Market review:

China stocks rallied on better than expected trade balance data with SHA rose about 0.93%, the biggest climb since July 26th.

Research Notes:

Money flowed into Aviation, Coal and Software Development sectors the most. Hunan Hualing Steel Co(000932.sz). rallied to limit-up as it had released an aggressive plan to transform into a new energy power generator.

Though the trade balance summed to 48.11-billion USD, is better than the 47.3-billion expected, both import and export scored negative growth and signaled that some domestic stimulus plan ‘s needed to support the overall GDP growth. DXY resumed to climb with better than expected job data last Friday and it pressured CNYUSD to two-week low. As PBOC made a statement last Friday that it would refrained from more easy monetary policy for the midterm, speculators mostly believe that infrastructure building could be the resort of growth stimulus which offered some support for commodity market, especially for those industrial materials. Coal, rebar and iron ore led the commodity rally with over 4% rise. We believed that the rally of these commodities could go on for about one month with G20 conference in September may require to shut down more steel producing facilities. Yet SHA over 3000 presented a good opportunity to unload some cyclical shares, such as coal and other metal producers into the rally, even to reduce some defensive sectors exposure as well.

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