INVESTMENT DAILY

The Hang Seng Index is expected to trade at 22,000 to 22,400today

    After making a strong rebound on Tuesday, Hang Seng Index struggled within smallranges again in these two days. The index closed at 22,417 points, decreasing 62points. HSCEI closed at 9,987 points, declining 62 points as well. Turnover was$66.5 billion. New York oil futures bounced back to over US$40 per barrel duringThursday daytime trading session, thus the decline of PetroChina(0857)in theafternoon narrowed to less than 1%, and CNOOC(0883)even reversed to a gain atday close. Federal Reserve Chairwoman Janet Yellen ‘was expecting’ the moment ofrate hike, implying a high probability to raise fed fund rate this month. Localproperty stocks fell, among which Swire Pacific(0019)and Henderson Land(0012)decreased 1.5% and 2% respectively.

    Europe Central Bank announced to further extend its bond purchase program by 6months, but it fell short of the market expectation. Euro rebounded while Europestock market plunged sharply. Besides, Fed Chairman Yellen once again impliedlikely to have interest rate hike in December, and said that recent trend bolster herconfidence for the return of inflation to 2%. US stock market also hard hit, the Dowand the Nasdaq fell 252 points (to 17,478) and 86 points (to 5,038) respectively.

    Europe and US treasury market suffered serious selling pressure, 10 year treasuryyield rose 15 basis point to 2.33%.

    ECB monetary easing magnitude is below expectation, triggered sharp sell off on USand Europe market. We expect HK stock market to open lower today while HangSeng Index initial support will be at 22,000. Besides, US will release non-farmpayroll tonight, which will be short term market focus.

    Technical Analysis

    After making a strong rebound on Tuesday, Hang Seng Index struggled within smallranges again in these two days. Last time the index fell below the bottom ofBollinger Band is mid-August, and by the time the index accumulated 15% declinebefore a rebound happened. However, the index remained above the bottom forseveral times, meaning that we can be prudently optimistic in the short run. Hence, ifHSI falls below the bottom of Bollinger Band 21,942 points, it may challenge thefirst support 21,719 points, and the next support will be 21,000 points. In addition,the first resistance for the index is the ceiling of the Bollinger Band 22,952 points,the next resistance is the closing low during early July of 23,516 points.