070509 Asia Close Wrap

Afternoon all,

Know this wrap is a bit late, but nevertheless, having some wrap is better than not having any!

Anyway, HSI tipped the top today, and got a lot of short sells towards the late session of the day! So, what does that mean? Profit takers are coming into the game, and many are exiting position prior to this stress test that is due overnight tonight.

HSBC was the sole blue chip out there that saved the world, by itself rising up 5%! This contributes to roughly 1% of HSI today! Hey, who said the elephant would fall? JPM actually revalued their target for HSBC to $108, though I'm slightly skeptical over this. However, in fundamental terms, then HSBC is still considered relatively cheap as of today, let alone a month or so back! So near term, I do personally believe it may reach towards 75, but that will be some sense of resistance then.

Nevertheless, around the sectors, many got sold off in afternoon session, with Cheung Kong, Hutchison and Swire all going deep down in the reds in the afternoon. Commodity plays all cooled off from early head start, with Angang finishing down 2%, when was up approximately 2%. Sinopec was also one of the stocks that got heavy profit taking today, while CNOOC tamper off its 3% high down to up 1.66%.

Defensives worked its way back from the reads, with tsingtao leading up 2.74%. The telcos all suffered from extreme profit taking after the 3 days of 5-10% rallies. Unicom down 4.72% while China Mobile ends pretty flat, up 0.61%.

One trade that worth special mentioning was Geely. As per last week, I had calls on Geely, and adviced that the deal talks will emerge from the market, and as of today, this eventuated. Holding thus far, in hindsight, would have obtained +58.89% at a high, and still would yield +44.44% if sticking to my strategy. To me, this trade now is done and settle, too late to enter in. Whoever still has Geely should try and get out of it as soon as possible.

Moving towards ASX, the day ended up 1.82%. ASX. again, to me, seems slightly lagged, as commodity plays did not tamper off from highs, when we expected profit takers to come in, it did not eventuate.Banks were a mix bag, but generally up. Financials, especially the insurance did well. As an expectation, I believe ASX will experience some headwinds tomorrow.

As an overnight play, I believe that the overnight market should have a bearish tone, as people would like to reposition themselves for the upcoming data and certainly would like to bank on some of the hefty profits that are avaliable. It would not be suprising to see much of the industrial metals and crude to drop, while financials may possibly drag on the market. If so, I see defensive plays for tomorrow to be the buyer, and this may spark some retreats in the market.

Aside from that, good luck, and happy trading!

ongy out.