Commodity futures were affected both by the appreciation of RMB and monetary tightening. Except coking coal, major commodity futures such as iron ore, hot rolled steel, lead, zinc, rubber, and deformed steel bar all dropped into limit down.

Individual resource stocks and cyclical stocks are inevitably affected by the commodity futures. Without any signs of  rising in financial stocks, A stock indexes have to fall.

Although the falling of commodity futures affected the performance of A-share, it is not totally bad. For investors, it may perform better in the coming 3 to 6 months. If the sharp rise of commodity futures continues, regulators may try to tighten the money supply. Then tougher measures may be introduced.

For the mid-term and long-term outlook, I think those regulations are good for the A share in the future.  Next year, the cost of capital will be higher than that of this year. Since the property market is under control, capitals must flow to other fields. The yields of financial products are bond to rise, yet they are hard to absorb all outflowing funds. In addition, other investment channels are not ideal, therefore some of the outflowing funds must go into the stock market. 

Commentary by Zheng Buchun, a NBD reporter and China's renowned stock analyst