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Market review: February 04, 2016

Fang submitted 2016-02-04 15:31:05

Market review:

China stock market rallied on stimulus hope before the CNY (China New Year) holiday, closed at 2781.02.

Research Notes:

  1. Nonferrous Metal, Power Generation and Food sectors got most money flowed in.  Huludao Zinc Industry led the rally in metal miners as zinc futures rose 4.35% in SHFE, probably for short-covering before the vacation. 

More investors started to believe China gov will resort to the old way of economy stimulus, aka, boosting real estate industry, as other methods had not worked well so far to turn around the bleak expectation of  GDP growth.  The speculation, in our opinion, is proper in the short term with some short squeeze in the commodity futures market, rather than big money really wants to bet on new 4-trillion plan,so could be risky in a longer term perspective.

We maintain our recommendation to stay away from the cyclical sectors, such as mining and steel producing. While there's always new china to invest in, some sectors such as fintech, biotech could be quite charming.

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