Market Summary:

Last week, there was generally decrease over the market. SSE Composite Index (000001.SH) changed -2.17 % to 2550.47. However, we can observe divergent performance between large and small cap shares that large cap shares perform better. CSI500 index changed -3.51 % while SSE50 Index slightly increased 0.09 %.

As for the overall market valuations, they remain at 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 little fluctuations but the inverse shape is changed as short-term rate decreased. As for treasury bond yield, there was a slightly increase for short term yield. The interest rates are still at relatively low level.

As for exchange rate, there were depreciation for both inland and offshore rates, that CNY/USD increased 0.13% (up to 16:30 of last Friday) and CNH/USD increased 0.19%.

As for foreign fund flows via both Shanghai and Shenzhen-Hong Kong Stock Connect, last week there were both net intflows for Shanghai and Shenzhen markets. The net inflow over last week was 25.84 billion CNY and the cumulative net inflow was 574.82 billion CNY at last Friday. Specifically, more inflow in Shenzhen market than Shanghai market.

In sum, market just created another historical new low and SSE Composite index just break new low and touched below 2500. A phenomena of lack of confidence.

News:

As of October 18, China Securities Regulatory Commission (CSRC) has accepted 271 enterprises that issue and issue depositary receipts, of which 30 have passed the meeting and 241 have not. 224 enterprises that normally fail to be heard in the enterprise have not been passed, and 17 enterprises have been discontinued. It is worth mentioning that since October, 17 enterprises have terminated the IPO review. Up to now, the number of enterprises terminating censorship has reached 187 this year.

Huang Qifan, former mayor of Chongqing and former vice chairman of the Finance and Economic Committee of the National People's Congress, attended the Fudan Chief Economist Forum in 2018 and said that one of the most important achievements of China's 40 years of reform and opening up was the emergence of capital markets. He pointed out that the capital market should be the barometer of the national economy, which has not been achieved; the input-output function, the capital market is lack of investment returns; to optimize the allocation of resources, the capital market to start again, is to start again against the problems of the capital market; delisting system is not in place then registration system will never arrive. At present, only India and China are still levying shares on major stock exchanges in the world, which is very unfavorable for China to open its market and participate in global equity capital competition, he said. It is suggested that stamp duty be abolished so as to reduce transaction costs and encourage capital market to enhance vitality and healthy development.

The State Council's Financial Stability and Development Commission held a special meeting on preventing and defusing financial risks, stressing that the five policies announced on October 19, namely, stabilizing the market, perfecting the basic market system, encouraging long-term capital to enter the market, promoting the reform of state-owned enterprises and the development of private enterprises, and expanding the opening up, should be implemented quickly and firmly. For enterprises that have temporarily encountered difficulties in operation, but have a market for their products, a bright future for their projects, and a competitive technology market, they should not be stopped lending blindly, suppressed lending, withdrawn loans or cut off loans.