Daily Report 260615 2015-06-26
Macro Economy
Yesterday the People's Bank of China processed a 35 billion 7-day-cycle reverse repo in the open market, bidding interest rate dive to 2.7%, previous was 3.35%. This is the first action from central bank after continuously pause the open market operation 19 times in 8 weeks. Central bank explained that: current overall liquidity from banking system is adequacy, moreover, under the influence of half-year assessment and recent IPO, partial financial institution fund demand has been increased. This reverse repo states central bank will continue easing policy, the high position long cycle interest rate still exist the downward scope, but under the circumstance of economy turns better, the comprehensive policy may be more cautiously.
Stock Index
Yesterday late-day points slumped. This retracement of stock index was caused of overvaluation; major shareholders reduced shares; overseas-listed China Index returned to market; IPO prediction, spot check on off-site capital and etcetera factors. Substantially reason was visions were too glorious but reality cannot follow. If the previous top reacts a temporary bubble, there is no way all enterprises can turn into booming, thus the market requires a downturn to squeeze bubble; previous reason for bullish will not make affect temporally; market is likely transfer from extreme positive to lack of confidence. Increasing back to previous points is difficult and there is a high possibility for downturn.

Soybean No.1 contract fell back after interim rally, spots price in northeast area start dropping; temperature rise, enterprises reduced the purchase price and the South lack of demands, made the short-period tendency came into adjustment situation; we predict the weaken operation tendency may continue for a while. Soybean No.1 contract operation method remains shorten near warehouse receipt area and strategically long position when hit deep retracement.
Soybean meal night session rallied following the buying market, spot price was stabilized currently and trading volume decreased; affected by larger port arrival amount in this month, market still consider the hammer from supply side; recent soybean meal maintain former increased but, selling market fundamental side was not good as buying market, this fluctuation tendency totally following the U.S. market. As for operation, we recommend progressively holding soybean meal long position slightly.

Yesterday PP futures continues volatile, opened at 8599 and ended at 8615, trading volume decreased 120,000 lots to 287,000 lots, and holdings increased 2038 lots to 407,000 lots. In upstream side, FOB Korea PP slightly decreased $2; average price was $953.5/ton. No plainly variation in device side currently. As for spot side, intraday domestic PP market price slightly decreased in the main stabilized trend. Major areas of petrifaction gradually reduced the ex-factory price, which further weaken the bolster to market cost. PP futures price running in a high position, impact on market mindset was limited. Merchants made shipment following the trend; partial merchants sell slightly surrendered part profits for increasing the shipment; downstream plant observed in cautious and willing to receive shipment in lower price, market trading focus on receiving shipment from merchants.
Yesterday main quotation of wires, north market was RMB 8400-8600/ton, east market was RMB 8700-8900/ton and south market was RMB 8650-9000/ton.
As for operation, current moving average system continues mixing, no plainly direction in tendency and there is high possibility of further volatile, we recommend keep observing.

                                                                 Dong LV (Investment Certificate NO. TZ008452)