Daily Report 170815 2015-08-17
Macro Economy
Data revealed that in the end of July PBOC yuan funds outstanding for foreign exchange was RMB 26.4 trillion; decreased RMB 308 billion on month to month base. Financing Institution yuan funds outstanding for foreign exchange was RMB 28.9 trillion; decreased RMB 249.1 billion. Yuan outstanding for foreign exchange from PBOC and Financing Institution in July both create the biggest decrease level, indicated that capital outflow speeded up and, PBOC enhanced currency market intervention for bolstering RMB exchange rate. But from broad money side, current M2 growth speed already exceeded target; basic currency tightening from foreign drain might just hedge the extra M2 and, there was a possibility of reduce reserve requirements.  But it was hard to determine whether reserve reduction would appear in a short time, the policy uncertainty was increasing.
 
 
Stock Index
Friday stock index fell back after soaring. Current stock market still lacked of confidence and bull market mindset had not formed, only the panic mindset had eliminated under the firmly bolster from national team and, market started to objectively trade in stock market. CSRC stated CSF would not quit within next few years but, market held different opinions on it; no quitting did not mean the national team had affirmed it was bull market and, did not guarantee that nation would ensure bottom of stock market. We regard as, there would always be measures to maintain market stable operation when it was necessary but, nation hoped there was internal logic to drive market out of weaken. On bullish side, 13th Five Year Plan; reform of state-owned enterprises; stabilizing growth attitude; further effecting from prior hot topics would also increase market imaginary space. On bearish: overall economy data performance was weak.
Technically, IF down bolster is 3900-3950. Hold volatile mindset and there might be long opportunity in short a time, we recommend seeking the chance in low level and do not chase it.

 
Copper
Last week copper price fluctuated in low level; domestic copper price fell back; LME copper price was also lacked of momentum to rally. RMB devaluation temporarily came to an end in last week but, US dollar appreciation hammered market again. Last week US retail, employment and PPI data was all better than anticipation which increase the possibility on US interest rate rising in September; US dollar index reversing the weakening trend in last week which hammered the copper price. On fundamental side, last Friday LME spots discounted $7.75; domestic spots discounted RMB 120-60. Copper inventories in three major exchanges increased 3128tons in last Wednesday, among which LME and COMEX decreased 3000tons respectively. There is lots of news on copper supply recently, latest news is, Zambia claimed that mining company had not executed the commitment on cutting down 30% electric power and, would impose to implement in November. Copper yield in KGHM from Poland leveled off in second quarter; yield of Sierra Gorda copper mine in Chile was 38,000 tons in first half year and the annual plan was 100,000 tons.
Technically, copper price had not got rid of weak trend; LME resistance was $5230, in domestic October copper price was RMB 40000; we recommend avoiding macro risk as for operation.
 
 
Soybean
Performance of DCE soybean was stronger than overseas market; soybean No.1 contract extended upward scope under the boost from spots; oil meal consolidation followed overseas market. Domestic soybean spots continued strong in this week and boost the futures price; since current spots were in stable, paid attention on further increasing scope although long momentum still existed in market.
Soybean meal consolidated followed overseas market; though boosted under bullish from RMB devaluation, overseas market slumped and import costs went down, after meals price spreads revised it would still fluctuate with US market; as for operation, we recommend observing or in short mindset.
 
 
PP
Last week PP futures rallied. In upstream, up to Friday night, FOB Korea propylene average price was $825.5/ton. As for device side, last week operation rate was 86.3% and similar with prior weeks. On spots side, domestic market influenced by futures rising; spots market tentatively raise; most downstream plants purchase raw material to covering; investing and trading momentum was plainly thicker than last week.
Current main quotation of wires, north market was RMB 8100-8150/ton, east market was RMB 8300-8450/ton and south market was RMB 8350-8400/ton.
As for operation, current moving average system upward, MACD red column extended as rally trend; recent market might into fluctuation section but, the upper bond has not confirmed yet, we recommend to observing.

 
                                                                 Dong LV (Investment Certificate NO. TZ008452)