Daily Report 060715 2015-07-06
Macro Economy
Since recently domestic stock market collapsed, decision-making levels issued multiple stabilization measures in the weekend. Securities Association of China published proposal in the official website on Saturday, 4 July and indicated that security companies – as the main market participators, must undertake the due obligations and unite together to maintain the market stabilization; and 21 security companies funded add up to no less than RMB 120 billion to invest blue-chip ETF. CSRC affirmed to postpone IPO but new shares issue auditing would not stop, which would substantially decrease new share issuing amounts and financing issuing amount; castigated malicious short terms; meanwhile central bank would assist giving liquidity support to China Securities Finance Corporation Limited through various forms. Central Huijin announcement stated already buy in ETF in the secondary market and will continue correlated operations.
Due to the huge amounts of financing in this bull market and, off-site financing, FPRC have made relationships among trust, bank and security companies becoming complex; once further collapsing, the real economy will be affected as the consequence, which the decision-making levels will not tolerate. But currently volume of A share is huge, the investors losing confidence made a serious selling pressure to market, the effect of government rescuing requires persisting inspection
 
 
Copper
Here begins again a fluctuation week. Last week copper price consolidated at high points, waited for numerous risky events becoming clear. One is Greek referendum and according to the newest situation, Greece citizens vote dissenting in the weekend and veto international bailout scheme which surged the market risk; Greece government want to increase the negotiation chips by this opportunity but Euro central bank consider this will lead to Grexit; Euro central bank plan to hold meeting this Monday to decide whether offering more supports to Greek; such a large indefiniteness lead to a higher requirement for market hedging and form the pressure to copper market. Other hand is the Chinese stock market, in the weekend the State Council of China rescued the market and need to wait for effect becoming clear. Back to the copper market, LME spot discounts expanded to $16, last week LME inventory increased 11,000tons, domestic inventory decreased 11,000tons. Comparatively speaking, current copper price is strong; this is related to large number of funds shorten positions closed to protect the held stock long positions.
As for fundamental side, copper consumption is still weak but, on the supply side copper mine yield increasing was not as prediction. Technically, copper price pressure at 20-day moving average line, LME is $5800, domestic copper price is RMB42,300, recent operation mainly focus on hedging macro risk.


Soybean
Soybean No.1 contract continued felling with adjustment, spot price in northeast area dropped; domestic soybean demand in recent period was weak, peasant household was anxious to clear grain surplus made weaken trend extending; it was predicted that soybean No.1 contract would continue weaken with volatile in a short period but, operation price was plainly lower the warehouse receipt, we recommend do not over taking short positions.
Soybean meal market rose following overseas market, due to last week spot increased range was around RMB 150/ton, crush margins loss plainly decreased but, the port arrival amount in June and July would be large, the future market still face the pressure from supply side; this is to say, continue rebounding trend of DCE meal need coordinate from U.S. market further rally; U.S. market will rest in recent days hence we do not recommend chasing bullish in DCE meal. As for operation, pay attention to soybean meal stop-profit on long positions.
 
 
                                                                       Dong LV (Investment Certificate NO. TZ008452)