Summary:

Weekly Report 2018/9/25

Last week, there was significant increase over the market. SSE Composite Index (000001.SH) changed 4.32 % to 2797.48

As for the overall market valuations, they remain at still low level in a longer historical view.

Credit spread between A-rate corporate bonds and treasury bond almost unchanged. As for the spread between Shibor Rates and Treasury bonds yield, all

terms (1M,6M, IY) of them experienced obvious fluctuations and now there is inverse term structure can be observed. As for treasury bond yield, there was a slightly decrease for short term yield. The interest rates are still at relatively low level.

As for exchange rate, there were slightly appreciation for both inland and offshore rates, that CNY/USD decreased 0.19% (up to 16:30 of last Friday) and CNH/USD decreased 0.47%.

As for foreign fund flows via both Shanghai and Shenzhen-Hong Kong Stock Connect, last week there were both net inflows for Shanghai and Shenzhen markets. The net inflow over last week was 8.18 billion CNY and the cumulative net inflow was 582.81 billion CNY at last Friday, another historical new high. Specifically, more inflow in Shanghai market than Shenzhen market.

In sum, last week, the market showed obvious confidence with continuous foreign fund inflow. With the implementation of another round of tariff, the tax rate is 10%, lower than expected. It can reflect that US does face its internal pressure to push its trade war ahead, so we see there is some extent of discount of the implementation of tariff on 200 billion goods. This may imply that the prospect would not be so harsh.