◆ Chinese banking sector shines

◆ Indexes has risen 4 weeks in a row

Abstract of last issue It is expected that stimulating policies will be released in the coming weeks. Market atmos-phere will keep improving.

Then….. China Central Huijin, owned by the Chinese central govern-ment, increases stake in the largest four mainland banks. ICBC (01398), CCB (00939), BOC (03988), ABC (01288), rise 5%-10% with huge vol-ume. As the four giants are the major index constituents, their current uptrend sup-ports both Hang Seng index and China Enterprises Index.

MARKET RECAP

Although the market of the

western countries are cur-rently consolidating, Hong Kong’s equity market keeps making new highs due to the infinite purchasing power of the Chinese central govern-ment. Apart from the stake in-crease of the banking sector, other state-owned industries also have benefited from the share purchase scheme of their parent company. It is ex-pected that the actions of the Chinese government will be the main catalyst of a consis-tent market uptrend. The mar-ket outlook for the future two months is still optimistic.

What now?

Our market timing model for both HSI and HSCEI still shows an ‘Uptrend’ signal. Technically, there is only little selling pressure and the mar-ket stores huge upward mo-mentum. If you have put your every cent into the market, you still have advantage in this stage.

“May the force of the Chinese

central government be with you

always.” by Joseph Lau

HSCEI outperforms Hang Seng Index

Hang Seng Index keeps breaking new highs

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What is China Central Huijin?

It is a wholly owned subsidi-ary of China Investment Cor-poration with its own Board of Directors and Board of Su-pervisors. Its purpose is to create an organizational structure by which the PRC government can operate as a shareholder for the large "big four" state-owned banks.

Borizon

Market Update Issue 14 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.

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Issue 14 October 2012

THE TREND

Benefiting from the increase in railway investment by the Chi-nese government, the railway and infrastructure groups have imme-diately surge. CSR(01766), the biggest locomotive and passenger carriages manufacturer, rose 15% in a week. Its subsidiary CSR Times Electric (03898) rose 10%. The state-owned infrastructure giants CRC(01186) and CRG(00390) also performed well. Technical analysis shows that they do have potential.

The two companies are the larg-est infrastructure firms in China. In the charts, they break the ‘Cup with handle’ pattern on the same day, confirming an uptrend each other. If a stock with fine funda-mentals shows a strong breakout on technical charts, the winning probability is high, but one must remember to set a stop-loss price on every trade because there are always chances of losing.

Borizon Ranking

CRC(01186):

CRG(00390):

China Railway Construction (01186)

China Railway Group (00390)

State owned— Winners of this week

Strongest 5 industries

1) Infrastructure

2) Mainland Banking

3) Petroleum

4) Marine

5) Insurance

Weakest 5 industries 1) Local retail 2) Communication 3) Alcohol 4) Electricity 5) New materials

Market Update