Daily Report 210815 2015-08-21
Macro Economy
Yesterday PBOC processed a RMB 120 billion 7-day-cycle reverse repo again, put overall RMB 350 billion into market with twice RMB 120 billion reverse repo and once RMB 110 billion MLF; RMB 90 billion reverse repo would be expired in this week, amount to net quantity at RMB 240 billion. According to our calculations, capital outflow in July had caused basic monetary tightened about RMB 510 billion; which indicated that though M2 had grew supernormal, capital spending in a short time cannot recover tightened basic monetary; the possibility of decreasing reserve funds was raising. In addition, Caixin China August manufacturing industry PMI initial value will published on 9:45 this morning, estimation is 48.2 and higher the July 47.8; still lower the 50 level.
 
 
Stock Index
Yesterday index went weaker; national defense and military project sector fell in a leadership; reform of state-owned enterprises concept continued weakened; outline of promoting big data development from executive meeting of the State Council was unable to boost related sectors neither. Holdings further increasing from industrial capital and social security fund entering capital market had certain bolster and confident the market in the relative low market level. But market enthusiasm lacked of sustainability. None of the hot concepts as national team rescuing market; estimation of reserve funds decreasing; military projects; reform of state-owned enterprises; big data can be the economic locomotive; market was lacked of plainly mainstream logic to lead the confidence from investors. Under the fluctuated platform, assets are more likely to switch among each sectors; index will mainly in fluctuation. Since economy data was weak; IC, represent the concept sector, is likely be stronger than IF and IC in the future. IF will have bolster at 3500 in September and, observing the price in future days, if IF further dropping after fluctuate at 3500, it might seek for prior low level.

 
PP
Yesterday PP futures fluctuated in low, opened at 7619 and ended at 7650; trading volume decreased 27532 lots to 570,000 lots; holding increased 1528 lots to 223,000 lots. In upstream, FOB Korea propylene decreased $2; average price was $810.5/ton. On spots side, yesterday domestic PP market in weaken consolidation trend. PP futures were in low level and further hammering market momentum. Most merchants shipped actively and surrendered partial profits on selling for own trading volume. Downstream plants stay in cautious and lacked of receiving demand; market asking was limited; trading momentum was thin.
For instance of wires, main quoted prices of north, east and south markets are RMB 7900-8000/ton, RMB 8100-8300/ton and RMB 8100-8350/ton, respectively.
As for operation, we recommend short positions held in cautious and, close positions based on market momentum.
 
 
                                                                     Dong LV (Investment Certificate NO. TZ008452)