Market review:

China stocks struggled to rebound with SHA climbed about 0.61%,defended the 2950 line.

The rumors about China Banking Regulatory Commission’s new regulation of financial supervision shocked the market last Wednesday, and now still in drafting. Some gamblers bet on the news title today as new rumors say that the policy of financial capital going into the stock market has not actually been adjusted.

Research Notes:

Money flowed into Real Estate, Public Transportation and Construction sectors the most.Heibei Langfang Development Co.(600149.sh),a real estate developer, rallied to limit-up for Hengda Group,one of the largest developer in China, had bought enough shares to merge with the firm.

For overnight US data generally disappointing and the hope for Fed tightening keeps fading, DXY fell to 2-week low, and sent CNYUSD to 6.64 level. The weakness of USD also encouraged metal, iron ore and coal futures to rally in China market. But grain futures, led by soybean meal and rapeseed meal, declined further with overnight collapse of soybean futures in CME, caused mainly by ideal weather in Midwest. Funds also played long industrial short agriculture strategy. Though SHA around 2950 presented less risk than its 3000 + level, we still suggest investor to play some defense with medicine and precious metal sectors, industrial metals could be an aggressive bet if SHA dip back to sub-2950 line as Gov could use some infrastructure stimulus as it did back in previous low-gear growth stages.