Market review:

China stocks continued to climb, for the third day in a row with SHA broke the 3200 ceiling.

Research Notes:

The index rose about 0.45% after a very volatile trading day with money flowed into Coal Mining, Construction Machinery and Harbor Construction sectors the most. Ningbo Haitian Precision Machinery Co.,(601882) rallied to limit-up as investors chasing this newly listed firm for its advantage in robotic manufacturing technology.

DXY spiked overnight as investors actually considered that the construction plan from Trump would benefit US economy and he showed no intention to interfere the Fed operation, at least for now. CNYUSD collapsed with very strong dollar as more investors trying to price the 1:7 level. In commodity market, the strongs stayed strong as coals and iron ore led the rally while bitumen, agricultures, silver and PTA slumped to limit-down as CSRC warning the investors not to push up the leverage in raw materials, the similar waring we heard in 2015 before SHA collapsed from the 5000 peak. As market priced out the Trump shock, we considered it’s proper to hold current exposure to mining and construction sectors as President Trump unfolding his grand plan on infrastructure build-up, which could bring SHA up to 3300+ in our optimistic scenario. Fed rate hike is still a risk factor yet we thought it’s been mostly priced in.

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