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

[winston]

The Shanghai index faces resistance around 2,400 points while the Hang Seng Index may test it between 19,500 and 19,700.

Both have around a 5-percent upside in the short term.

Of course, the debt crisis in Europe is far from over and more non-tradable shares are expected to be released into the mainland markets this year.

In 2006, about 55 percent of all shares of publicly traded state-run firms were classified as non-tradable.

Since then, Beijing has sold nearly 50 percent of them in the market. If this supply does not stop, it will limit the upside for A shares.

Another factor is corporate governance.

Many overseas fund managers are not comfortable with annual reports and auditor standards in the mainland. An improvement would see A shares set to soar further.

Source: Dr. Check, The Standard HK

[winston]

The Hang Seng Index is near technically overbought territory after gaining 3 percent this week to date, led A-share sensitive names on hopes of monetary policy easing after favorable data and several share buybacks in mainland markets, seen as forms of government intervention.

Its 14-day relative strength index (RSI) value stands at 67.7, with a reading above 70 suggesting the benchmark is overbought.

Source: Reuters

[winston]

The Shanghai market will be closed next week.

[winston]

What is limiting the upside in A shares?

Apart from a possible economic slowdown and corporate governance issues, another reason is oversupply.

Daily turnover in Shanghai and Shenzhen shares is about 60 billion yuan (HK$73.8 billion).

Just this week, non-floating shares valued at 47.7 billion yuan will become free-float shares.

Last year, non-floating shares valued at 2.07 trillion yuan became free-float shares. This year 1 trillion yuan worth of such shares may become tradable.

Total market capitalization of Shanghai and Shenzhen markets is about 21.67 trillion yuan - with free-float shares making up 16.75 trillion yuan.

So, non- floating shares worth 4.92 trillion yuan have yet to be released.


Source: Dr. Check, The Standard HK

[winston]

TOL:-

Dont understand why HK is up 350 points.

Is it because of the China's GDP number coming in above expectation ?

But doesnt a strong GDP number going to slow down the loosening of the RRR reduction or Interest rates reduction ?

Or did they just program the machines blindly, to buy if the GDP numbers come in above expectation ?

Anyway, turnover is extremely low so it's not too difficult to slaughter some sleeping pigs ..

Do you know why you are buying, holding or selling ?

[winston]

Hong Kong markets will be closed for the Lunar New Year from Monday through Wednesday.

[winston]

Short selling in Hong Kong declined for a second-straight session on Thursday, accounting for 7.8 percent of total
turnover, the lowest since Jan. 16.

Shorting interest has been particularly pronounced for Chinese banks despite their relative strength.

Since Jan. 9, short selling interest in China Construction Bank (CCB) has stayed above 13 percent.

Source: Reuters

[winston]

DJ MARKET TALK: HSI Rises For A 6th Day, +0.2%; Take Profit - KGI

1001 [Dow Jones] The HSI is last up 0.2% at 20,476.67 on follow-through buying, but the rally is showing signs of fatigue with the index rising for a sixth straight session, for a cumulative gain of 7.7%.

The HSI's 9-day RSI has risen to 81 which is "substantially overbought" and the index is near the major resistance level at 21,000, says Ben Kwong, COO at KGI Asia;

"We expect selling pressure to emerge. We suggest investors to take profit by reducing their exposure on investment portfolio."

Blue chips are about half up and half down; China Overseas Land (0688.HK) is down 1.9% to HK$15.20, succumbing to profit-taking after its 17.1% rally year-to-Thursday, but big recent underperformer Power Assets (0006.HK) rebounds 1.2% to HK$54.10. Market volume is solid at HK$7.95 billion.

Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: Patience Likely A Virtue With HSI Overbought

1403 [Dow Jones] From a short-term punting point of view, going long on the index, especially via leveraged bets, at this juncture perhaps is not a good idea, given the HSI's 7.5% rally in the past five sessions.

Already, there're signs pointing to a likely correction, including the outperformance of blue-chip utility duo CLP (0002.HK) and Power Assets (0006.HK) and perennial laggard China Mobile (0941.HK), and hence it's perhaps better for investors to wait for a pullback rather than chasing shares higher right now.

The HSI is up 0.1% at 20,458.47, stubbornly defying the profit-taking pressure; volume is solid at HK$35.19 billion.

China Mobile rises 1.4% to HK$78.60 and is the most heavily traded Hong Kong stock; CLP rebounds 1.2% to HK$63.20 while Power Assets rallies 2.4% to HK$54.75.


Source: Dow Jones Newswire

[winston]

The Hang Seng Index has gained 1,489 points in the past six sessions to 20,501.

It is a little overbought and is nearing the 250-day moving average resistance (now at 21,100).

Upside is limited if you chase high beta shares.

Mainland markets are highly likely to rise today on the first trading day in the Year of The Dragon. But this may also be a sign of a near-term pullback.

Source: Dr. Check, The Standard HK