Daily Report 241214 2014-12-24

 Macro Economy

The US stock market Dow Jones index (DJI) closed—the first time—over 18,000, indicating economy growth. The higher than expected growth rate contributed to market confidence, and the influence even covered the impact of health care stocks decline. DJI closed up 18,024.17 and the S&P 500 index increased 0.17% to 2,082.17, which hit historical high. Specifically, energy index surged 1.26%. Statistically, November consumer spending in the US market rose 0.6%, which was the highest since September; personal income increased 0.4%--the highest since June. The new housing sales dipped 1.6% compared with October, unexpectedly hit the lowest point over the last 4 months. Durable goods orders descended 0.7%, the third decline over last 4 months. The month-on-month GDP growth of both the UK and France met the expectation, while the year-on-year growth of the UK was lower than expected led to sterling depreciation. The adjusted US GDP of Q3 rose at an annualized pace of 5%, which is the biggest growth since the Q3 of 2003. Affected by that, the US stocks and oil prices started to grow, particularly, oil prices surged 3.37%. As for the domestic market, the Communist Party of China (CPC) held the Rural Working Conference in Beijing between 22th and 23th this month. The conference focused on enhancing agricultural modernization; put forward of guaranteeing national food security, ensuring self-sufficient of grain and rations safety; and discussed management rights transfer of rural farmland, and expanding experimental units of land rights transfer awarding. The conference shows that agricultural problem is one of the main problems of this country.

 

Stock Index

The stock index plunged yesterday, heavyweights and mid to small-cap all-together encountered retreats. Although Securities and Insurance companies closed up, the index topped down during the session, indicating the lack of growth motivation. Intensive situation of funding among banking area led to risk-free interest rate decreased, and shook the logical of increase this rally. There will be a large amount of funds released for new share purchasing, which may ease the status quo. However, funding risks would pressure the index if the central bank not taking any further easing policies. There exist possibilities for the index pullback, thus, it is suggested to take a wait and see stance.

 

Copper

The LME copper market waved narrowly this Tuesday, closed down $6,338 (dipped $22). Trading volume kept light before Christmas holiday. The overnight US dollar index rose above 90, hit the highest point over the last 9 years. The US GDP increased by 5% from a year earlier, which is the largest growth since Q3 2013, far above the initial rate of 3.9%. This is due to the remarkable increase of consumer expenditure. Moreover, the December consumer confidence is 93.6, reached a record high since January, 2007. The strong data enhanced the expectation of advanced interest rate raise, pressured other countries. Basically, the LME spot premium rose by $2 to $51, and the inventory dramatically increased by 3,525 tons to 172,200 tons. Specifically, Asia and Europe contributed 3,050 tons and 1,350 tons respectively, while the American New Orleans inventory lost its weights by 875 tons. Actually, America and Eurasia kept enhancing inventory since September; and connections have been found between the increase and economy and consumption. Pay attention to Zambia’s mining tax raise. Lumwana, the biggest simplex copper mine in Africa suspended production. This mine went into production in 2008, and the average output during the first 6 years was 169,000 tons. Technically, the copper price is being adjusted from the lows between $6,200-6,500 in a short term; it is suggested to wait until the bright comes.

 

Soybean

Overnight U.S. market edged up. Trading volume kept light before Christmas holiday and New Year holiday. The market appeared peace basically. South America increased soybean sowing, adding beneficial weather for growth, the US soybean demand was flat, indicating a lack of bull driven. It is estimated that soybean would keep being volatile and weak recently, pay attention to December’s and January’s demand and supply reports. The DCE soybean No.1 contract will step into the 1501 contract delivery month, and this contract attracts multi-concern. Soybean futures purchasing would come to a conclusion after this delivery. The spot is during centralized selling, so that forward prices have pullback spaces. The DCE soymeal continued weakly pullback pattern. Impacted by intensive domestic supply, spot prices of costal area reduced to RMB 3,180-3,220 per ton. It is predicted that soybean import of this month and next month would be over 14.5 million tons. There is a certain callback motivation. For operation methods, it is suggested to mainly short DCE soymeal in a short run, and hold short positions for soybean No.1 far month contracts.


 
PP

PP futures shocked from lows yesterday, from 7,780 to 7,801, the trading volume reduced from 223,000 hands to 396,000 hands, and the holding positions declined by 16,244 hands to 251,000 hands. From the upstream aspect, affected by exceeded supply and economic data, the European and US oil futures dramatically bottomed up on Tuesday after the decrease of Monday. However, reported by American Petroleum Institute, the US raw petroleum and refined petroleum inventories comprehensively increased; the electronic trading platform and morning session of west Texas light futures fell back during the Asian trading period after European and the US crude oil closed. The WTI crude oil rose by $1.86, and averaged at $57.12 per barrel; Brent crude grew by $1.58, averaged at $61.69 per barrel. FOB Korea propylene surged by $20, averaged at $565.5 per ton. As for devices, despite former stockout due to temporary overhaul, the operation is normal at the status quo. There is less influence on forward market. On spot perspective, the domestic PP market kept the increasing trend with a narrower range around RMB 100 per ton yesterday. PetroChina rised their prices for the north, east and south China, and advanced supporting for supply; and the retailers increased prices associated with that, although the output was low. Downstream factories rejected such activities, the actual quotation preferred lower prices. Take brushed spot as an example, the main quote prices of north China lye between RMB 9,200-9,500 per ton, east China quoted at RMB 9,600-9,800 per ton, and south China quoted at RMB 9.600-9,700 per ton.
 
                                                                         Dong LV (Investment Certificate NO. TZ008452)