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2015’s Stock Market Chess Play In Session, Where To Go From Here
By: Louis Kent Lee
Articles (199) Profile

It’s not difficult to be caught up in the midst of the run that everyone’s talking about. The stock market, especially in Asia, is heating up. And oh, the key word to that? China.

Investors have complained about not having enough action in the lion city. That is true, to a certain extent when you compare it to the action we are seeing in Hong Kong.

Thankfully, a weekend ago, Shares Investment enlisted the help of renowned experts to address the know-hows and when to, in investing in the Hong Kong market.

Shares Investment Conference 1H15 Expert Takeaways

Howie Lee, Investment Analyst from PhillipCapital kicked off the investment conference with an endorsed focus on the Hong Kong exchange. After all, that was what most participants were there for.

Howie revealed that eyeballs were all on several key hot sectors that will benefit from China’s governmental policy.

That was another key word heard throughout the entire day too, when we talked about approaching the investment concepts in Hong Kong on a value stand point.

Howie explained that as a result of the policies announced by the Chinese government, it is wise to look for investment opportunities within sectors that will be the key beneficiaries.

Specifically, Howie mentioned that his team favours the sectors such as Infrastructure (railways), Banking and Financial Services, and also the Automotive sector.

Howie’s 40 Tick Strategy For The A50 Index

Apart from tackling the investment opportunities on a fundamental stand, Howie also introduced his 40-tick strategy, which was specifically conceived, to work for the China A50 Index.

As Chinese companies are risky for those that are unfamiliar with them, a good way to invest in this Hong Kong China phenomenon is to invest in their A50 index.

It is akin to investing in our Straits Times Index ETF, where the investment is diversified across a wide range of blue chips.

Typically, it was observed that the A50 would normally fluctuate about 100 to 200 basis points, equivalent to 40-80 ticks per day. On high volume days, it can even go up to 100-120 ticks.

The 40-tick strategy is meant to catch just 40 ticks in one single trade. The key concept of this strategy is that depending on the 10-30 minutes chart’s trend, it is not difficult to selectively time the trade and scoop 40-ticks, regardless of whether you are in long or short.

40-ticks profit sums up to some US$100. With a risk tolerance of 2:1, one’s stop loss could be placed at 20-ticks, equating to some US$50. As it is easy for this strategy to see traction, it was recommended that investors should not be overtly greedy and be mindful of how many times they utilise this strategy per month, and stick to their stop loss plan.

Louis Wong Advocates Bullishness On HKEx

Simply put, Louis Wong mentioned in his key speech that he is still unwaverishly bullish on the Shanghai-Hong Kong Stock Connect (SHKSC).

Liquidity, more eyeballs, and a lot of hot money are some of the obvious reasons that followed because of the SHKSC.

Louis is of the view that the bull run we have seen, especially on the Hang Seng Index (HSI), will continue especially in Hong Kong.

As more and more money pours in from the China market into the Hong Kong market in search of discounted values of H-shares against their A-share counterparts, the HSI has been pushed higher and a technical target of 30,000 points looks doable.

In view of the underway preparations of the Shenzhen-Hong Kong Connect Scheme, this adds on to Louis’ bullishness of the Hong Kong market.

A specific stock pick that naturally followed would be the Hong Kong Exchanges & Clearing (HKEx).

Besides reporting boosts in both EBITDA and net profit by more than 30 percent, HKEx’s business plans of linking commodity markets between Hong Kong and Mainland China give investors a wider exposure to stocks from both cities.

His measured price target for HKEx is set at HK$388

Cheap Is Not The Word For Hu Li Yang

Asia’s stock market’s godfather was seen addressing crowd concerns, as usual, on the imminent rise of the interest rates in the United States.

A point to note that Hu Li Yang made, was to watch the US 10-Year Treasury note yield. Once this rises to more than three percent, interest rates metrics will be very likely raised by the Feds.

Hu Li Yang also reminded the audience that as a result of the “money game” which has lasted for a considerable time resulting in money flowing into the bond markets, housing markets and market funds, “long term investment”; per se, might not be that effective as a strategy anymore.

As for an alternative investment consideration to hold, Hu Li Yang expressed that the Renminbi and US dollar are good choices to consider as in the long term, these currencies are bound to appreciate as the US dollar will be boosted by the raised interest rates, while the Renminbi should appreciate accordingly with China’s economic strength continuing to strengthen.

Kevin Gin’s Optimism In China

Optimism resides very strongly within Kevin Gin when it comes to China. For starters, it helps when Kevin has on the ground experience and has personally seen for himself the opportunities that are present in the market.

Kevin reasoned that despite the slowdown that western media continued touting on China’s growth, seven percent growth in gross domestic product, is still a very good figure.

Kevin opined that China’s urbanisation and re-development plan driven by Xi Jinping will open up many sectors at one go.

From real estate, large scale high speed rail in a bid to link up major cities, opportunities from this front is aplenty.

Other notable areas that Kevin mentioned includes energy conservation, environmental protection, information technology, biotechnology, high-end equipment manufacturing, alternative energy, medical and pharmaceutical.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

Please click here for more information about this author.


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