The CSI 300 lost 0.74% on higher yet below average volume and remains in an Uptrend Under
Pressure with eight distribution days. The index continued moving sideways around its 50-DMA
(~4,892, +0.7%) with key resistance at the 100-DMA (~4,930, +1.4%) and major support at July
28’s low (~4,664, -4.0%). Re-rising COVID concerns dampened sentiment that had just improved
slightly on expectations of domestic policy easing. Sino-U.S. relations made headlines with another
twelve Chinese companies blacklisted by the U.S. Steel stocks led the gains on expectations of tight
supply and improving demand. Stocks related to permanent magnetic, a key material of higher-end
motors, were boosted by policy support for higher motor efficiencies. EV battery-related stocks outperformed on strong lithium prices and a robust outlook. Healthcare was rattled by new domestic
COVID cases and policy on eldercare and rehabilitation industries. Tourism companies remain
shadowed by COVID. Real estate underperformed amid lingering liquidity worries. Agricultural
stocks retreated further from the previous rally on bottoming hopes. The market was volatile and
weak with a high distribution day count and strong rotation. We are more cautious on concerns
about new COVID variants. Investors should stay cautious, disciplined, and selective and avoid
chasing highs.
