Market review:

Rally of China stocks stopped with SHA declined about 0.55%. Investors taking profit with a missed- expectation CPI and many macro data scheduled to be released on Monday, including Industrial Production, Retail Sales and New Loan.

Research Notes:

Money flowed out of Software Development, Real Estate and Industrial Equipment sectors the most. Shanxi Sanwei Group(000755.sz), a manufacturer of organic chemicals, rallied to limit-up as the shares are acquired by Shanxi Road and Bridge Group as part of a restructure plan.

DXY overnight showed sign of stabilization despite ECB held off a new round of QE.CNYUSD got another round of selling-off with PBOC injected liquidity through rev-repo and market sentiment damped with macro data. In commodity market, manganese alloy, palm oil and soybean oil rallied to limit-up as production lower than expected and consumers in China busy storing more veg oils for the holiday season. NDRC released a plan to curb the rally of coals also encouraged speculative funds to run out of the previous market leaders. As the next week would be filled with China macro readings and position reduction before holiday, the market could be volatile and risky for most investors. Yet we thought that any abrupt dip of SHA toward 3000 could be a buying opportunity into Green China sectors and mid-size firms which would benefit from SOE reform, but investors should always adjust their exposure with Fed meeting incoming in mind.

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