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.
Author: Saminathan Jaganathan
European Focus
On Thursday, the Stoxx 600 was up 0.72%. The week has been very constructive as the index closed negative only on Tuesday. Compared with last Friday’s close, the index was up 1.7% through Thursday. Today, the index is trading constructively along with other major markets in the region.
Global Focus Developed
Australia’s ASX All Ordinaries Index was up 0.81% this week with five distribution days. It remains in an Uptrend Under Pressure.
Global Focus Emerging
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%).
Global Focus Frontier
National Bank of Kuwait is the leading banking group in Kuwait in terms of assets, customer deposits, and customer loans and advances. Its strong leadership position across its product offerings will pave the way for its future growth.
China A Shares
The CSI 300 rose 2.97% on increased volume for the week. We upgraded the market condition to a Confirmed Uptrend on Monday after the index surged 2.17% on the news of interest rate reform and the plan to build Shenzhen into socialist demonstration area. The short-term risk preference and market sentiment recovered under the stimuli of domestic policies, but we believe the market is still volatile and the Monday follow-through day may fail. The CSI 300 regained its 50-DMA and 100-DMA, which serve as the next levels of support. We see immediate resistance near 3,850 and the next resistance near 3,900. The market is still facing a lot of uncertainties in the near term, thus we advise investors to stay cautious and patient, taking a disciplined approach to selecting quality growth ideas that have strong relative strength and are not extended more than 5% above a pivot.
US Focus
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq sold off over 2.6% after trading slightly below resistance at the 50-DMA for several sessions. Each index picked up a distribution day, as the count increased to three days on the Nasdaq and two on the S&P 500. Indices are poised to re-test August 5 lows, which is followed by support at the rising 200-DMA.
European Focus
On Thursday, the Stoxx 600 was down 0.4% after renewed recession fears as the 10-year to two-year year yield curve inverted for a second time. However, the index was still up 1.26% compared with last Friday’s close. Today, the index is trading 0.56% higher and has recovered yesterday’s losses.
Global Focus Developed
Australia’s ASX All Ordinaries Index was up 1.98% this week. The index has five distribution days and remains in an Uptrend Under Pressure.
Global Focus Emerging
The CSI 300 rose 2.97% on increased volume for the week. We upgraded the market condition to a Confirmed Uptrend on Monday after the index surged 2.17% on the news of interest rate reform and the plan to build Shenzhen into socialist demonstration area. The CSI 300 regained its 50- DMA and 100-DMA, which serve as the next levels of support. We see immediate resistance near 3,850 and the next resistance near 3,900.
