Daily Report 211014 2014-10-21
Macro Economy
In terms of domestic market, the GDP in Q3 is released by Chinese National Bureau of Statistics on 10 a.m. today. The growth rate is 7.3% on year-on-year basis. Meanwhile, the rates of increase for industrial production, fixed asset investment and retail sales will be published as well. Some of the previously released data have already shown that China’s economy is likely to grow sound and steady. Therefore, it is crucial whether or not the rates of increase for industrial production will stop dropping. Attention should be paid on those figures.

Domestic gold showed a small gap up opening and then fluctuated in the night session. The 10-day moving average crossed above the 20-day moving average, indicating the gold is likely to go up. As for the operations, previous long positions opened according to 5-day moving average at RMB 245 could be held. Short-term long positions could still be opened if the pullback takes place and the gold drops to RMB 245.5 Stop-profit should be set at RMB 247.5 and RMB 249.5 respectively. Stop-loss should be set at RMB 244.5. Central Bank of Russia continues increasing the gold reserves to 1150.8 tons, which shows the monetary attribute of gold. In terms of the U.S., the Fed’s news agency claimed the assets purchasing project will be end in the late October. However, there was no statement on the interest rate policy. Recently, the attitude of Fed officers is mixed. The statements of Fed’s meeting on interest rate from October 28 to October 30 should be focused. In terms of the funds, positions of overnight gold ETF slumped by 8.97 tons, indicating the funds tend to sell the gold when the price is high. On the whole, the pullback of assets related to the USD stimulates the demand of gold. However, the gain of gold may be offset by the funds’ selling moves. The gold is likely to drop after increasing slightly. Investors should be cautious toward this issue.

Domestic silver remains narrowly range-bound in the night session. The short-term pressure from 20-day moving average at RMB 3850 is relatively strong. As for the operations, defensive moves should be prepared at RMB 3810 for previous long positions opened at RMB 3830. The performance of silver around RMB 3850 should be focused during the intraday trading. In the short term, the rallying momentum of silver 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 fluctuated and slightly rallied yesterday. The rumor that the People’s Bank of China will provide funds to commercial banks further strengthens the expectation of directional easing policy. Besides, it is believed the reform will take place after the fourth plenum. Therefore, the stock index is bolstered. However, the cyclical weighted stocks are not likely to grow too much compared to middle and small stocks. The space for stock index to increase is limited. A series of important economic data, like GDP, will be released today. The attitude of weak economy is difficult to change. The fluctuation of stock index may remain for the short term.

The pattern of strong soybean meal and weak soybean oil remains in the Dalian market. The soybean meal spot in many different regions dropped by RMB 10/ ton to RMB 50/ ton. The mainstream quotation was from RMB 3400/ ton to RMB 3460/ ton. Oil factory operating rate rises, which increases the supply. Besides, the amount of imported soybean advances as well. The prices of No.1 soybean in the far months remain weak. The pressure from the funds to soybean futures prices is not over. Price of new soybean is relatively stable. The yield of soybean in Hei Longjiang producing area is higher than expected. The price seems a little bit weak due to low trading volume. In terms of operations, 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.

Yesterday PP futures opened in a low position and followed with a downward trend. It opened at RMB 9490, which ever broke through RMB 9559 during the session. However due to the hammering of previous fall, it has a weak fallback, closed at RMB 9413. The trading volume dropped 95174 lots to 374000 lots. The holdings increased 1584 lots to 211000 lots. Overnight the propylene price was flat.
For spots, yesterday the pp price in most pp markets worldwide edged down around RMB 50-100 per ton. The ex-factory price of petrochemical enterprise is stable, which has relatively weak support of the market cost. The majority merchants set orders according to their sales; they operate under low inventory mutually wait and see the market.
For instance of the wire drawing price, today's mainstream of North China bid in RMB 10300-10700 per ton, East China mainstream quotation in RMB 10400-10700 per ton, South China mainstream quotation in RMB 10550-10700 per ton. Fundamentals appear bearish. Overall, current price is under 5-day moving average; the moving average is on short trend; the MACD gap spread even further, which appears bearish trend. In terms of operation, considering the changes of supply and demand according; short when the price is high; for short investors who hold on contract 1501 be aware of the risk of the main contract switching.
                                                                                          Dong LV (Investment Certificate NO. TZ008452)