Weekly Review

HSI Weekly Movement	Weekly Market Statistics

Review & Outlook of Market Performance

The HSI experienced wild swing this week, having reached its record high of 18,301 on Tuesday and went down to test 17,100-point on Friday. Such degree of volatility was triggered by weakness in the US markets (especially the NASDAQ) coupled with the expiry of March index futures on Thursday. The market soared 2.86% on Monday to close at above 18,000 level on temporarily relieve in rate pressure following an increase announced last Friday. Gains were concentrated on a few big cap stocks such as China Telecom, C&W HKT and Hutchison. The index managed to climb to its all-time high on Tuesday on futures-led buying. Turnover was relatively thin. Sentiment soon turned sour on the back of heavy losses suffered in the US markets. Tech stocks experienced further correction under the influence of US tech counters. NASDAQ lost 7.86% this week (or 11.7% since its record high hit on 10 March) as investors continued to underweight tech counters and chased after blue chip laggards. Sentiment on these tech counters was further rocked by profit warning from Japanese Internet powerhouse Hikari Tsushin and continual sell down in Internet-related counters worldwide over their excessive over-valuation and the growing uncertainty of their earnings prospects. The closure of Tiger hedge fund caused little jitters to the market despite the hedge fund was said to be holding stakes in several local companies. On the IPO front, there are not less than five companies that are planning to raise funds from the market. Responses for these IPOs were mixed and interests were tilted towards companies with Internet-related themes.

The market outlook for the near term would remain volatile. Trading direction next week will largely depend on external market conditions. Investors would focus on the upcoming release of US leading indicators and the unemployment data next week. We believe the HSI has established firm support at 17,000 - 17,100 point level unless there is major retreat in the US markets, in particular tech stocks on concerns of their stretched valuations. We believe the market to consolidate at current level before testing higher ground.

HSI

• The weighting of CITIC Pacific [0267] increased to 2.61% from 2.36% after its parent, CITIC Beijing, had sold 20 million CITIC Pacific shares to an independent third party. The buyer is said to be Lucent Technologies, according to a newspaper report.

　

• The weighting of Dao Heng Bank Group [0223] rose to 0.62% from 0.55% after the bank announced better-than-expected results last Friday.

　

• Henderson Land Dev.’s [0012] weighting edged to 1.64% from 1.49% after the company posted a four-fold increase in bottomline on the back of lower provisions on properties.

HSCCI

• CITIC Ka Wah Bank’s [0183] weighting rose to 2.60% from 2.33% as the stock staged a technical rebound after stock price hit its lowest level in nearly 12 months.

　

• The weighting of CNAC [1110] rose to 1.42% from 1.26% following the company’s announcement of a turnaround in net profit to $212 million last year, from a net loss of $5.9 million in 1998, on lower deficit in investment properties.

　

• Shum Yip’s [0604] weighting increased from 0.87% to 1.09% after its recent inclusion in the MSCI China Free Index.

　

• Continental Mariner Investment’s [0119] weighting increased from 0.5% to 0.61% on news the company had paid 12.2 million yuan to its parent, China Poly Group, for a 49% stake in a DVD manufacturer.

HSCE

• Beijing Datang’s [0991] weighting dropped to 4.18% from 4.73% despite there were no negative news this week.

　

• The weighting of Nanjing Panda [0553] jumped to 2.61% from 1.8% on speculations that the company might seek further cooperation with Ericssion in the mainland.

Disclaimant

This report has been prepared solely for information purposes and we are not soliciting any action based upon it. Neither this document nor its contents shall be constructed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. The information is based upon information which we consider reliable, but accuracy or completeness is not guaranteed. Opinions expressed herein are subject to change without notice. East Asia Securities Company Limited and other associated with it may have positions in the securities of the company or companies mentioned herein