Market Summary:

Last week, there was generally increase over the market. SSE Composite Index (000001.SH) changed 3.09 % to 2679.11. Specifically, small cap shares perform much better than large cap shares and we can observe that CSI500 did much better than SSE50(6.6% vs 1.12%).

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 except for some rise of the short-term spread. As for the spread between Shibor Rates and Treasury bonds yield, longer terms (6M, IY) of them experienced obvious rise and now hold an upward-term structure. As for treasury bond yield, there was some decrease for longer term yields. The interest rates are still at relatively low level.

As for exchange rate, there were divergences between inland and offshore rates, that CNY/USD increased 0.05% (up to 16:30 of last Friday) and CNH/USD decreased 0.38%.

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 7.14 billion CNY and the cumulative net inflow was 616.80 billion CNY at last Friday and creates another historical new high. Specifically, more inflow in Shanghai market than Shenzhen market.

In sum, there is rebound over last week and we see some opportunity for small cap shares. During last week, the M2 was released and it is just 8.0%, indicating weak monetary situation, as the expectation was 8.4% and there is an obvious gab to catch expectation. This indicating lower than expected economy activity and thus inhabit growth. We would have some detail talk about this in this week’s macro economy topic.

News:

(1)China Securities Net: according to statistics, the cumulative net capital inflow through stock connect programs since this year is 264.7 billion yuan, the highest level since the opening of Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect. Various signs show that, with the release of good policies and the gradual clarity of "policy bottom + low valuation" in the market, more and more incremental funds are beginning to "covet" A shares.

(2)Wind: next week, there is no maturity funds in the open market of the central bank. The "silent period" of this round of counter-repurchase has lasted for 16 trading days. Analysts believe that monetary policy will remain loose and the benchmark reduction will continue, but the overall rate cut probability is very low

(3)Xinhua News Agency: speaking at the 26th APEC Leaders' Informal Meeting, Xi Jinping said that trade and investment liberalization and facilitation should be continuously promoted; China's economic contribution to world economic growth has been maintained at over 30%, while accelerating the transition from high-speed growth to high-quality development; this year, consumption is increasing China's economic growth. The contribution to China's economy will reach 78%, and the overall trend of China's long-term economic stability will continue.

(4)The Shanghai Stock Exchange formally promulgates new regulations on major illegal compulsory delisting, specifying four major illegal delisting situations, namely fraudulent issuance in initial listing, fraudulent issuance of reorganized listing, avoidance of delisting by falsifying annual reports and other situations identified by exchanges; for companies that enter delisting procedures due to major illegal compulsory delisting. It will not be allowed to resume listing for such violation, to avoid unnecessary repetition of delisting process, trigger speculation in the market, and add major illegal and compulsory delisting cases of public safety to respond to social expectations.

(5)Shenzhen Stock Exchange promulgated "Measures for Implementing Major Illegal and Compulsory Delisting of Listed Companies" and revised relevant rules: the suspension period of major illegal delisting will be shortened from 12 months to 6 months; after major illegal companies are suspended from listing, they will no longer consider the situation of company rectification and compensation, and will be terminated directly after the expiration of 6 months. Listing shall not be resumed; other major illegal delisting companies except fraudulent issuance shall apply for re-listing with the time interval extended from one year to five years; companies delisting from fraudulent issuance shall not be re-listed.

Copyright by fangquant.com