Market Summary:

Last week, there was generally increase over the market. SSE Composite Index (000001.SH) changed 1.55 % to 2553.83. Specifically, small cap shares perform better than large cap shares and we can observe that CSI599 did better than SSE50 (2.47% vs 1.72%).

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

As for Credit spread between A-rate corporate bonds, the 5Y spread slightly fluctuation and matches to 10Y spread. As for the spread between Shibor Rates and Treasury bonds yield, short-term (1M) spread experienced obvious decrease and now it keeps an upward term structure. As for treasury bond yield, last week, short-term yields short term yield of treasury bond decreased. Furthermore, as for long-term yield, there is a small downward move.

As for exchange rate, there were dramatic appreciation for both inland and offshore rates, that CNY/USD changed -1.69% (up to 16:30 of last Friday) and CNH/USD changed -1.52%.

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 15.73 billion CNY and the cumulative net inflow was 658.84 billion CNY at last Friday. Specifically, more fund flow in shanghai market than Shenzhen market.

In sum, the experienced some rebound and RMB exchange rates appreciated for a very significant step. Furthermore, huge foreign fund net inflow via Stock Connect Program shows up again and this may indicate some rebound of market confidence.

News:

(1). According to the Ministry of Human Resources and Social Affairs, the unemployment rate in China's cities and towns is 3.8% at the end of 2018, and a series of measures will be taken to stabilize employment in 2019.

Ministry of Human Resources and Social Affairs: We will speed up research on the implementation plan of reducing the social insurance premium rate, increase the strength and extent of unemployment insurance premium return, increase the amount of venture guarantee loan, increase the amount of individual application from 100,000 yuan to 150,000 yuan, and increase the amount of small and micro enterprises loan from 2,000,000 yuan to 3,000,000 yuan; and carry out large-scale vocational skills training.

Ministry of Human Resources and Social Affairs: Many measures should be taken simultaneously to promote the sustainable development of the old-age insurance system. First, we will implement the universal insurance plan, expand coverage and increase fund income. The second is to implement the central adjustment system of the fund, promote the overall planning of the whole country on the basis of accelerating the overall planning at the provincial level, and rationally balance the burden of inter-regional endowment insurance funds. Third, we should promote market-oriented, diversified and specialized investment of funds to maintain and increase their value. Fourth, transfer part of the state-owned capital to enrich the social security fund and enhance the ability of the fund to resist risks. Fifth, we should develop a multi-level old-age security system to meet the needs of different groups

(2) Zhong Shan, Minister of Commerce, said that in 2019, China will expand its open areas, continue to reduce negative lists, relax market access such as the ratio of foreign capital shares, and allow more areas to operate solely. We will intensify our efforts to attract foreign investment, promote major projects to land and create new open plateau, support the expansion of the new area of Shanghai Free Trade Zone and explore the construction of Hainan Free Trade Port.

The Central Economic Work Conference has deployed three key tasks: the Import Fair, China-US economic and trade frictions, free trade pilot areas and free trade ports. This is an important political task entrusted to the Ministry of Commerce by the Central Committee of the Communist Party of China. It is also the top priority of this year's work of the Ministry of Commerce. We will exert all our efforts, nail spirit and embroidery efforts, to grasp the three tasks carefully and achieve results.

(3) Shanghai Securities Journal: Securities firms have begun to recommend listed companies on the Scientific Innovation Board to relevant departments. Five major areas of business will be encouraged, including new generation of information technology, high-end equipment manufacturing and new materials, new energy and energy conservation and environmental protection, biomedical and technological services.

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