◆ Indices keep climbing

◆ Automobiles sector led the market

“If you are a risk

taker, it’s time to put

your every cent into

the stock market.”

By Joseph Lau

MARKET RECAP

After the holiday, Hong

Kong’s equity market kept climbing due to the steady up-ward trend of the US stock market. The Mainland mar-kets will open on the coming Monday. It is expected that stimulating policies will be re-leased in the coming weeks. Market atmosphere will keep improving.

What now?

Two weeks ago, index con-stituents’ performance im-proved but the situation is now changing. Individual stocks are going to lead the market. Industries like gold mining, communication and automobiles showed a strong move. As market focus is switching to small cap stocks, investors should immediately adopt relevant plans to ride on the wave and maximize their profit.

Our market timing model for both HSI and HSCEI shows an

‘Uptrend’ signal. The trend of individual stocks and the mar-ket is now consistent. The chance of advent of a brand new bull market is reaching to 80%. A smart investors should try his very best to find out the leading sectors and build position on the strongest stocks. If you are a risk taker, it is time to put your every cents into the market since the winning probability and expected return are continu-ously increasing.

HSCEI outperforms Hang Seng Index

Hang Seng Index keeps breaking new highs

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What is expected return?

Expected return is a measure of the relative balance of win or loss weighted by their chances of occurring. For example, if a fair die is thrown and numbers 1 and 2 win $1, but 3 to 6 lose $0.5, then the expected gain per throw is E(R) = 1/3 × 1 - 2/3 × 0.5 = 0

Borizon

Market Update Issue 7 October 2012

This article is intended for any students with interest in stock market. With 9 years of trading experience, our writer is an investor. He is currently managing 500k of equity.

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Issue 7 October 2012

INDUSTRY COMPARISONS

Currently, the automobile, paper-making and communication sec-tors are leading. The strongest company in the automobile sec-tor is Brilliance China (01114), the manufacturer of BMW in China. Its sales increased unex-pectedly in September 2012. This great news immediately stimu-lated the stock price and led to the uptrend of the sector. Geely Automobiles (00175) surged 20% within a month. Great Wall Motor (02333), the major SUV manufac-turer, even made a historical high.

The paper manufacturer bene-fited from the rise of product price. Lee&Man Paper(02314) and Nine Dragon Paper(02689) rose about 20% within one week. Investors should observe the change of fundamentals. The com-munication industry kept sky-rocketing. COMBA (02342), China Wireless (02369) and TCL Comm. (02618) continued their strong move and surged 15% more these two weeks. Investors should wait for the consolidation and consider to take action in the next break-out.

Brilliance China (01114) led the industry

Great Wall Motor (02333) broke new high

Automobiles— Winners of this week

Strongest 5 industries

1) Automobiles

2) Papermaking

3) Communication

4) Mainland securities

5) Gold mining

Weakest 5 industries 1) Luxury 2) Cosmetic 3) i-phone related 4) Gamble

5) Utilities

Market Update