The CSI 300 dropped 2.6% on higher volume this week and the market is in a Rally Attempt. The coronavirus outbreak hit the market sharply as it fell 7.9% Monday, then continued to rise for a fourth consecutive trading day. The outbreak and rapid spread of the virus could put more pressure on China’s already slowing economic growth. In addition, a weaker yuan and pressure on leisure, travel, and retail stocks have worried investors. Market sentiment has been buoyed somewhat by the solid rebound in recent days, but we are keeping a close eye on strong resistance at 3,914–3,972. We expect the CSI 300 to consolidate, with its 200-DMA (~3,865) providing short-term support. A follow-through day could still occur any day going forward. The tech-heavy ChiNext index was trading constructively this week, gaining 4.57% and hitting 52-week highs. We advise investors to be rational and cautious, focusing on sectors that would benefit directly from the battle against the coronavirus or industry leaders with guaranteed growth that are immune to the epidemic.
Symbol: CMT.CN
Global Focus Emerging
The CSI 300 dropped 2.6% on higher volume this week and the market is in a Rally Attempt. The coronavirus outbreak hit the market sharply as it fell 7.9% Monday, then continued to rise for a fourth consecutive trading day. The outbreak and rapid spread of the virus could put more pressure on China’s already slowing economic growth. In addition, a weaker yuan and pressure on leisure, travel, and retail stocks have worried investors. Market sentiment has been buoyed somewhat by the solid rebound in recent days, but we are keeping a close eye on strong resistance at 3,914–3,972. We expect the CSI 300 to consolidate, with its 200-DMA (~3,865) providing short-term support. A follow-through day could still occur any day going forward. The tech-heavy ChiNext index was trading constructively this week, gaining 4.57% and hitting 52-week highs. We advise investors to be rational and cautious, focusing on sectors that would benefit directly from the battle against the coronavirus or industry leaders with guaranteed growth that are immune to the epidemic.
China A Shares
Chinese markets remain in an Uptrend Under Pressure with six distribution days. Markets will reopen on Monday following a delay due to the coronavirus.
Global Focus Emerging
Chinese markets remain in an Uptrend Under Pressure with six distribution days. Markets will reopen on Monday following a delay due to the coronavirus.
China A Shares
The CSI 300 fell 3.6% for the holiday-shortened week on lower volume and was moved to an Uptrend Under Pressure as the distribution day count rose to six from four. The Wuhan coronavirus, which has infected more than 600 people and killed 17 people as of January 23, hurt investors’ risk appetite substantially. Stocks related to retailing, leisure services, airlines, and films suffered from strong selling pressure. The CSI 300 breached previous support at ~4,100 and tested 50-DMA support. The next immediate support is at ~3,925. We are looking for a reliable solution to control the epidemic in order to increase our conviction. Investors are advised to stay cautious and focus on quality ideas with strong expectations approaching earnings season.
Global Focus Emerging
The CSI 300 fell 3.6% for the holiday-shortened week on lower volume and was moved to an Uptrend Under Pressure as the distribution day count rose to six from four. The Wuhan coronavirus, which has infected more than 600 people and killed 17 people as of January 23, hurt investors’ risk appetite substantially. Stocks related to retailing, leisure services, airlines, and films suffered from strong selling pressure. The CSI 300 breached previous support at ~4,100 and tested 50-DMA support. The next immediate support is at ~3,925. We are looking for a reliable solution to control the epidemic in order to increase our conviction. Investors are advised to stay cautious and focus on quality ideas with strong expectations approaching earnings season.
China A Shares
The CSI 300 declined 0.2% for the week on lower volume, ending a six-week gaining streak. The market remains in a Confirmed Uptrend with four distribution days. The index has been consolidating after hitting 52-week highs, remaining constructive. We continue to be positive on the general market. A phase-one trade deal between the U.S. and China was signed, easing tensions but still leaving major problems unsolved. China’s GDP grew 6.1% y/y in 2019, the weakest growth in nearly 30 years. More stimulus is expected to boost sluggish demand. Immediate support is at ~4,100 then at ~4,000. We expect the CSI 300 to continue consolidating around 4,200, with strong resistance at ~4,400. Investors are advised to focus on quality ideas with strong expectations approaching earnings season and select those emerging from solid bases or strongly rallying from key support levels.
Global Focus Emerging
The CSI 300 declined 0.2% for the week on lower volume, ending a sixweek gaining streak. The market remains in a Confirmed Uptrend with four distribution days. The index has been consolidating after hitting 52-week highs, remaining constructive. We continue to be positive on the general market. A phase-one trade deal between the U.S. and China was signed, easing tensions but still leaving major problems unsolved. China’s GDP grew 6.1% y/y in 2019, the weakest growth in nearly 30 years. More stimulus is expected to boost sluggish demand. Immediate support is at ~4,100 then at ~4,000. We expect the CSI 300 to continue consolidating around 4,200, with strong resistance at ~4,400. Investors are advised to focus on quality ideas with strong expectations approaching earnings season and select those emerging from solid bases or strongly rallying from key support levels.
China A Shares
The CSI 300 rose 0.44% this week on higher volume and remains in a Confirmed Uptrend
with four distribution days. Although U.S.-Iran tensions disturbed the market, stronger-thanexpected
December price data eased worries about the economy to some degree. News that
China is sending a team to the U.S. early next week to sign a phase-one trade deal also boosted
sentiment. We remain positive on the general market as the CSI 300 is holding well above
support at ~4,100, and we see the next level of resistance at ~4,403. Investors are advised to stay
patient as significant distribution could occur with the expiration of lockup periods of a large
number of shares approaching the end of January. We recommend focusing on ideas emerging
from solid bases or rebounding from key support levels with heavy volume. Also, be mindful of
companies’ announcements going into the season of preliminary FY19 earnings results.
Global Focus Emerging
The CSI 300 rose 0.44% this week on higher volume and remains in a Confirmed Uptrend with four distribution days. Although U.S.-Iran tensions disturbed the market, stronger-than-expected December price data eased worries about the economy to some degree. News that China is sending a team to the U.S. early next week to sign a phase-one trade deal also boosted sentiment. We remain positive on the general market as the CSI 300 is holding well above support at ~4,100, and we see the next level of resistance at ~4,403. Investors are advised to stay patient as significant distribution could occur with the expiration of lockup periods of a large number of shares approaching the end of January. We recommend focusing on ideas emerging from solid bases or rebounding from key support levels with heavy volume. Also, be mindful of companies’ announcements going into the season of preliminary FY19 earnings results.
