Author: Midhun Parameswaran

The CSI 300 fell 4.51% on lower and below average volume this week. On Tuesday, the market condition was shifted to a Downtrend as the index breached below the consolidation around 4,700~5,000. The index continued to trend down and hit a 13-month low, with next support at the low in September 2020 (~4,550, -0.2%) and July 2020 (4,479, -1.9%). Wind power equipment led due to policy stimulus. Health Care continued to plunge, dragged by CRO and COVID-19 medicine. Coal stocks slumped as the government pledged efforts to ensure coal supply. Computer and media lagged due to the retreat of digitalized economy related stocks. Market sentiment was dampened by the slump of U.S. and European stock markets due to the conflict between Russia and Ukraine as well as the U.S. Fed’s faster-than-expected rate hike plan. The market has no persistent leading sectors. As the CSI 300 traded downward from the beginning of the year and lost support of all moving average lines, we advise investors to take a cautious approach, raising cash or cutting positions on extended ideas to take profits. Pay attention to companies announcing strong FY21 earnings guidance. The stock market will be closed during the Spring Festival (January 31 to February 4).