China markets were closed for the National Day holiday for most of the week and will reopen on Tuesday, October 8. We reiterate a cautious approach going into trade talks next week. The CSI 300 has recorded five distribution days in recent weeks and is testing the 50-DMA (~3,800). Further weakening of the index could raise concern and we anticipate volatility to remain at an elevated level near term.
Symbol: CMT.CN
China A Shares
The CSI 300 dropped 2.1% for the week on lower volume and remains in a Confirmed Uptrend. The number of distribution days is now at five over the past three weeks. We are watching to see if clustering becomes an early sign of market pressure. The market continued moving sideways as trading volume further declined. With the National Day holiday approaching, wait-and-see sentiment is strong; conservative investors tend to reduce positions or hold cash in case of uncertain events in overseas markets during the holiday. China’s industrial profits fell 2% in August, reversing the previous month’s gain (2.6%) and a sign that the economic growth is still bottoming. The possible impeachment of U.S. President Trump cast another shadow over trade tensions. Although the market is in an Uptrend, we remain cautious due to recent heavy selling pressure. The CSI 300 is testing 50-DMA support and we expect consolidation to continue in the near term. Investors are advised to stay cautious, focusing on quality growth stocks with good prospects.
Global Focus Emerging
The CSI 300 dropped 2.1% for the week on lower volume and remains in a Confirmed Uptrend. The number of distribution days is now at five over the past three weeks. We are watching to see if clustering becomes an early sign of market pressure. The market continued moving sideways as trading volume further declined. With the National Day holiday approaching, wait-and-see sentiment is strong; conservative investors tend to reduce positions or hold cash in case of uncertain events in overseas markets during the holiday. China’s industrial profits fell 2% in August, reversing the previous month’s gain (2.6%) and a sign that the economic growth is still bottoming. The possible impeachment of U.S. President Trump cast another shadow over trade tensions. Although the market is in an Uptrend, we remain cautious due to recent heavy selling pressure. The CSI 300 is testing 50-DMA support and we expect consolidation to continue in the near term. Investors are advised to stay cautious, focusing on quality growth stocks with good prospects.
China A Shares
The CSI 300 fell 0.9% for the week on slightly lower volume. The market remains in a Confirmed Uptrend with three distribution days. Disappointing industrial production, consumption, and fixed-asset investment data for August revealed pressure on China’s economy, which impacted market sentiment. The new one-year Loan Prime Rate was cut 5bps, in line with consensus and thus not a great boost to the market. The CSI 300 has immediate support at ~3,890 then at its 50-DMA (+3.2%). We look for immediate resistance at ~4,000 then at ~4,100. As global liquidity eases and positive domestic policies are introduced, risk appetite has increased. The electronics sector outperformed this week as Huawei and Apple unveiled new products. We expect the CSI 300 to continue consolidating in the short term, as sentiment may improve ahead of the National Day holiday, coupled with continued uncertainty surrounding trade talks. Investors are advised to be cautious and focus on quality growth leaders that have good prospects and benefit from recent policies. Avoid chasing extended ideas.
Global Focus Emerging
The CSI 300 fell 0.9% for the week on slightly lower volume. The market remains in a Confirmed Uptrend with three distribution days. Disappointing industrial production, consumption, and fixed-asset investment data for August revealed pressure on China’s economy, which impacted market sentiment. The new one-year Loan Prime Rate was cut 5bps, in line with consensus and thus not a great boost to the market. The CSI 300 has immediate support at ~3,890 then at its 50-DMA (+3.2%). We look for immediate resistance at ~4,000 then at ~4,100. As global liquidity eases and positive domestic policies are introduced, risk appetite has increased. The electronics sector outperformed this week as Huawei and Apple unveiled new products. We expect the CSI 300 to continue consolidating in the short term, as sentiment may improve ahead of the National Day holiday, coupled with continued uncertainty surrounding trade talks.
China A Shares
The CSI 300 rose 0.6% for the week, still in a Confirmed Uptrend with one distribution day. Volume has stayed above average, with only four trading days this week due to the Mid- Autumn Festival Friday. Markets remain volatile after important economic data released this week. China’s CPI rose 2.8% y/y in August, exceeding consensus. PPI fell 0.8% y/y, the second consecutive monthly decline, showing mounting downward pressure on the economy. China’s new loans, social financing, and M2 money supply were all up in August. On the trade war front, U.S. President Trump said he would delay tariff increases until October 15, boosting sentiment. Our conviction has increased due to recent policy easing, expected to boost the economy and ease trade tensions in the short term. Remain patient, as the CSI 300 may continue consolidating in the near term after rallying 11% from August lows. Focus on quality growth leaders with good prospects. The CSI 300’s immediate support is at ~3,900, with the first level of resistance at ~3,985 and the second at ~4,100.
Global Focus Emerging
The CSI 300 rose 0.6% for the week, still in a Confirmed Uptrend with one distribution day. Volume has stayed above average, with only four trading days this week due to the Mid-Autumn Festival Friday. Markets remain volatile after important economic data released this week. China’s CPI rose 2.8% y/y in August, exceeding consensus. PPI fell 0.8% y/y, the second consecutive monthly decline, showing mounting downward pressure on the economy. China’s new loans, social financing, and M2 money supply were all up in August. On the trade war front, U.S. President Trump said he would delay tariff increases until October 15, boosting sentiment. Our conviction has increased due to recent policy easing, expected to boost the economy and ease trade tensions in the short term. Remain patient, as the CSI 300 may continue consolidating in the near term after rallying 11% from August lows. Focus on quality growth leaders with good prospects. The CSI 300’s immediate support is at ~3,900, with the first level of resistance at ~3,985 and the second at ~4,100.
Won Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq are consolidating gains after gapping above resistance at the 50-DMA. To remain constructive, we would like to see the 50-DMA serve as support as more high-quality ideas emerge from bases. Both indices are currently less than 2% off all-time highs with five distribution days on the Nasdaq and three on the S&P 500.
Market View
The U.S. market has been moved back to a Confirmed Uptrend. The S&P 500 and Nasdaq are consolidating
gains after gapping above resistance at the 50-DMA. To remain constructive, we would like to see the 50-DMA
serve as support as more high quality ideas emerge from bases. Currently both indices are less than 2% off alltime highs with five distribution days on the Nasdaq and three on the S&P 500.
China A Shares
The CSI 300 surged 3.9% for the week on higher volume. It remains in a Confirmed Uptrend
with one distribution day. The index had a five-day gaining streak as trading volume significantly
increased, indicating the market has regained confidence. China’s central bank will cut its reserve
ratio by 0.5pct following market close Friday, which is expected to inject more liquidity into
the market. With China’s upcoming 70th anniversary, the market is expected to remain stable.
Our conviction has increased for September and we expect the CSI 300 to continue trading
constructively at 3,900–4,100 in the near term. The index has support at the 50-DMA (+5%)
and resistance at the April highs of ~4,126 (-4.5%). Still, we recommend that investors remain
cautious as the index is facing intense pressure. Allocate capital to high-quality growth leaders
with good prospects benefiting from current policies and not extended more than 5% above
pivot.
