We expect the HSI to trade at 21,200-21,600 today

Battered by a series of positive factors including Fed plans to keep low interest rate for an extended period while S&P maintained the Greece credit rating unchanged, local market opened higher on Wednesday. Shanghai A share market soared in the afternoon and closed above the 3,000 level which helped to boost local market to extend its gain. The Hang Seng Index added 362 points to 21,384. H share index also added 291 points to 12,321 while market turnover rose to HK$65.9bn, reflecting investor more aggressive attitude. US interest rate unchanged, fund flow into rate sensitive HK property sector, market leader SHK properties (0016.HK) rose 4.0%. A share strong performance helped to boost China plays. Of which, gold miner – Zijin (2899.HK) and Real Gold (0246.HK) both rose 5%. On the other hand, A share strong performance also triggered buying interest on brokerage and insurance sector.

Amid the momentum from the Fed to keep low rate for an extended period, together with the lower than expected PPI released on Wednesday, US stock continued to rally but late profit taking pressure has limited the gain. The Dow and the Nasdaq rose 48 points (to 10,717) and 11 points (to 2,389) respectively. Thanks to the lower inventory reported, crude oil price rose 1.5% to US$82.9 per barrel. In view of the recent strength seen in the local market, we expect the local market to maintain its upward trend in the near term. The sustainability of the recent A share rebound would dominate Hong Kong listed China play short term performance. Besides, China Mobile will release its earnings today which will be another market focus.

Technical Analysis

The Hang Seng Index opened higher and finished with a white candlestick, just closing below 100 Day SMA (21,431). Together with blue chips turnover increasing to HK$23.6bn, its buying momentum has been accelerated. 100 Day SMA is still the initial resistance, if overcome, it will test 22,000. On the other hand, 10 Day SMA (21,090) and 20 Day SMA (20,827) is the first and second support.