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Market review: December 16, 2016

Fang submitted 2016-12-16 16:01:36

Market review:
China stocks stabilized as investors played some bargain hunting around SHA 3100.

Research Notes:
The index rose about 0.17% with money flowed into Plastics, Food and Beverage, and Motorbike sectors the most. Zhejiang Great Southeast Co.(002263),a plastic product manufacturer, rallied to limit-up as the recent cold front brought more demand for its products, such as agriculture film.

The hawkish statement from FOMC still supporting a strong DXY, but we felt that the pressure from profit taking from the dollar could stop the index from rallying further in the near term. CNYUSD kept falling and broke the 6.949 level and heading for 7 again. I expected 7.1 for the mid-term CNY target in 2017.
In commodity market, soybean, wheat and corn led the rally as investors taking agricultures as a safe haven during the recent turmoil after the Fed decision. But most commodities declined as the risk appetite still low for risky assets. Recent week of slump of SHA offered many stocks safer to buy, we are looking into sectors such as ST, environment protection and new energy. Agriculture chemicals and seeding are also the seasonal pick. SHA still got potential to rebound to 3200 level while investors need some time to absorb the shock from Fed.


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