Daily Report 190115 2015-01-19
Macro Economy
China Banking Regulatory Commission (CBRC) announced in Commercial Bank Entrusted Loan Regulation that commercial banks have no responsibilities for credit risks of entrusted loans, and the regulation forbids credit funds to act as the source of entrusted loans. Considering off-balance-sheet financing operations represented by entrusted loans of December’s credit data surged, and to control rent-seeking spaces of high qualified certificated enterprises, the regulator is working on stricter regulatory policies. The residential sales price index of 70 large and medium sized cities released by the National Bureau of Statistics (NBS) indicates that the price 65 cities declined on a month-on-month basis in December, and 67 cities decreased in November. The short-term rebound of real estate seems to continue. Pay attention to the industrial and investment data of December and the GDP of Q4 that would release this Tuesday.
Last Friday, domestic AU1506 contract surged by 2.1%, broke through RMB 251 and then bounced back in a higher rate.
Operation advice: hold long positions established at RMB 247 and stop lass at RMB 260 in an appropriate volume. Since short-term risk-aversion sentiment exploded, gold price is estimated to continue to grow, beware of drop after rapid rise. The prediction of European Central Bank scale debt purchasing on 22nd this month is more intense; Swiss central bank gave up to remain the exchange floor at 1.20 that euro against franc, and this triggered exchange market fluctuated widely. Accordingly, market’s risk-aversion sentiment heated up, gold is appreciated by funds. Positions of gold ETF increased 23.3 tons in two days. Besides, newest data of CFTC reveals noncommercial gold net positions rose, indicating stronger purchasing power of arbitragers towards gold. In U.S., inflation data of December kept low, estimation of Fed interest raise cooled down, and that promoted the gold price. Overall, the focuses of this week are ECB interest decision and Greece election on 25th; economic data of U.S. would be flat.
Last Friday, domestic AG1506 contract increased by 3.05%, short-term broke through RMB 3,700 and then rebounded in a higher rate.
Operation advice: hold midterm long positions established at RMB 3,600, as for long positions breaking through RMB 3,700 in short-term, stop loss at RMB 3,780 in an appropriate, and beware of short correction risks. Overall, silver price moves along with gold price, yet shows weak metal features.
Funds shows that positions of silver ETF remain sell-on-the-rally since December 2014, and cut 92.32 tons in recent two days, indicating funds’ bearish view of silver price though it bounced back already.
Stock Index
Stock index fluctuated and rebounded on Friday. China Securities Regulatory Commission (CSRC) criticized 12 securities as violating margin trading regulation, 3 of those was penalized, indicating CSRC’s intention of more intensive leverage risk regulation. This directly influenced brokerage shares, and also slowed down leverage raising pace of the stock market. Short-term market style might change, that is, funds may transfer from heavy-weighted blue-chip stocks to small emerging stock, and dragged the index fall.
Copper market is adjusting after last week’s slump, LME copper price resisted the impact of us dollar surge, and eventually closed up by $125 at 5-day moving average of $5,650. The market element is significant in last week, especially, crude oil price rose significantly supported copper price. Monthly International Energy Agency (IEA) report announced last Friday reveals that oil price slump might undermine the output development of non-OPEC member, New York crude oil futures price soared by 5.3%. Since crude oil market ended loss, short-termly it may support the rebound of copper price in a certain degree.
There are many concerns this week, namely, Chinese macro economic data on Tuesday, ECB meeting on Thursday, and Greece election on Sunday, the market is predicted to remain volatile. Since copper market turned into bear market in 2011, copper prices showed a slump of 15-20% in each 2012, 2013 and 2014, and then remained range-bound. The biggest decline in last week is 12.3% at $5,353, which below the lowest objective of 20 years at $5,500. We believe copper price would bounce back from this position.
On the fundamentals hand, LME spot premium edged up by $2 at $53, weekly inventory increase reached 13,000 tons to 200,000 tons. SHFE inventory rose 24,000 tons to 137,000 tons. Global copper inventory growth shows that surplus supply is becoming true.
The newest CFTC report indicated that non-commercial long positions rose, net short positions dipped 5,442 lots to 36,000 lots, fell from the record high. National Grid planed to allocate 24% more funds into grid investment. The plan mainly focuses on ultra-high voltage, which has limited influence against copper price.
On the technique hand, copper price bounced back associated with short substantially positions closing out, and is estimated to remain rebound trend. If copper price can hold on 5-day moving average of $5,750, LME would rebound towards $6,000. The copper price would rebound towards RMB 43,000 provided domestic 4-month copper can hold at RMB 41,230. Operate contrarily.
                                                                             Dong LV (Investment Certificate NO. TZ008452)