Daily Report 171014 2014-10-17
Macro economy
In terms of the domestic market, data from the People’s Bank of China (PBOC) showed that the total financing scale in September was RMB 1050 billion while the new RMB loans were RMB 857.2 billion. M2 increased 12.9% on year-on-year basis, which basically matches the expectation. As the CPI continues dropping, there is relatively large space for issuing new policies. However, policies which aim to remain economy stable have been being released. If the credit data turns to be better and the amount of loans keeps growing afterwards, the policy of lowering reserves and interest rate will be difficult to issue. Besides, attention should be paid to the domestic industrial data in September and the GDP in Q3, both of which will be released next week.
Domestic gold remains narrowly range-bound during the night session. The 5-day moving average crossed the 20-day moving average from below, which is a positive sign for the gold. In terms of operations, long positions opened when the gold broke through RMB 245 yesterday could be held. The stop-profit should be set at RMB 247.5 and RMB 249.5 respectively. The stop-loss should be set at RMB 244. The performance of gold close to the RMB 246.5 should be focused. On the whole, data released in this month of the U.S. economy is mixed. The retail sales data published on Wednesday is not as good as expected, but the initial claims for unemployment benefits of last week kept dropping. The U.S. industrial output in September increased substantially as well. Statements from the Fed officers are also mixed toward the rate hike. According to the assets price, the U.S. stocks and the USD remain weak. The gold rebounds recently, but there is heavy pressure from the resistance line above. The funds have to choose to hold bullish or bearish view toward the gold. The positions of overnight gold ETF increased 1.79 tons on Friday after dropping 2.09 tons on Thursday. The U.S. housing starts data in September and the consumer confidence data in October will be released today. Moreover, the Fed Chair Janet Yellen will give a speech on ‘"Inequality of Economic Opportunity’.
Domestic silver remains narrowly range-bound during the night session. The price dropped first and then rallied during the trading process. The following short-term trend of silver will be determined according to the 5-day moving average at RMB 3830. As for the operations, previous long positions opened at RMB 3830 could be held. The trend of silver is bullish, but the risk of decrease should be taken into consideration. Defensive moves should be prepared at RMB 3810. The performance of silver under the pressure of 20-day moving average at RMB 3880 during the intraday trading should be concentrated. On the whole, the rallying momentum of silver this week is weaker than that of gold. The impact of those U.S. assets on silver is relatively small, indicating the character of weak metal. The silver is still following the trend of gold closely and it is difficult for the silver to get out of the trend independently.
Stock index
The stock index rose to a high level and then slipped. The M2 in September released yesterday grew increasingly, which indicates the easing effect of the monetary policy. The credit data is slightly better than expected. The economy is still weak considering the CPI and PPI, but it seems to be increasing sound and steadily in the short term. On the whole, the impact from the data to the market is not that large. Currently, economic growth and monetary environment was relatively stable. The domestic demand is not enough, but the expectations of stable economic growth rate and easing policy are supporting the market. Therefore, stock index may remain fluctuating in the short term.
Overnight U.S. soybean closed higher due to technical buying. Attention of the U.S. soybean should be paid on China’s imports demand and price. The Dalian soybean meal remained strong while the soybean oil kept weak. The price of far month futures contracts of No.1 soybean drops. The soybean meal spot is stable and quotations of the most area remain between RMB 3400/ ton and RMB 3480/ ton. The supply in the Northern China insufficient and the price is higher than normal soybean meal price. Besides, the imported soybean is relatively low in this month. It is believed this situation will last to the end of the month or the beginning of next month. Recently the No.1 soybean fluctuates violently. In terms of operations, the stop-profit should be set for long positions of soybean meal. As for the No.1 soybean, investors are not suggested to make further moves till the correction is over.
The PP futures opened higher and then dropped. The opening price was RMB 9823 and the closing price was RMB 9762. The trading volume slipped by 57. 5 thousand lots to 262 thousand lots. Positions increased by 14260 lots to 187 thousand lots. As for the upstream, the crude oil price advanced, but the FOB South Korea PP declined by $ 26, with the settlement price $ 1215.5. In terms of the PP spot, domestic PP turns narrowly range-bound today. The quotation in the Eastern China decreases slightly. The PP futures drop in the early market. Besides, it is said that the Northern China Sinopec will reduce the PP price. More PP is sold as the price goes lower, which results in the decrease of quotation. The downstream factories tend to find products with lower price and the trading volume is a little bit weak. For instance, the quotation of polypropylene wiredrawing in the northern China is from RMB 10450/ ton to RMB 10600/ ton while that in the eastern China and southern China is from RMB 10500/ ton to RMB 10750/ ton and from RMB 10600/ ton to RMB 10850/ ton respectively. In terms of technical analysis, both the position of 5-day, 10-day and 20-day moving average and the MACD indicate the PP is likely to remain a downward trend. As for the operations, investors with short positions are recommended to focus on the change of months and international crude oil price.
                                                                                                                   Dong LV (Investment Certificate NO. TZ008452)