Daily Report 191114 2014-11-19
Macro Economy

In domestic market, data released from National Bureau of Statistics shows that the new housing sales in October dropped more on year-on-year basis. However, policy on housing loans is adjusting in parts of China. Real estate enterprises are adopting various ways to sell houses in order to decrease inventory. Part of consumers choose to purchase houses, but the sales data is still lower than last month, which is basically in accordance with previous expectation that the real estate market will rally in for a short term in Q4. China’s foreign direct investment in October is $ 8.53 billion, increasing by 1.3% on year-on-year basis and centering in service industry. It is believed that the reform of China’s economy will continue.


Domestic gold future’s major contract AU 1506 increased to a high level and then fell in the night session, standing on 20-day moving average for short term. If the gold could stand firmly on 20-day moving average, the rallying trend is believed to continue. In terms of operations, previous long positions opened when the gold broke through 5-day moving average could be held. Performance of gold around RMB 238 is likely to be tested. If the gold closes at 20-day moving average, the rallying momentum is considered to remain. The bolster effect at RMB 235 will be tested. The international gold market fluctuates violently in recent two weeks. The gold is facing strong bolster after slumping to $ 1130. The power of long positions is relatively strong as there is little bearish news. Although bearish sentiment still exists in the market, any little bullish news will trigger the rebound of gold market. The gold price is also influenced by the upcoming Swiss referendum in November 30. The U.S. new home starts and building permits data in October will be released today. Besides, the Fed Meeting Minutes in October will be published on 2 a.m. Thursday, which should be in focus. It is believed that the gold will remain weak in middle term, but short-term rallying is likely to take place as well. The overnight gold ETF remained flat yesterday.


During the night session, the price of domestic silver main contract 1506 has a narrow adjustment. The price has been obviously pressed by 20-day moving average at RMB 3470. In terms of operation, recently silver price waved a lot; in the middle term it remains weak in the big picture but it could be fixed lately. Long orders set up at RMB 3350 could be held according; there may be a chance to fill back previous gap at RMB 3670; intraday pay attention to the performance around RMB 3370-3470.
In general, silver price still followed with the gold trend, it may hardly get rid of independent situation. In foreign market the gold price has rallied to $1180, but international silver price remains weak in regard of the trend; if the rally continues lately, the rally space of silver will be wider than the gold. From the funds perspective, silver ETF remains the same level for 4 straight days.

Stock Index

Stock index continued fluctuating and dropping yesterday. Short-term bullish influence resulting from the Shanghai – Hong Kong Stock Connect is fading away. Besides, market requires correcting after previous continuous increase. Cyclical stocks slipped due to closing of long positions while the growth stocks are back to active. The core reason of the positive market is the decline of financing costs. The upward trend of market is believed to remain. Plus the long-term influence of Shanghai – Hong Kong Stock Connect may be underestimated by market. The upcoming subscriptions of new stocks will bring impact to the funds. The market will continue its previous strong performance only after fluctuation is not that violent.


Yesterday pp futures opened at RMB 9766 and closed at RMB 9688. The trading volume increased 10916 lots to 264000 lots. The holdings dropped 4962 lots to 168000 lots. From the upstream, propylene dropped $25 to the average price $1110.5 per ton. Shenhua Ningxia Coal Industry Group (SNCIG), Datang doren and other companies of in total 500000 tons production capacity will start producing in the near future. The utilization has certain ascend.
In terms of spot, yesterday in domestic market partial pp price goes down. In south China, petrochemical has cut the polypropylene ex-factory price; it has less support to market source; the quota from merchants are main in falling trend. Downstream is not that active to get into the market; though there is small single purchase to maintain current production, but it is not yet reach the level of trading and investing.
For instance of the wire drawing price, today's mainstream of North China bid in RMB 10250-10400 per ton, East China mainstream quotation around RMB 10400-10600 per ton, South China mainstream quotation in RMB 10500-10650 per ton. Currently the price of contract 1501 is around the first line of former support level of RMB 9550-9600. Recently the weak waving will in charge of the whole picture.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)