Market review: June 24, 2016

Fang • submitted 2016-06-24 15:46:25

Market review:

China stocks fell following the selling off of the global market when Brexit became the reality. SHA declined about 1.35% , showed some firmness compared with other major indexes, such as Nikkei and ASI, which mostly fell over 3%, some even touched the fuse-stop level. Some investors believed that Brexit actually could benefit China economy, as UK may place less trade restriction on China export.

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        <strong>Research Notes:</strong>
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        Money outflowed from Petrochemical, Mining and Electronics sectors the most. AVIC Real Estate

(000043.sz) rallied to limit-up as it planned to sell some hotel assets to raise capital.

The Brexit event trigger global risk aversion moves, DXY once broke the 96 level and CNYUSD fell to 6.6, which considered a boost for China export sector. In commodity market, gold and silver led the rally while most commodities fell for risk-off manoeuvre. Brexit could cause some short term selling off of risky assets but it’s still too far from a full-fledged crisis and global central banks would inject liquidity, and more Fed hike delay, to smooth the volatility. So for the short term we suggest investors to own some shares related with gold mining as a pick of risk aversion and some cyclical shares which can benefit from liquidity surge, such as lithium and rare earth producers. The mid-term strategy is still to focus on new energy and food & beverage sectors.

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author: Fang

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