INVESTMENT DAILY

The Hang Seng Index is expected to trade at 19,500 to 20,000today

    Hong Kong stocks rebounded on Wednesday, it once rose over 500 points in themorning. However, Hong Kong equities was negatively affected by the China stockmarket, eventually closing below 20,000-level. The Hang Seng Index closed at19,934 points, increasing 223 points. HSCEI closed at 8,494 points, gaining 55points. Turnover for the whole day was $77.4 billion. China Unicom (762) andChina Telecom (728) signed cooperation agreement, both stocks rose 3.8% and 4.8%respectively. Brokers sector was weak before the market closed, GF Sec (1776) andHTSC (6886) dropped 2.7% and 1.8%.

    US stock market continued its rebound on Wednesday early session. However,crude oil price decline again triggered selling pressure on the US stock market. Ofwhich, consumer-discretionary and health-care stocks suffered the most. The Dowand the Nasdaq closed 365 points (to 16,151) and 160 points (to 4,526) lowerrespectively. On the other hand, fund continued flow to US treasury market, 10 YearUS Treasury Yield dropped to 2.09%.

    Offshore RMB exchange rate and interbank rate stabilized, helped HK stock marketonce rose sharply. However, Shanghai Composite Index fell below 3,000, investorsconfidence turned weak, HK stock narrowed its gain. We expect investors focus willstill on RMB and A share future movement.

    Technical Analysis

    Hang Seng Index slightly rebounded, and it presently is located above the bottom ofBollinger Band 19,858 points. Although the index 14-day RSI is around 27 which isclassified oversold, MACD bearish gap keeps widening, hence it’s too early toconclude that the index becomes stable. The first support of the index is 19,430points happened in mid-2013, and the next support is 18,700 points. Furthermore,the first resistance is 20,320 points, and the next resistance is the middle of theBollinger Band 21,297 points.