HSI outperformed regionally
The HSI gained 2.6% last week, reversing all the losses that the HK benchmark suffered during the first trading week of August. Closing at 24,955 on last Friday, the HSI is currently trading 5.1% above its 50-day moving average of 23,743, marking its record high of 25,010 last Friday afternoon. This week the economic data is likely to drive market direction.
 
Economic data from China
China will be announcing some important economic data this week, including the HSBC China manufacturing Purchasing Manager Index (PMI) on Thursday (21 August).  HSI traders will be interested in the Chinese PMI result which may give an indication of where the HSI and China A50 index is heading in the coming days. Bloomberg’s survey of 4 economists estimated the manufacturing PMI figure at 51.6, indicating an expansion in the Chinese manufacturing activity.
 
The manufacturing PMI measures the robustness of the manufacturing activity in an economy. A PMI reading above 50.0 indicates expansion in the manufacturing activity while a reading below 50.0 indicates contraction.
 
Local benchmark edged higher
The STI finished 0.8% higher last week, with the bulk of its gains coming on Friday. Among index constituents, Jardine Matheson and Hong Kong Land outperformed, contributing to more than 35% of the index’s gains. On the flip side, DBS and ComfortDelGro were the biggest laggard, after pulling back 0.6% and 3.1% respectively.
 
Finishing at 3,314.77 last Friday, the Singapore benchmark is currently trading 0.5% higher than its 50-day moving average.
 
Sharp rebound seen in Nikkei
The Nikkei 225 has seen a rough start to the first trading week of August, tumbling more than 4.8% as investor sentiment was affected by a stronger yen and escalating tension in Ukraine and Iraq. Last week, the Nikkei 225 rebound strongly after a report that the nation’s pension fund freed itself to buy more domestic equities, according to a report on Bloomberg.
 
For the week, the Nikkei 225 rebounded approximately 3.7% to finish at 15,318.34 by the closing bell on Friday. However, the Nikkei 225 is still down 1.9% for the month.
 
Macquarie warrants on equity indices
Macquarie has listed the following warrants over regional indices. Bullish investors may consider the call warrants while bearish investors may consider the put warrants, which gain value when the underlying index declines.
 
Economic data to look out for this week:
Mon 18 Aug: China property prices (July), China foreign direct investment, China August business indicator, Eurozone trade balance
Tue 19 Aug: Japan leading index, US CPI, US housing starts
Wed 20 Aug: Germany PPI, US Fed release FOMC meeting minutes
Thu 21 Aug: HSBC China manufacturing PMI, Japan manufacturing PMI, Eurozone manufacturing PMI, US initial jobless claims

Source: Macquarie Research - 18 Aug 2014