Friday, 26 June 2009 (Mid-day Post)

Summary
Hang Seng Index 18,487.65 (Change: +212.62/1.163%)
Range: 18,360.71 - 18,519.69
Turnover HKD32.82B

Hang Seng Index
Why does turnover continue to shrink day-over-day? Especially with so much capital coming into the market? Those questions keeps bothering me. And because of those nagging issues, I still don't see HSI jumping massively, rather I see it go up and down and up and down in the near run.

But having said that, things are definitely looking good at the moment. Today head of HKMA, Joseph Yam again said that they will be injecting more funds into their reserve to maintain the USD peg. That's two consecutive days in a row now, and hence capital continues to keep liquidity in the market. But how long can this persist? How about this, I believe we can still see positive upside until around July 3-5, when the super hyped and 420x oversubscribed IPO Ba Wang comes onto the market. Like Jackie Chan in his ridiculous commercials comments, trading activity should "ba-huang huang" and soar in secondary trading. Also with the release of so much capital that frozen-up, the following few days should also drift nicely.

Yesterday the US finally closed up, catching up with world indices after four days of dropping. Ironically, negative news on unemployment and decline in GDP was overlooked, and doesn't seem to be having an impact on Asia either. Neither did the news out of UK that British Banks will still be experiencing some trouble in the coming months. But evidiently, HSBC is getting some selling pressue at HK$65, down HK$0.85 (-1.29%).

For the third consecutive day, HSI has gone up above 20-day average, gaining everything that was lost last week. As I mentioned in my earlier blogs, HSI should continue to close up above 18,000, and prior to end of June as managers close their 2H books.

China Construction Bank (0939.HK)
Closing at HK$6.10, CCB has gone up far beyond my expected HK$6.00. News today that loans in June may have surpassed initial expectations brings positive optimism again. Perhaps this will be my first time I am starting to get concerned. Although long-term wise (over the next year), I still see CCB HK$6.70+, in the near-term (over the next month), growth should be limited (possibly only another ~1-2%) before a mild correction.

GOME Electrical Appliances (0493.HK)
Closing at HK$1.90, it's gone down quite a bit from it's high of HK$2.32 a couple of days ago. I don't see it jumping substantially in the short-term, but to hover around HK$1.80-1.99. I still remain very optimistic though, seeing its price to rise as high as HK$2.50 over the next year. If you think about it, at HK$1.90 you're really paying for HK$1.71 a share after subscribing to new shares (Remember: every 100 shares has the right to buy 18 new shares at HK$0.64). A price appreciation to HK$2.00 is a good 17% gain, HK$2.50 an even better gain of 46.2%.