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Market review: May 10, 2016

Fang submitted 2016-05-10 15:31:05

Market review:

China stocks generally stabilized after selling-off yesterday, and closed at 2832.59.

Research Notes:

Money flowed into Ship Building, Food and Agriculture sectors the most. Zhejiang Calxon Group (00918.sz), a real estate developer, rallied to limit-up for its plan to merge with Evergrand Group.

The CPI released at 2.3%, in line with expectation, while PPI for April climbed to -3.4%, thanks to the commodity rally in that month, while this trend could not continue in our opinion. Both iron ore and rebar futures hit another limit-down while agri futres showed some resilience during the selling-off for summer weather premium. We believed the funds selling raw material futures aggressively in the recent weeks are mostly those who longed them in the previous months, to gain some extra return out of equity market and led to huge volatility in the commodity market. And for SHA, though we speculated 2800 could be a firm support, investors’d better increase some exposure only if SHA can dip below it. The un-cyclic sectors, such as agriculture, food and beverage, entertainment should be some safer picks.

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