Daily Report 161214 2014-12-16
Macro Economy

In domestic market, China is less likely to increasingly hold the US Treasury as the RMB remains growing strongly. Until October, the amount of US Treasury that held by China is $1.25 trillion, which is $ 13.6 billion less than that in September, making it the lowest in past 20 months. The HSBC China Manufacturing Initial Index will be released today. The figure in November is 50, which is the lowest in the past six months. The data this term is expected to be 49.8.


Main contract of domestic gold AU 1506 was influenced by pressure and dropped slightly in the night session, breaking below the bolster of 5-day moving average at RMB 245. The gold is likely to drop further afterwards. In terms of operations, defensive moves should be prepared for previous long positions opened around RMB 240. Attention should be paid to the bolster effect of 10-day moving average at RMB 242.5. Short-term short positions could be taken if the trading volume is weak during the intraday trading. Stop-loss should be set at RMB 243.5 while the target is RMB 240. Sound investors are not recommended to make any moves. The US industrial output in November advanced 1.3% compared with that in October. The figure is also much better that the expected data 0.7%. The last Fed meeting about interest rate in this year will be held on 3 am Thursday. The Fed is expected to be hawkish toward rate hike, which then drags down the gold. The US Treasury yield rises marginally. Besides, the crude oil continues slumping. The US index is expected to remain rebounding this week after correcting. The positions of overnight gold ETF decrease 2.39 tons, which is the first decline in the recent week. It is believed that the funds are selling gold when the price is relatively high. The purchase of gold lacks constancy.


Domestic silver dropped following the trend of gold in the night session, breaking down the bolster of 5-day moving average at RMB 3630. Attention should be paid to 10-day moving average at RMB 3560. Short-term short positions could be taken if the trading volume is weak during the intraday trading. The target is RMB 3485 while stop-loss should be set at RMB 3590. The positions of overnight silver ETF drop when the price is high, indicating funds are not holding optimistic view of the silver.

Stock Index

Stock index fluctuated and corrected in the early session and rebound in the afternoon session yesterday. Growth stocks and focused investment keeps active and so as the security stocks. However, according to the range of rebound, individual security stocks grow variously. Whether the security will rally strongly still needs to be seen. Investors are recommended to be cautious as the trend of stock index afterwards is not clear.


On Monday LME copper market being in a dramatic downturn, closed down by $120 to $6370. From the fundamentals, LME spots premium dropped $2 to $50; inventory level increased 925 tons to 167000. Domestic spot premium dropped RMB 140 to discount RMB 300-200; merchants with inventory are rushing to sell. Current copper supply is abundant, downstream collect inventory based on demand; the trading and investing are quite thin.
From technical perspective, copper price fell back at the key resistance point; short term it may wave at the low point.


Yesterday PP futures opened up in a low point then followed with an upward trend. It opened at RMB 7666 and closed at RMB 7860. The trading volume increased 438000 lots to 763000 lots; the holdings increased 13906 lots to 200000 lots. From the upstream, overnight FOB Korea propylene dropped $20 to average price $670.5. From devices perspective, current capacity utilization is normal; there is no sign of the new centralized maintenance; the supply is stable.
In terms of spots, yesterday the majority pp markets are slumping continually. CPC east China, south China and northeast China, also included Sinopec south China etc. majority regions have lowered their ex-factory price continually, which suggests it has even less supports to the market.
For instance of the wire drawing price, today's mainstream of North China bid in RMB 8650-9000 per ton, East China mainstream quotation in RMB 8800-9100 per ton, South China mainstream quotation in RMB 9000-9350 per ton.
                                                                                   Dong LV (Investment Certificate NO. TZ008452)