Daily Report 200115 2015-01-20
Stock Index
China Securities Regulatory Commission (CSRC) tightened leverage risk supervision, led to yesterday’s stock market disaster. Futures indexes plunged down to the limit as a whole, also, CSI-300 Index dropped by over 7%. But CSRC did not confess the liability, it denied for pummeling stock markets through journalists, hoped the market not to over-read, and claimed not to impose financers—lower than RMB 500,000—mandatory liquidation. The speech tended to calm the market, but more seems like a disclaimer. Moreover, the market did have predicted the CSRC not to conduct mandatory liquidation against financers lower than RMB 500,000. As a matter of fact, if the market kept opening low, many accounts are going to be closed. There are divergent perspectives supporting long and short positions, whether the speech of CSRC would ease the escaping trend of funds cannot tell. A shares liquidity risk is lurking.
LME Al 3-month contracts closed down by 1.47% at $1,814/ton. European Central Bank (ECB) is going to announce its quantitative easing decision on 22nd. The U.S. financial markets closed today.
CSRC clarified its punishments against financing and margin trading not to weigh on shares; promised to adjust civil servants’ salaries, and is going to announce the GDP of 2014. On the industry hand, National Grid plans to invest RMB 4,204 billion in 2015. National Development and Reform Commission (NDRC) may extend electric-transforming after testing in Shenzhen, it has approved West Inner Mongolia Power Grid electric price reform. SHFE aluminum remained rebounding.
Overnight U.S. financial markets closed on Martin Luther King Day. News flow in U.S. markets is dull, market demand and supply is bearish. South America soybean which is strength at price in the future would attract more attention of buyers. U.S. soybean is encountering breakthrough of earlier December’s lows, there may be difficulties to stop the downhill trend if no bullish news shows up in short-term.
DCE soybean No.1 contract 1501 finished delivery, short-term concern would be further undermined. Since the weakness of spot have not changed, the rebound of DCE A1505 and A1509 would have to face the pressure of approaching later delivery selling. Soymeal plunged at the afternoon session, future prices dipped below previous lows and triggered bearish sentiment. There are several aspects of bearish headwind in domestic market, short-term, including stressed arrival soybeans, avian influenza and cool fodder demand. DCE soymeal would test the support at RMB 2,600 if overseas markets keep fail.
On the techniques hand, hold short positions of DCE soymeal, and short soybean No.1 during rebounds.
PP futures opened high and went higher yesterday, opened at RMB 7,320, and closed at RMB 7,435. Trading volume surged 61,612 lots to 614,000 lots, while positions cut 32,272 lots to 335,000 lots. On the upstream hand, propylene prices leveled off. On the device hand, operation rate is stable, no signs of substantial new production restriction. On the spot hand, pp prices in most markets remained edging up by RMB 50-100/ton. Polypropylene futures opened high and went volatile, investors did not appear much worries. Sinopec North China branch resumed its pricing policy, so that enhanced the support for costs. Accordingly, traders mainly take profits, hesitation sentiment is significant in the market.
As for wires, north markets quoted prices are at RMB 8,1`50-8,200/ton, east markets quoted prices are at RMB 8,400-8,700/ton, south markets quoted prices are at RMB 8,600-8,700/ton. Fundamentals show some pickups currently, but the continuity needs to be measured. Form the market as a whole, the bearish range of moving averages have not been broken, the performance at RMB 7,500 is extremely important. It is predicted to fluctuate at RMB 7,000-8,000, precisely, the line of RMB 7,500 is the core resistance.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)