The HKEx reminded brokers that the FTSE Xinhua China 25 Index will be rebalanced on 21 July. The related trading activities may start as early as next Friday as the rebalancing of the FTSE Xinhua China 25 Index will be effective the following Monday. Be prepared to see huge fluctuations during next Friday’s closing auction session.
In a down market, funds will first sell the stocks they don't want to keep or where they need to trim their holdings. Then they will look to buy into those that they want for their portfolios or add to their holdings. This is because they are not worried that the market will run away from them, and in fact would expect the market to retreat on their selling.
In a rising market, they take the opposite tactic by first buying the stocks they want and then selling the ones they don't want to keep.
Since we are in a down market, I would expect that they will sell first and buy in later. Keep this strategy in mind for your own trading.
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