INVESTMENT DAILY

The Hang Seng Index is expected to trade at 21,600 to 22,000today

    The latest China economic data is weak, among which RMB-denominated exportsdropped 3.7% yoy in November and the foreign exchange reserve slid to almostthree-year low of US$3.44 trillion. Thus Hang Seng Index significantly decline onTuesday. It once decreased more than 400 points, and the decline narrowed beforethe end of trading hours. It closed at 21,905 points, decreasing 298 points. HSCEIclosed at 9,660 points, declining 137 points. Turnover was $76.3 billion. New Yorkoil futures fell over 5% again, dragging the three oil giants to keep dropping morethan 2%. AIG sold PICC P&C(2328)with 6.1% discount at most in order towithdraw over $5.7 billion, and the stock tumbled 5.8%.

    Continuous weakness of oil price triggered further selling pressure on oil and rawmaterial stocks on Tuesday. Besides, China recently released economic data is stillweak, investors are concerned that it will be a drag to global economy growth. USstock market fell again on Tuesday, the Dow once dropped more than 200 points.

    The Dow and the Nasdaq closed 163 points (to 17,568) and 4 points (to 5.098) lowerrespectively.

    Since China export data remained weak in November, together with sharp fall offorex reserve, it will hurt investors confidence. Besides, oil price fell sharply, itwould also hurt commodity exporting countries revenue. Together with US likely toadjust rate upward in Dec, funds flow is not favor to emerging market.

    Technical Analysis

    Hang Seng Index closed at 21,905 points on Tuesday, very close to the bottom ofBollinger Band 21,902 points. In short term, if it’s confirmed that the index fallsbelow the bottom, that means the index will go down instead of going up. Last timethe index fell below the bottom of Bollinger Band is mid-August, and by the time theindex accumulated 15% decline before a rebound happened. Hence, if HSI fallsbelow the bottom of Bollinger Band, it may challenge the first support 21,719 points,and the next support will be 21,000 points. In addition, the first resistance for theindex is the ceiling of the Bollinger Band 22,827 points, the next resistance is theclosing low during early July of 23,516 points.