Daily Report 121114 2014-11-12
Macro Economy

In domestic market, President Xi Jinping gave a closing word at the APEC informal leadership meeting. He claimed that ‘the meeting decides to promote the building process of Asia Pacific free trade zone and strengthen the construction of infrastructure and network. Improve the co-operation of public and private economy. Break through the bottleneck of financing of construction. The set up of Asia Pacific free trade zone will in a way help our country maintain the increase of outbound trade. Strengthening the construction of infrastructure will partly offset the economic decline due to the drop of real estate investment. Related policy toward foreign trade and investment is likely to make a contribution to the economy.


Stock Index

Stock index rose to a high level and then fell back yesterday. Influenced by the Shanghai – Hong Kong Stock Connect, T+0 and easing monetary policy, banks’ stocks and other blue-chip stocks soar. However, changing of style leads to risk to small cap growth stocks, which drop substantially and drag down the stock index. Besides, the trading volume of Shanghai and Shenzhen stock market hit their record highs, indicating the mass transfer of funds. Currently, factors which support the blue-chip stocks remain unchanged. However, fluctuations are hardly likely to avoid when market is changing its style. Investors should be aware of the potential risk in short term. There is still space for stock index to rise afterwards.


Soybean

In domestic market, soybean contracts in Dalian Commodity Exchange in near months are strong while contracts in far months are weak. Domestic soybean spot remains its weak trend with low market trading volume. Farmers tend to hold their soybean, leaving little volume for traders to purchase. Soybean meal spot corrects in part of regions. The supply of soybean meal spot is relatively small while the basis spread in far months drop. The U.S. soybean will arrive at harbor at the end of this month, which will bring pressure to the market. In terms of operations, considering the soybean rallies in foreign market, short-term moves could be taken for soybean meal in Dalian Commodity Exchange. As for the No.1 soybean, contracts in near months are believed to be strong while contracts in far months are weak.

 
PP

Yesterday pp future opened up low and followed with a downward trend. It opened at RMB 10018 and closed at RMB 9829. The trading volume increased 124000 lots to 449000 lots. The holding increased 13048 lots to 170000 lots. For upstream, the propylene fell $5; the average price is $1160.5 per ton. In terms of spot, most market have relatively stable pp price and with a bit lose; the range is within RMB 50. CPC northeast and east China have lowered part of factory price. The market in general is mentality bearish; people do not have confidence towards the future. Traders mainly choose to ship and drop current holdings; partial traders have sales.
For instance of the wire drawing price, today's mainstream of North China bid around RMB 10350 to 10650 per ton, East China mainstream quotation around RMB 10550-10700 per ton, South China mainstream quotation in RMB 10600-10750 per ton. The short term will lead by waving.
                                                                            Dong LV (Investment Certificate NO. TZ008452)