Author: Sandeeep N

The CSI 300 ended flat on lower volume for the first four trading sessions this week. The market remains in a Confirmed Uptrend with the number of distribution days increasing to five. The index was trading above its 21-DMA (4,990, -0.2%) with immediate resistance at highs of 5,090 (+1.8%). The annual Central Economic Work Conference last week highlighted technology development, self-control of supply chain, and clean energy for the coming year. Market sentiment was boosted as China will maintain policy support for economic recovery, avoiding a sudden shift in policy, to keep economic growth reasonable in 2021. Solar and wind power energy stocks were leading as the government said the new installation of wind power and solar energy in the 14th five-year period (2021‒2025) will be much higher than in 13th five-year period (2016‒2020). Defense stocks outperformed on higher expectation of military expenses in the 14th as well. Investor confidence in the tech sector was hit by news that the government launched an antitrust probe into Alibaba Group. We expect the index to be range-bound in the near term before breaking above key resistance. We advise investors to stay disciplined in the volatile market and focus on quality stocks breaking out of proper bases or key resistance levels.

The CSI 300 rose 2.26% on lower volume and remains in a Confirmed Uptrend with the number of distribution days decreasing to four. The index rose for four consecutive sessions and broke above its 21-DMA (4,981, -0.8%) Thursday. News that the U.S. may add more Chinese companies, including SMIC, to its trade blacklist added pressure to the market Friday. The index faces immediate resistance at highs of 5,090 (+1.5%). China’s central bank issued an RMB 960B injection of medium-term lending facility to shore up liquidity. Value added of industrial output rose 7.0% y/y in November, its fastest pace in 20 months. Retail sales grew 5% y/y in November, continuing to recover but lower than estimates. Property investment and sales area grew 6.8% and 1.3%, respectively, from January to November, both higher than last month. Health Care rebounded this week as the completion of NRDL negotiations relieved worries about the uncertainties in the sector. Basic Material outperformed on expectations of economic recovery. Liquor, solar energy, and new vehicle stocks also led the market. Our conviction increases but we still advise investors to stay disciplined in the volatile market and focus on quality stocks breaking out of proper bases or key resistance levels.