Market review:
China stocks fell on CSRC criticism on recent insurance companies buying and trial on Xu Xiang, one of the most prominent stock investors in China.

Research Notes:
SHA dropped about 1.7%, the biggest slump since September, with money outflowed from Finance, Construction and Real Estate sectors the most. Gansu Shangfeng Cement Co.(000672) rallied to limit-up, for the third day in a row as investors believed that the company may benefit some capital injection and gov’s support for the One Belt One Road plan.
DXY stayed firm at 100.8 with Italia constitution vote result nailed down the Euro. CNYUSD declined again as investors are preparing to use more foreign exchange quota as new year approach and new quota to be issued, despite Shibor rates, especially those longer terms stay high. In commodity market, Methanol, PP and Plastic led the rally, with methanol reached the limit-up as new round of cold front would sweep China in the recent week and crude oil goes on rally with OPEC decision of cut some output. As Chair of CSRC blamed the aggressive buying of some big cap shares from insurance money as kind of crime, this unexpected statement sent money rolling out of stock market and rush into commodity market to avoid further volatility from equity. Yet in our opinion CSRC won’t change the fundamental much and as the stocks dip the regulator has to placate those insurance companies, sectors such as new energy, one belt one road and electronic cars could be the bargain if SHA sink further into the 3150 ~ 3200 region.