Market review: January 19, 2016

Fang • submitted 2016-01-19 15:31:05

Market review:

The Shanghai Composite Index reclaimed 3000 today and closed at 3,007.74.

Research Notes:

1.NBS data on Tuesday including GDP, Industrial Production, Retail sales, Fixed-asset investment, which pretty came in as expected. But unemployment rate surprisingly hit 5 percent, the highest level since 2003, another convincing reason for gov to go easing further. So the buying is mostly for more stimulus from the gov side.

2.PBOC auctioned 80 billion Yuan of seven-day reserve-repurchase agreements and another 75 billion Yuan of 28-day contracts that will mature after China week-long Spring Festival starting Feb 8th.

Tough whether the stimulus methods would work in year 2016 is a long term question, in the short term the sentiment is leaning to some optimism before the Spring Festival holiday. Money flow keep the pattern for favor of cyclical, we could suggest some profit taking of cyclical stocks during such rally on the hope of stimulus, yet some positions, especially those would benefit from China econ transition, such as consumer consumption and service, could be reserved for the holiday season.

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author: Fang

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