Daily Report 120615 2015-06-12
Macro Economy
China RMB loans increased 900.8 billion in May, M2 year-on-year growth of 10.8%, society capital raising scale expanded RMB1.22 trillion. From Jan to May, fixed investments cumulatively year-on-year decreased 11.4%, growth of real estate and infrastructure investments decreased but, manufacturing industry increased slightly; according to data in this month, fixed investment and real estate investment both increased slightly; meanwhile growth of industry added value rallied to 6.1% in May; consumption growth rallied to 10.1%, actual growth rallied to 10.2%.
On the whole, downward trend of economic will be controlled in a certain level, but there’s no plainly improvement on the core problem-investment downward trend, policy of stable growing will not be reduced and, directional policy is essentially to further adopted.
Stock Index
Yesterday CSI500 rallied and SSI50 went down. On the stock market, besides the bank, non-bank financial, excavate, media sector turned green, other sectors all boosted. Yesterday published economic data remained weak which driven SSI50 to a downward trend; though the financing data published later was better, there’s no optimistic space considering the overall data and attitude from central bank. CSI500 spots index hits a new high, bolster to CSI500 futures price gradually consolidate. Overall bull market is not likely denied but, current booming momentum is weak, funds fast in and out with cautious and switch among each hot sectors constantly, index volatile in a large range. Before macro economy booms up and concepts show substantial effect, it is generally considered bubble exists; evaluation is confused; major shareholders reduce holdings; private placements increasing; it is an overdrawn suspicion predicted. It can only consider market is in a slow bull or volatile bull.
Technically, there is no actual breaking through of index. As for operation on futures, market remain volatile; we recommend intraday make short term and do not hold positions too stable.
Thursday copper domestic and overseas copper price slumped, copper market turns up new shorten momentum. As for macro side, except for China economic data remain weak and policy tends to observe the effectiveness, U.S. dollar exchange rate rallies also hammers the copper price. The May U.S. retail data soared according to the publishment on Thursday, market strengthen the expectation of Fed raising interest rates in Sep. If Fed holds a meeting on next Tuesday and Wednesday, the possibility of U.S. dollar exchange rate rallies may strengthen according to recent performance. On fundamental, Thursday LME spots premium to $16, inventory soared 9450tons which increased the pressure on copper price; after all China consumption is not flourishing, especially the consuming industries come into the slack season in advance from May while the copper yields continues increasing, the expectation of fundamental turns to surplus keeps hammer the copper market, LME inventory begin to increase will strengthen this expectation with no doubt and, copper price hits a larger pressure.
On the supply side, Mining Minister of Zambia indicated the tax revenue problem still influence the copper yields and will be hard to increase in this year, considering the yields in Q1 decreased 10% that the possibility of negative effects already been reflected is high; Zambia Sentinel copper mine under First Quantum Minerals put into production in last Dec and, quarterly report indicated come into commercial production this Q3, in this year will output 150,000-200,000tons copper.
On technical side, copper price reappear the weak trend, if LME price fell $5860 in later market, downward space will be open again for copper price. It is predicted resistance at $6000.
In domestic side if price fell RMB42500, might also exists possibility of copper price went down to RMB40000. We recommend continue holding short position as for operation.
Soybean No.1 contact slumped in night session, we considered after futures price fell RMB4300 may not react the actual spots states, the divergence of market prediction to price in the future will width fluctuant recent soybean futures price, value of short term in currently price had plainly decreased, previous short position closed up.
Soybean meal spots quotation in North reduced, since from Jun to Aug there was a huge amount soybean arrival the port, oil plant had high operating rates, terminal demands turned back to slow, overall soybean meal remained in a weak trend. But crush margins losses on operation side in the short period may limit the downward trend.
As for operation, we recommend reducing previous soybean meal short positions appropriately.
Yesterday PP futures continues upward trend, opened at RMB8550, closed at RMB 8680, trading volume increased 46754lots to 689,000lots. From the upstream perspective, FOB Korea propylene prices increased $5; average price was $950.5/ton. As for the spots market, yesterday domestic PP price all rallied, overall price increased RMB100/ton. Sinopec South Chinese, Petro China North China, East China and South China ex-factory price rallied which strength the bolster to supply cost, merchant followed upward trend and made shipment, positions opening and covering plainly boomed up. Although demands from downstream continues low, plant are more likely to firm purchasing,  trading volume increased, market investing and trading turns to thick.
Main quoted wires prices of north, east and south markets are RMB 8700-8800/ton, RMB 8900-9050/ton and RMB 8950-9100/ton, respectively.
For operation strategy:  MACD red-column extended further and, yesterday price broke through moving average system showed a rebounding trend. But the PP still exist a large confliction on fundamental side, current rally mainly under driven from crude oil increasing, we recommend pay attention on crude oil trend and wait for the time being.
                                                                 Dong LV (Investment Certificate NO. TZ008452)