to keep tabs on the China situation. As we noted back in March, you can monitor shares of Brazilian iron ore giant Vale.

You can also monitor the "Dow Industrials of China," the Shanghai Stock Index. The index tracks the share prices of China's most important corporations.

As you can see from the chart below, the Shanghai Index suffered with most other assets in 2011. It fell from its April peak of 3,057 to 2,148 (a 30% fall).

The index spent the first few months of 2012 rallying off its lows (A)… only to sink lower in March (B).

But in the past few weeks, the index has found buying support… and is rallying toward a short-term high (C).

As long as this rally holds… and keeps the index above its 2,148 low, it's a sign China is holding it together.

Source: www.dailywealth.com

[winston]

Hang Seng Index futures expire this Friday.

[winston]

China Finally Breaks Above 200-Day Moving Average

When an index or stock is above its 200-day moving average, it is considered to be in a longterm uptrend, and vice versa when trading below the 200-day.

China’s Shanghai Composite finally broke back above its 200-day today after trading below it for the past 228 trading days. Going back to 1990, this was the third longest streak of its kind, and it clearly illustrates how weak China’s market has been over the past year.

China has had three prior streaks of 200 days or more below its 200-day.

Below we highlight how China's stock market has performed in the weeks and months following the end of these streaks.

http://www.bespokeinvest.com/thinkbig/2 ... erage.html

[winston]

Closed at 20485 yesterday.

100-day moving average at 20,268