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Market review: May 12, 2016

Fang submitted 2016-05-12 15:31:05

Market review:

China stocks stabilized before some critical econ date release, and closed at 2835.86. Investors worried that M2 supply growth and Industrial Production data due Friday and Saturday may show China econ’s still in the low gear. Furthermore, state media also supported a more conservative monetary policy, in contrast with significant loan growth in Q1, which also damped risk appetite.

Research Notes:

Money outflowed from Construction Material, Hotel and Food & Beverage the most. Jiling Jinguan Electric rallied to limit-up as investors considered this newly listed firm‘s still undervalued. For the last several weeks, we‘d witnessed the funds prefer commodities over equities, and we believed such divergence could continue into summer. We restated the recommendation for sectors with larger exposure to CPI, such as Agriculture, Food & Beverage and we also noted that Shipping and Biomedicine could also benefit from a volatile El Nino summer. Short positions in futures of construction materials can serve as a proper hedge for both agri futures and equity longs.

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