Daily Report 230315 2015-03-23
Macro Economy
The U.S. stock market went up last Friday, closing to previous record high again. S&P 500 closed up by 0.9 percent to 2,108.06 points. U.S. dollar plunged again on Friday after the rise the day before, the U.S. debt yield slip associated with gold and crude oil significantly rebounded, the year-most-important Fed’s conference is still impacting the market. Besides, the U.S. launched oil and gas drilling rigs reduced 56—the 15th week of decline, supporting crude oil bounce.
On the European hand, the eurozone leaders and Greek Prime Minister Tsipras met about the assistance and made some progress, Tsipras promised to provide a series of reformation list in order to improve Greek balance sheet, so that the country could get the aid funds. Such situation conforms to our expectation, and we consider that Greek debt risks are smaller than before yet till June.
On the domestic hand, a few Chinese leaders disclosed the reform information in the next phase on the weekend. Zhou Xiaochuan, President of People’s Bank of China (PBC), said that is going to launch three aspects of reformation this year, to accomplish capital account convertibility. In addition, Finance Minister Lou Jiwei declared that only transferring a part of state-owned assets to replenish Social Security gap could be able to lower the Social Security rate. The Vice Minister Zhu Guangyao expressed that current trillions debt replacement launched by the ministry of finance was to resolve problems caused by previous scale economic stimulus package, and emphasized to remain strategic composure without scale stimulus packages. Overall, the publish of relative policies is helpful for cheering up the market, but the economic downtrend is difficult to be altered in a short term.
Domestic AU1506 significantly rebounded during the night session last Friday, surged by 1.29 percent and met strong resistance at 20-day moving average of 241.8 yuan. The main pattern is still bear. However, the market is at periodic bottom, containing rebound correction, reverse resistance is strong from the up side. Mainly take profit for mid-term short positions built in at highs, cut appropriate quantity of short-term long positions built in at breaking through 10-day moving average of 237.5 yuan at 240.5 yuan and hold the remaining intraday.
Overall, although the Fed gave up the “patient” statement, whether the rate ranking would happen in June have not been mentioned, the market warmed up. Gold and silver covered the bear and showed some reverse chances. Whereas, the later market stepped into the “data pattern”, which implies the U.S. economic data performance would be the key of influencing gold and silver. On the funds hand, the world biggest Gold ETF funds SPDR cut 5.37 tons of positions from the prior trading day, the total positions were 744.4 tons. Although Funds raised 1.79 tons of positions last Wednesday, then gold prices rebounded last Friday, while funds were selling at rallies, pay attention to funds’ investment movements towards gold in later trading.
Domestic AG1506 was obviously stronger than gold prices last Friday, rose by 3.39 percent, and had strong resistance at 3,650 yuan.
Operation strategy: for previous short positions, prepare defense at 20-day moving average. Those previous positions are likely to rebound in the short term. Cut appropriate quantity of long positions built in at breaking through 3,530 yuan at 3,600 yuan and 3,650 yuan, and hold the remaining.
Stock Index
Stock index surged in succession last week. Surges of information service, transportation, agriculture, forestry, husbandry and fishing were over 20 percent; and rises of banking group, real estate and broker heavyweights were over 10 percent, the overall market soared. Current factors that bolstering the market growth are simplified administration, empowerment, innovation and entrepreneurship, which equals to release productivity, and initiate new growth and business points; monetary policy is expected to be loose in order to lower costs of enterprises. Simultaneously, commodity bear market lowered enterprises’ cost and benefited relative businesses. On the industry hand, ministries and commissions launched 15 policies in one week, indicating the country’s desire of promoting revolution and development. Information all-around appears to be bull, and there has remaining spaces for rise.
Domestic and overseas copper prices surged last Friday, created the record high of rebound. LME copper surged $200, and closed at $6,040. SHFE 6-month Copper closed at 43,430 yuan, rose 1,300 yuan. Technically, weaker U.S. dollar index eased copper markets’ stress, and Chinese stabilization policy is one of the supports. On the fundamentals, Chinese copper inventory loss 2,267 tons to encourage the market last Friday. Since this was the first drop of copper inventory after 8.7 tons rise, the market’s resistance got some ease. As we discussed in the quarterly report, global copper inventory rose nearly 300,000 tons at the year-beginning due to the extremely weak consumption. The productivity grew 10 percent since the year begin, while consumption dipped 10-25 percent. The fundamentals of the year-beginning revealed the surplus of the whole year, is a reflection of panic. Once the consumption returned in March and April, copper price would get support. Copper mine supply was full of problems in the year-beginning (see the quarterly statement), current processing charges were lower than $100, and is estimated to provide further support. Grasberg copper mine started a strike about unfair wages (320,000 tons output last year).
Operation strategy: LME copper prices broke above previous highs at $5,960, is likely to rebound towards $6,300. Domestic 6-month copper broke above 43,140 yuan, and might bounce to 45,000 yuan. Hold long positions.
LME 3-month Aluminum closed up by 0.96 percent, and closed at $1,797/ton. Greek Prime Minister showed the willingness to alter the fiscal policy. There are 35 investment-intention founding countries in Asia. Vice prime minister of the State Council Zhang Gaoli would not tolerate environmental violation, and the Housing Construction Department would raise the amount of provident fund loans. On the industry hand, SHFE is going to launch Tin and Nickel contracts on 27th this month. It is said that new electronic reformation strategy has been published. Chinalco would sell Guizhou aluminum plants’ alumina production line in a bundle.
Operation strategy: SHFE aluminum extended the uptrend, pay attention to the short-term resistance at 13,500 yuan/ton.
The U.S. soybean closed up last Friday, supported by plunged U.S. dollar and covered bear. The market is influenced by merchandises, no significant changes in supply and demand.
On the domestic hand, DCE soybeans’ performances were diverse for divergent categories, oil and meals waved associated with overseas markets. Soybean No.1 moving independently, soymeal spot prices pulled back last week, affected by declined U.S. soybean. The main quoted prices were 2,980-3,040 yuan/ton. Fodder farms and merchants were prudent in receiving goods, and not active in purchasing. Current soymeal spot inventory is tight, forwards’ quoted prices are high. Rapeseed meal and soymeal are weak and volatile. Domestic-made soybean spot plunged significantly last week, fell for over 100 yuan/ton in many markets. Since the sales process in producing area is slow, price-falling risks may appear in later trading due to concentrated selling. Thus, Soybean No.1 has been affected by lower warrants’ cost, and is projected to remain weak and volatile.
Operation strategy: conduct short-term operations or just wait and see.
                                                                              Dong LV (Investment Certificate NO. TZ008452)