External risk from US  lConsumer confidence continues to decline l  Decline in house prices is likely to continue in US and the subprime crisis may     further trim earnings of those investment banks l  Market concern over the bankrupt of Freddie Mac and Fannie Mae, the two largest     mortgage finance lenders of US, may further weaken the investors’ confidence. l Continued weakening US dollar will support the international crude oil prices at a    high level, exerting negative impacts on companies’ earnings.   Impact of high inflation – earnings down   Power, petrochemical and aviation sectors have been negatively affected by high inflation driven by rising crude oil prices. On the other hand, coal and nonferrous are the major gainers. In addition, consumer sector still maintain a robust earnings growth due to its sound immunity to inflation. Telecom sector is less sensitive to inflation, thus we regard it as relatively defensive plays.