A little thought on the coming week

Last week, the US market closed higher after report that the spending of capital goods were better than expected (or really?). For the beginning of the week, markets in Asia should follow the positive sentiment from last week.

However, the mood here is still very cautious. The fourth straight weekly gain probably indicated that the markets across the globe have risen quite a bit for the recent months. While some of the stocks here in Hong Kong were still doing very well, the overall momentum might be fading. Even though the benchmark HSI has risen for the past few trading days, the index has turned red several times in almost every trading day. Some stocks failed to perform, e.g. Chinese banks (Bank of China 3988.HK, China Construction Bank 939.HK).

Property developers in Hong Kong were some of the big winners, with huge gain in Cheung Kong (1.HK) and Sun Hung Kai properties (16.HK) in particular. Two sites in Hong Kong will be sold by the government in an Land auction on coming Wednesday (29 Sept 2010). The locations of the two sites are probably not the best, and readers should be reminded that Hong Kong government is under tremendous political pressure to curb home prices, thus the mood here is more cautious. The government will announce the policy address on 13 Oct, and curbing measures are expected. As a result, developers are trying to launch more units to the market. For instance, Cheung Kong is launching the Oceanaire, while Sun Hung Kai is launching Valaise.

Although Monday in Asia looks bright, the overall mood is still cautious. Given continuous rise for weeks, readers are reminded that corrections might be imminent. Also, economic data has been mixed recently, and Ben Bernanke also commented that printing more money seemed to have not worked so well. Thus readers should be cautious if any bad data releases would hit the market really hard.

Economic Calendar:
US Consumer Confidence, 28 Sep 2010
Q2 GDP third estimate, 30 Sep 2010
Chicago PMI, 30 Sep 2010
U of Michigan Consumer Sentiment Final reading, 1 Oct 2010
Construction Spending, Auto Sales, 1 Oct 2010

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.