Market review:

China stocks rebounded after the yesterday selling off, with PMI data beat the expectation.

Research notice:

SHA climbed about 0.72% with money flowed into Real Estate, Ship Building and Steel sectors the most. China Unicom (600050) rallied to limit-up as investors believed that this company may be chosen as one example of SOE PPP reform, despite its poor profit report this year.

DXY fell overnight but still hold the 101 line with CNYUSD also resumed falling to 6.89 level. Shibor went on rising with the selling off of bonds continued. Some investors believed that gov would not hurry to curb the current tightness of money suppy to support the exchange rate of RMB and fight off the 1:7 expectation. While the recent tighten up of the bank account regulation had driven some investors to reduce their RMB assets. In commodity market, hot rolled coils, iron ore and rebar led the rally as investors felt that the slump in previous session ‘s overdone and the supply cut policy would support prices of those raw materials further. As SZ-HK connection‘s about to initiate, money positioned into big caps, SOE reform and telecommunication sector which could benefit from the updating of the 5G communication the next year. But we doubt that SHA could advance further above 3300 before the FOMC meeting, unless PBOC could ease the money supply further, which generally happen after the spring festival.