Market review:

China stocks declined with SHA fell about -1.43%, the largest slide of the year with investors reacted to the weekend financial regulatory conference which emphasized to tighten the regulation .

Research Notes:

Money outflowed from Information Technology, Mechanics, Electronic Devices sectors the most. Invengo Information Technology Co(002161) rallied to limit-up as investors expected the company will benefit from the rise of man-less retail stores as technology provider.

DXY stayed weak around the yearly low level 95.15 as investors believed that Fed will not hike the rates in recent months given the softness of US econ data. CNYUSD strengthened to 6.76 as data showed that Q4 econ performed better than the market expectation. In commodity market, Manganese silicon, Iron Ore, Coking Coal rallied the most as investors bought into the cyclic raw material with the expectation that USD would stay weak and China real estate industry would keep the demand for the industrial commodities high. The impact of the financial regulatory conference should be limited in the short term we believed and we are still positive on the performance of SHA, especially those competitive SOEs, firms produced scarce resource, food and beverage companies which seasonally outperform the market in Q3.Despite the recent setback SHA could keep its pace towards 3300 level yet investors should avoid the still overpriced Growth Enterprise Market which could be depressed for longer term.