Comments on Market

A share market saw fluctuation yday, and turned weak in the afternoon session to close with 1% loss. Despite strong performance of engineering machinery and cement sectors, most stocks experienced correction. Turnover of star stocks like Zoomlion (000157.CH) and Anhui Conch Cement (600585.CH) was abnormally high, indicating huge investor divergence after recent strong rebound.

CPI growth is declining, and we expect lower inflation in the next few months, 3.1% for Nov. and 2.4% for Dec., and may be negative in 1Q09.

Trade Surplus reached historical high in Oct., but mainly due to sharp decline of import growth. Domestic demand is weakening.

US and other regions are still delivering bad news. We hold cautious about the market, and the event-driven huge rebound is unlikely to go too far, but new low is hard to see in the short term either.

Best regards,