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Market review: October 11, 2016

Fang submitted 2016-10-18 09:10:23

China stocks rallied for the second day as investors continued to price for property curb. SHA climbed about 0.56% with money flowed into Telecommunication, Real Estate and Finance sectors the most. China Unicom rallied to limit-up as it released plan to attract private shareholders as part of the SOE reform. DXY broke the 97.2 level as Fed official reassured that Dec should be the month for rate hike. CNYUSD fell to the lowest level since 2010 as PBOC continued to inject liquidity to ease the tightness in the inter bank market. Also investors eyed on the new monetary data to be released this week, worrying more capital outflow. In commodity market, steel, iron ore and coal led the rally as investors believed the cut of production would outnumbered the decline of the demand, especially for coal, which forced gov to encourage some recommence of production of some mines that previously shut for the the supply-side reform. The strength of commodity derivatives is also attributed to the money reallocation from property to financial assets. We believed that smart household electronic devices, SOE reform and new energy should be the sector picks for Q4, yet investors should take profit when SHA approaching 3100 which set as our mid-term target before a possible Fed rate hike by the end of year 2016.

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