◆ ‘Offensive’ groups rise, ‘Defensive’ groups set

◆ Market floods with hot money

Abstract of last issue There is only little selling pressure and the market stores huge upward momen-tum. If you have put your every cent into the market, you still have advantage at this stage.

Then….. The inflow of hot money pro-vides enormous support for Hong Kong equity market. This week, HKD has risen to the 7.75 level, the boundary of the pegged trading band. Meanwhile, there is strong buying power on the market constituents. The two major indexes are hence boosted.

MARKET RECAP

Apart from the current in-

flow of fund, the improvement of Mainland economy also benefits the market. The Cen-tral government announced that GDP growth has stopped sliding. Better still, Wen Jiao Bao, the Premier of the State Council of China, predicted that there will be a significant improvement in the economy. Under optimistic atmosphere, market keeps moving up.

Mainland banking sector, the winner of the last week, still leads the market. The top gainers this week are the ce-ment companies and heavy in-

dustries. Their excellent per-formance is due to the GDP improvement and the buy back action of short positions.

What now?

“Our market timing model for both HSI and HSCEI still shows an ‘Uptrend’ signal. There is only little selling pressure. The long term is still in uptrend but one should beware of any short term downtrend which could hurt your position.”

HSCEI keeps outperforming Hang Seng Index

Hang Seng Index keeps rising steadily

4

What is linked exchange rate?

It is a type of exchange rate regime to link the exchange rate of a currency to another. The exchange rate is stabi-lized by an exchange mecha-nism, whereby the Hong Kong Monetary Authority (HKMA) authorizes note-issuing banks to issue new banknotes pro-vided that they deposit an equivalent value of US dollars with the HKMA.

Borizon

Market Update Issue 21 October 2012

This article is intended for any students with interest in the stock market. With 10 years of trading experience, our writer is an investor. He is currently managing 500k of equity.

Joseph Lau

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Issue 21 October 2012

THE TREND

Owing to the expectation on the acceleration of fixed asset invest-ment, the cement and heavy in-dustry have become the top gainer this week. The state-owned cement giants CNBM (03323), An-hui Conch (00914) and China Re-sources Cement (01313) have risen 10%. The heavy industry company Zoomlion (01157) and Lonking Hldgs (03339) have surged near 10%. With a series of good news, improvement in fun-damentals and strong buy back power of short positions, it is ex-pected the long term performance of fixed asset related industries could outperform the other sec-tors.

Sectors that have benefited from the growth of fixed asset invest-ment include cement, heavy in-dustry, real estate, infrastructure, steel. Potential companies include Yuexiu property (00123) and SU-NAC China (01918).

Borizon Ranking

Yuexiu(00123):

SUNAC(01918):

Yuexiu Property (00123) will find support on $2

SUNAC (01918) forms a ‘base on base’ pattern

Heavy industry— Winners of this week

Strongest 5 industries

1) Cement

2) Heavy industry

3) Marine

4) Automobile

5) Media

Weakest 5 industries

1) i-phone related 2) Food industry 3) Insurance 4) Utilities 5) Medical

Market Update This article is intended for any students with interest in the stock market. With 10 years of trading experience, our writer is an investor. He is currently managing 500k of equity.