Dim Sum Express

Investment Strategy: Market plunge a result of several negative factors that have been neglected

    We believe the plunge in the A-share market yesterday was not triggered by any immediate negative events, but was rather the result of several negative factors that have been at play for a while but have been neglected by the market until now. We expect market conditions in 2H17 to be better than those in 1H17, and that major market risks might be seen in 2Q17 as the economy potentially falls into stagnation. A substantial market correction in Dec might be followed by a rebound in 1Q17, during which time we like non-ferrous, oil & gas, chemical and papermaking, as well as banks, toll roads and airports.

    Property: Long-term policy mechanisms to benefit property market development

    Going forward, we believe the development of a multi-layered housing supply system (especially the development of a well-functioning property leasing market) and the implementation of property-related tax reforms will benefit the mid/long-term development of the domestic property market. In the near term, tightening remains the dominant policy tone in cities with a heated property market, with the scope of tightening expanding. We continue to think that amid weakening sector business conditions, any systematic investment opportunities in mainstream property stocks are yet to be seen. Meanwhile, we remain positive on the property finance space.