Investment Daily

As Standard & Poor’s Ratings Service lowered HK’s credit-rating outlook tonegative, leading Hong Kong stock markets dropped on Friday. Besides, Asianmarket turned weak, HK market obviously corrected. The Hang Seng Index oncefell more than 300 points and finally closed 278 points lower at 20,499. H shareindex fell 160 points to 8,843. Market turnover was HK$65.3bn. Macau gamingrevenue dropped 16% yoy in March, below expectation. Sands (1928.HK) andGalaxy(0027.HK) dropped 4.7% and 3.8% respectively. Besides, mainland bankprospect not good, share price turned weak. Of which, ICBC (1398.HK) fell2.8%.

    Although US healthcare stocks continued its recent rally on Monday, investorsattention turned to corporate quarter results to be released starting from nextweeks, which is expected to remain lackluster. US stock market fell on Monday,of which, industrial and material stocks suffered the most. The Dow and theNasdaq closed 56 points (to 17,737) and 25 points (to 4,889) lower respectively.

    On the other hand, investors concerned that oil producing countries might notreach a freeze production agreement in mid-April meeting, crude price fell 3% onMonday.

    US interest rate expectation cool down, which favor HK stock, However, as HangSeng Index and H share index has accumulated significant gain from its low, it haspartly reflected the favorable factors. Besides, market talks said that Centralgovernment might soon launch first batch of loan to debt trial, investors will eyeon the impact on mainland banking sector.

    Technical Analysis

    Hang Seng Index declined on the first trading day in the second quarter. Currentlythe index shows weakening signs. The MACD bullish gap nearly disappears, andthe 14-day RSI is located around 60. The Bollinger Band changes from anincreasing to a flattening pattern. However, there lacks obvious signal that theindex is poised to massive downturn, thus the first resistance maintains at 21,000points, and the next resistance is 21,400 points. In addition, the first support willbe the middle of the Bollinger Band 20,369 points, and the next support is thebottom of the Band 19,832 points. One thing worth noting is that the width ofBollinger Band largely narrows to around 1,000 points only, which means amomentum may appear soon.