INVESTMENT DAILY

The Hang Seng Index is expected to trade at 27,300 to 27,700today.

    Hong Kong stocks volatile on Thursday, the hang seng index opened 12 pointshigher on Thursday morning, however, given news that golden Sun Securities stopmargin trading for Mainland gem trading, A share market plunged. But thanks to thefinancial stocks and property plays rebounded, losses were narrowed, A-sharemarket closed 37 points higher and regained the 49,000 level. Hang Seng index sawthe largest losses of 562 points, however, losses were narrowed, market closed at27,551, fell 105 points. H-share index gained 12 points to 14,127. Market turnoverwas HK$195.2bn. Market expecting Macau gambling sales may rebound in June,saw buying interest of Macau gambling stocks, WYNN (1128) surged 9%. Besides,market rumor said Bank Comm (3328) hand in reform plan, share price jumped5.5%.

    Greece told the International Monetary Fund that it plans to delay its loan repaymentdue this Friday and bundling four loan repayments due in June into one payment forJune 30. Besides, recent job data in US remained strong, investors also concerned onUS interest rate hike. US stock market plunged on Thursday with the Dow and theNasdaq closing 171 points (to 17,906) and 40 points (to 5,059) lower respectively.

    Besides, Europe and US bond turned stabilized on Thursday after recent sell off with10 Year US Treasury Yield fell 6 basis point to 2.31%.

    Mainland brokerage gradually tightened margin financing, Shanghai CompositeIndex is capped at 5,000. Given A share volatility, HK market will also be impacted,initial support for HSI is at 50 Day SMA.

    Technical Analysis.

    Hang Seng Index closed with cross star on Thursday. Technically, market droppedbelow 20DMA (27,611) coupled with MACD bearish gap expanded, showing thatmomentum turning weak. Hang Seng index first support would be 27,000, whilenext support would be 26,500. For resistance, 10DMA (27,708) would become thefirst resistance, while next resistance would be seen at 28,000.