International political and economic situation uncertainty expands focus on import substitution logic and oil and gas industry.

1. Due to the expected trade war between China and the United States, the market is worried about the impact on the export of machinery and equipment and restrictions on the import of related high-end, advanced and intelligent manufacturing equipment. It is suggested to focus on the two directions of advanced and intelligent manufacturing supported by the national strategy under the import substitution logic. China relies heavily on industries such as robot core parts, semiconductor equipment manufacturing, medium and high-end pump valve castings and forgings and other mechanical basic parts. 2. The international oil price center has obviously moved up, oil and gas exploration and coal chemical machinery and equipment plate at this stage is still recommended to give priority attention. 3. Advanced manufacturing, intelligent manufacturing and industrial Internet are likely to be hot spots in the machinery sector in 2018, and strategic advanced manufacturing and intelligent manufacturing with national key layout should be appropriately allocated.

It is recommended to pay attention to the relevant targets: Hang oxygen shares, Jerry shares, Jingsheng mechanical and electrical, to pure technology, Xinlai should be materials, Tianqi shares, Shenyang machine tools, Easton, Sany Heavy Industries, Hengli Hydraulics, CIMC Group, Quartet Cold Chain, China Zhongche, Connie Electrical and Mechanical.

Market performance This week, the Shanghai Composite Index rose 0.89 per cent, the CSI 300 rose 0.42 per cent, the small and medium-sized board rose 0.23 per cent, the GEM rose 0.00 per cent, the CSI 1000 rose 0.19 per cent, the machinery and equipment industry index fell 0.07 per cent, the industry rose 18/28, the sector lost 0.96 percentage points to the Shanghai Composite Index.

This week's machinery and equipment sector, the week's top five stocks for the three super-new materials, Dayuan pumps, Xinmei Star, Terry machinery and Tianyong intelligence, up 20.14 percent, 15.07 percent, 13.73 percent, 10.44 percent and 9.86 percent, respectively. The top five decliners were McGrady Electric, Donghua Test, Jincai Internet, Lanke High-tech and Yizimi, down 18.62 per cent, 14.21 per cent, 14.18 per cent, 13.99 per cent and 13.15 per cent, respectively.

This week, the machinery sector led the rise is mainly three super-new materials, leading the decline is McGrady Electric, the top four gains are more than 10%, the top ten declines are more than-10%, the plate rise and fall significantly narrowed. The index generally edged up this week, with the mechanical sector performing poorly. McGrady Electric, which led the rise last week, led the decline this week, with poor plate aggregation and sustainability.

Industry dynamics

1.2018 annual ranking of the top 50 global construction machinery manufacturers, 9 Chinese companies on the list; 2. Sino-French joint venture Guangdong Taishan Nuclear Power Plant Unit 1 began loading; 3. The country's first industrial Internet provincial platform was established in Jiangxi.

Risk Alert

Industrial policy promotion and implementation is lower than expected, market style changes bring down the valuation center of the machinery industry, cost upward pressure on profitability continues to decline, and sub-new sector system risk.