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Financial Index Weekly Report 2018/12/03

Fang submitted 2018-12-03 11:26:24

Market Summary:

Last week, there was generally increase over the market. SSE Composite Index (000001.SH) changed 0.34 % to 2588.19. Specifically, large cap shares perform better than small cap shares and we can observe that SSE50 did much better than CSI500(1.20% vs 0.04%).

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, after longer terms (6M, IY) of them experiencing obvious rise, they now hold an upward-term structure. As for treasury bond yield, they almost keep the term- structure of the previous Friday. The interest rates are still at relatively low level.

As for exchange rate, there were some depreciation for both inland and offshore rates that CNY/USD increased 0.02% (up to 16:30 of last Friday) and CNH/USD decreased 0.10%.

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 10.99 billion CNY and the cumulative net inflow was 625.59 billion CNY at last Friday, and reached another historical new high. Specifically, more fund inflow in Shanghai market than Shenzhen market.

In sum, the market experienced some rebound. However, during this weekend, in G20, China and US reached agreement about current trade conflicts, (the details are presented in the News). Then, this consensus should bring great confidence about the prospect of economic condition and therefore bring confidence in market. Further rebound of the general market is expected.


News:

(1) The Thirteenth Summit of the Leaders of the G20 adopted the Declaration of the Buenos Aires Summit of the Leaders of the G20, emphasizing that international trade and investment are important engines of growth, innovation, employment and development, and supporting the necessary reforms of the WTO to enhance its operational effectiveness. The declaration stresses that all parties support the contribution of the multilateral trading system to achieving growth, innovation, employment and development goals, and will assess the progress of WTO reform at the next summit.

(2) Xinhua News Agency reported that on the evening of December 1, local time, Chinese President Xi Jinping met with US President Trump in Buenos Aires, Argentina. After the meeting, the heads of the Chinese economic and trade team said that the two heads of state discussed the China-US economic and trade issues and reached consensus. The two heads of state spoke positively of the recent positive and effective consultations between the economic and trade teams of the two countries. The two sides believe that sound and stable China-US economic and trade relations are in the common interests of both countries and the world. The two sides decided to stop upgrading tariffs and other trade restrictions, including not raising existing tariff rates against each other, and not imposing new tariff measures on other commodities. The two sides agreed to immediately address their concerns in the spirit of mutual respect, equality and mutual benefit. In accordance with the requirements of the Nineteenth Congress of the Communist Party of China, China will take further measures to deepen reform and expand opening up. In this process, some economic and trade issues of concern to the United States will be resolved. At the same time, the United States will actively address the economic and trade issues of concern to China. The two heads of state instructed the economic and trade teams of the two sides to intensify consultations, reach an agreement, cancel the tariffs imposed since this year, and promote bilateral economic and trade relations to return to normal track as soon as possible, so as to achieve a win-win situation.

Wang Yi said that the two heads of state had conducted two and a half hours of in-depth exchanges in a friendly and frank atmosphere, far exceeding the scheduled time. The meeting was very successful and reached important consensus, pointing out the direction for China-US relations in the coming period.

(3) Liu Shaotong, Deputy General Manager of Shanghai Stock Exchange: At present, under the guidance of the CSRC, according to the relevant laws and regulations, the Shanghai Stock Exchange is studying and drafting the relevant programs, business rules, and supporting systems of the registration system for the Kechuang Borad, developing the corresponding technical rules, and speeding up the work, so as to ensure the positive and stable implementation. The registration system has been studied for a long time in China. We should learn from the experience of the international capital market and combine the actual situation of our country to try and explore the pilot registration system to form a relatively clear listing standard and time expectation, so that the market can play a decisive role in the allocation of resources.


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