Daily Report 130815 2015-08-13
Macro Economy
Yesterday US stock market leveled off, S%P 500 index raised back the 1.5% down range and over 200-days moving average system; energy sector lead to rally. Up to closing, S%P 500 index raised 1.98 point or 0.1%, ended at 2086.05 point. Data from US Department of Labor revealed that, US June JOLTS job vacancy was 5,249 million, lower than forecast 5.35 million; May value corrected from 5.363 million to 5.357 million. Though data was not good as forecast, there was no obvious dropping, which indicated US labor market was continuously reviving. US June budget deficit was $149.2 billion, forecast $140 billion. William Dudley, the president of the Federal Reserve Bank of New York, indicated that Fed would raise interest rate in the near future if in optimism and, the precise timing would determined by newly released data. We continues to believe since the reversal from recent economy data and, inflation target hovered in low level, that it was most likely Fed would raise interest rate in the end of year. In addition, the Japanese central bank adviser claimed, current inflation rate was far away from 2%, central bank might need to increase the easing forces. While Vietnamese Dong had already becoming the first currency joint devaluation camp after RMB devaluated: trading range of Vietnamese Dong extended from middle rate 1% to 2%, for protecting own export competitiveness. RMB devaluation increased the hammer on Asian-Pacific region competitive devaluation.
In domestic, yesterday released data revealed that, July Industrial added value was far from forecast; growth fell back to 6%. State Fixed Capital Investment nominal increased 11.2% on year to year base from January to July and, nongovernmental Fixed Capital Investment nominal increased 11.3% on year to year base, both created record low. Nationwide Investment in Real Estate Development nominal increased 4.3% on year to year base and created a new low from May 2009 but, sales of commodity house continues reviving. Overall, Chinese economy stabilized once in June and assisted to accomplished economy target in first half year at 7%, but the entire economic index fell back in the beginning of second half year, which hammer the stabilizing growth. Previously we have anticipated that reviving from real estate industry would drive economy stabilize in a short period but, investment in real estate we calculated dropped again and foreign trade data in this month sharply went down, that strength of economy stabilize might be weaker than estimated. In addition, news from Bloomberg was, PBOC had intervene the exchange rate of yuan against dollar in onshore market at 1 dollar to 6.4300 RMB through the agent bank to avoid over devaluation on yuan against dollar, but yuan still devaluated near 1%. PBOC will hold press conference on RMB issue at 10:15 this morning, pay attention on it.

 
Stock Index
Yesterday stock index slightly retraced; only the coal, military and construction sectors edged up. Previous rally was based on the firm rescue attitude from nation side with sufficient rescue resource; estimation of stabilize growth policy and individual subject continues booming, but RMB devaluation in these days had heavy impact on market confidence that panic anticipation to economy increased again. Yesterday June economy data continued entirely diving, showed that recent stabilize growth policy had not drive the economy stabilized. Economy downturn had threatened the stabilization of employment; increased the regional financial risk and, exacerbated investors’ concern on future market. There will be certain worries on stock index in short period and it is hard to hit high level; we recommend paying attention on the falling opportunity.
 
 
Copper
Wednesday LME copper price recovered lost profits after plunging; domestic copper price hit RMB 40000. LME spots discount extended to $15.12; inventories decreased 4950 tons; domestic spots as well in discount; consumers lacked of buying momentum. On supply side, Codelco stated in Wednesday that, Ministro Hales mine stopped striking and, Salvador, shut down from 22 July would be solved afterwards. The annual copper output from Salvador and Ministro Hales mine is 40,000 tons and 140,000 tons respectively, which has continued striking for 22days. Technically, recent copper price will still fluctuate in low level; LME resistance at $5340, in domestic is RMB 40000; we recommend keep in observing temporarily on operation and waiting for further clearly market.
 
 
Soybean
Intraday DCE will fall down under the influence of sluggish overseas market; though these day yuan devaluation bullish the soybean, after corrected this spread the domestic market still followed US market volatile; according to shorten keynote in report data, US soybean would test the bolster at 900 again, and if the US weather did not occur serious issues in the future two to three weeks, US soybean would not raise in a short period. We recommend observing or hold shorten as for operation.
 
 
PP
Yesterday PP futures volatile high, opened at 7870 and ended at 7898; trading volume decreased 148,000 lots to 405,000 lots; holding decreased 8822 lots to 217,000 lots. In upstream, FOB Korea propylene decreased $10, average price was $825.5/ton. On spots side, in yesterday domestic PP futures, wires in south market quoted high and others tended to weak out of stable. Sinopec south China and Petro China south China EXW further increasing; merchants bid in high under the influence of enhanced cost bolster. Since yesterday momentum was common and buying momentum was thin, investing and trading was worse than last day.
Current main quotation of wires, north market was RMB 8100-8150/ton, east market was RMB 8300-8450/ton and south market was RMB 8350-8500/ton.
As for operation, current moving average system is upward, MACD red column extended as rally trend; recent market might into fluctuation section but, the upper bond has not confirmed, we recommend to observing.
 
 
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