Daily Report 111114 2014-11-11
Macro Economy

In domestic market, pricing data released by National Bureau of Statistics yesterday showed that the CPI in October was up by 1.6% on year-on-year basis, which is close to a 5-year low. The PPI has been decreasing for the past 32 months, surprisingly lower by 2.2% in October on year-on-year basis. The warped end takes place as the end of year is approaching and global commodities market is weak. Besides, domestic demand has not been improved. All those factors lead to the continuous dropping of CPI and PPI. It is expected that the CPI and PPI will keep in low levels afterwards, which brings space for monetary policy of the People’s Bank of China. However, in terms of specific policy methods, disagreements between market and the People’s Bank of China are likely to remain.


Stock Index

Stock index soared yesterday. According to the official statement of China Securities Regulatory Commission (CSRC), the Shanghai – Hong Kong Stock Connect will take place on November 17, which surprises the market slightly. The whole stocks market, especially the brokerage stocks, is stimulated by this positive news. During the press conference of Shanghai – Hong Kong Stock Connect, Shanghai Futures Exchange claims that the stock market is able to adopt ‘T+0’. The market trading volume and the brokerage stocks will be further stimulated if the ‘T+0’ is officially adopted. The CPI and PPI released yesterday are still weak. Therefore, easing monetary policy will remain. It is expected that the stock index is likely to continue growing.


Copper

On Monday LME copper trend is a bit weak, closed down by $28. Pay attention to this Thursday China is going to announce the solid investment data and also the added value of industrial output data. Fundamentals, LME spot premium decreased $13 to $62; inventory level increased 2125 tons to 161900 tons. Domestic spot premium fall back RMB 60 to the interval of discount RMB 50 to premium RMB 50. The market supply is quite full; brands are quite diversified; few intermediaries come into the market for operating; downstream mainly choose to wait and see; investing and trading are quite thin. Since it is about to the off season, it is hard to find a bright spot on consumption.
Technically, recently copper price is waving within the interval, we remain the thought of short rally; wait for the end signal of rally. In the short term, pay attention to the effectiveness of the resistance at $6700 on 10-day moving average.


Aluminum

On Monday LME 3-month aluminum fell, closed at RMB 2038.75 per ton, down by 0.94%. A long awaited trading link between Hong Kong and Shanghai will launch on Nov. 17; the ministry is officially set out connectivity infrastructure plans. From the industry perspective, the reform of LME warehouses expected will limit the original aluminum line up for 34 working days. According to forecast the new bauxite resources in Guizhou will be around 400 million tons. Views on SHFE aluminum remain the same.
                                                                 Dong LV (Investment Certificate NO. TZ008452)