HSI closed down 35 on China rate cut

HSI opened gap up in the morning. Market cheer on the news of interest rate cut & RRR reduced. The highest we saw was 23423.64 for cash market; futures highest 23415. However, profit taking came in and we started to see decline in HSI.

As we mentioned earlier, the market rebounded almost 3000 points since the first day of October. It is normal for investors to take profit and sellers came in to short sell the market. HSI dropped to lowest at 23036 in the afternoon, closed almost day low @ 23043 (-137) for October futures while cash market closed -35 @ 23116.

We sold half of our holding from Bank Of China, pocket some of the profit and will see how it goes. If the market further rally, we still have half of the holding and other Chinese Bank shares from ICBC and ABC. HSI need to go through correction in order to move higher. If correction come, we'll continue adding our portfolio according to market condition.

Bank Of China

Bank Of China (HK:3988) is one of our favourite Chinese bank shares. Listed in both Shanghai Composite Index and Hang Seng Index, it is one of the top 4 Chinese bank which is aggressively expanding to overseas.

With P/E ratio at 5, it is not only a high dividend bank shares, the price also has the potential to go up. Since BOC HK3988 retraced from 52 weeks high at HK$5.68 in April to 52 weeks low at $3.25 in September; we think the 42% correction presents a buying opportunity. While we might not see a lower price than $3.25 from now, we are happy to hold 3988 for mid to long term.