Investment Daily Note

Market Highlights

William Dudley, the New York Fed President, said yesterday that the decision to begin the normalization process at the September (FederalOpen Market Committee) meeting seemed less compelling to him than it did several weeks ago, suggesting that the chance for a rate hike next month has diminished. However, we think short-term market movement is still more influenced by A-share market performance, and whether the Fed delays rate hike has limited help for investor sentiment recovery; future market direction still hinges on A-share performance.

The People's Bank of China yesterday conducted short-term liquidity operation (SLO) to inject RMB140 billion of liquidity, to ease monetary conditions further and stabilise the market before reduction of required reserve ratio (RRR) translates into actual increase in market liquidity. According to a post on website of Ministry of Industry and Information Technology, Xin Guobin, the Minister, said the industrial sector currently faces huge downward pressure, and the authorities would take effective actions to stabilise industrial growth.