Author: Vinaya Kumar

The CSI 300 retreated 1.99% on lower and above average volume and remains in a Confirmed Uptrend with three distribution days. The index came off highs and lost its 200-DMA (~5,025, +1.4%), with next resistance at recent high around ~5,100 (2.9%) and support at the 100-DMA (~4,906, -1.0%). Persistent COVID concerns and fresh jitters about China-U.S. relations outweighed the policy boost from a key economic meeting. Investors parsed better-than-expected industrial output (+3.8% y/y, consensus 3.7%) and social retail sales (+3.9% y/y, consensus 3.6%) and below-estimates fixed-asset investment (+5.2% y/y, consensus 5.3%) in November. Electrical and power companies led gains on a positive outlook from expectations of rising investments in a shift to clean energy. Coal and steel stocks rebounded following bottoming hopes. Long-term leaders like auto, EV battery, and semiconductors led losses. CRO companies were rattled by rumors of U.S. bans. Consumer stocks, mainly liquor and home appliances, retreated from the recent rally fueled by price hikes and eased real estate policy, respectively. The boost from policy support waned. We prefer staying patient and monitoring if the index can find upward momentum. Investors should avoid chasing highs and adopt a disciplined and selective approach amid the volatile market with strong sector rotation.

The CSI 300 advanced 3.14%, with volume rising to greater than average, a high since mid- September. The market was shifted to Confirmed Uptrend after the index broke above key resistance at ~5,000 and retook its 200-DMA on good volume. The distribution day count fell to three from six. Next resistance is around early July highs (~5,200, +2.9%) and support is at the 100-DMA (~4,911, -2.8%). Sentiment was boosted by the central bank’s reserve requirement ratio cut and positive policy signals from a key political meeting. Investors parsed stronger-thanexpected trade, softer yet still above-consensus factory gate inflation, and improving but belowestimate financial data in November. Real estate-related sectors like building material, furnishing, and home appliance rebounded after authority vowed to support the sector’s healthy development. Financial stocks outperformed on the reserve ratio cut. Food and beverage stocks led following expectations of support for consumer consumption to back up domestic demand. Long-term leaders like auto, EV battery, defense, and semiconductor stocks retreated. Our conviction has increased on improved strength in the market and stronger appetite following expectations of increased policy support in the key economic work conference to be held this month. Investors should adopt a disciplined and selective approach amid high volatility.