Market is weak.

Current situation is leading our market to be weak. best is to stay away for the time being. Will look for more undervalue counters in the mean time.

US dropped yesterday as S&P Moody’s announced a wave of downgrades on bonds backed by sub-prime mortgages. The dollar also fell to record low vs. Euro as Benny boy spoke on inflation. The start of the earnings season started on the wrong foot as Home depot and Sears issued profit warnings. As previously said the sub-prime impact soon be known somewhere between now and mid next week.

Hong Kong pushed further higher yesterday as banking stocks did better than expected helping the index maintain a 6-day high. However with US facing sub-prime issues and profit warning it’s going to weigh on sentiment, we’ll see them test the 22,600-22,700 point today and then consolidate towards 23,000.

Locally despite better than expected GDP figures we are still affected by US and regional drop. With Fed expected to keep rates unchanged for the next few months, we can only depend on earnings results to hold the market up. However it seems that US results season were worse than expected. It’s also a good excuse for investors to take profit as well as prices and valuation have already reached a high.