Asia Morning Analytics 120210: All Eyes On Europe

Morning readers,

All eyes on EU last night, as the Greece bail-out plan develops. Not that nice of a day for EU bourse as comments are mixed and lacks clarity, though it may signal the bail-out would occur if it becomes necessary. Euro's decline last night may suggest and reflect two things, one being speculators continue to test the validity of such bail out, and the other being a pricing in of Euro if such bail out occurs.

Though notably, S&P and FTSE ended on a positive note, aided by such increasing credibility of a bail-out plan that helps slowing contamination fears. Moreover, initial jobless claims fell more than expected, pointing to a US recovery story being intact. Such overseas lead boosts sentiments to carry across for Asia.

However, it should be noted that Hang Seng and China will be on its last trading day before CNY holidays, hence, volume should remain relatively low, whilst any movement today will be rather minimal. The critical levels to look for would be the 20,000 mark, and expecting HSI to finish today between 20,200 - 20,500 as the near term range. Anything below 20,000 may signal bearish trend coming back into play.

Again, would reiterate previous buy lists over the couple of days, and the chinese banks should be on the radar at the moment, given yesterday's nice CPI data (+1.5% vs. consensus +2.0%) may provide initial support for a slowdown in tightening cycle from Chinese authorities.

That's about it today, and would like to wish you all a happy CNY.

Happy trading.

ongy out.