Market review:

China stocks declined for another day with SHA fell about 0.57%.Investors dumped more positions on some rumors on some insurance funds will exit equity market, until China Insurance Regulation clarified that no such plan to exit fund, at least in the short term.

Research Notes:

Money outflowed from Real Estate, Electronics and Construction sectors for the second day. Fangda Jinhua Chemical Technology Co.(000818.sz), an alkali products producer, in Liaoning Province rallied to limit-up as investors betting on that the Gov will release plan to boost economy in Northeastern China which facing strong head wind. And some shocking loss reports from major petrochemical giants in China also damped the mood of investors.

Overnight US econ data showed mixed signal but Fed officials continued to offer hawkish talk on rates. Yet DXY ended in sideways around 94.6 level. CNYUSD weakened as investors worried about more setback of the equity and other risky assets. In commodity market, Silicon Manganese, Ferrosilicon and Rapeseed meal led the rally as exchange reset some delivery fee for two ferroalloy. And report on crop loss from Canada support price of rapeseed meal. We believe the market could stay weak before Jackson Hole Symposium, despite the chance for rate raise is still low in our estimation, not only for September, but also for the rest time of year. And any dip before the Yellen speech, better with ones that bring SHA back to sub-3000 level could offer some buying opportunities in new energy, electronic car and smart electronic device sectors which we considered as where the growth come from.

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