Daily Report 280915 2015-09-28
Macro Economy
US stock market price was mixed on last Friday; S&P 500 index leveled off at closing and, headed for the second consecutive weekly loss; biological technology stock was in selloff. From data side, driven by increased consumption expenditure and construction activity, US second quarter GDP grew at a 3.9% annualized rate and was high expected 3.7%. Markit issued US September Services PMI™ Business Activity Index initial value was 55.6 which met the expectation. September University of Michigan confidence data final value was down to 87.2, which dropped to its lowest from last October, but higher the expected 86.5 and initial value 85.7 in September. Overall, US economy is still in reviving trend but, growth on salary and inflation is too slow, consumers’ confidence is shattered. St. Louis fed president Bullard still wish to start increasing interest rate but, he claims whether there will be sufficient data for decision makers to decide interest rate is uncertain before October meeting, yet the possibility exists. We consider the data before October meeting is hard to have large shifts; the possibility of fed raise interest rate in October is low. On European side, the ECB management committee members, Bundesbank president Weidmann claims no one has said QW would be expanded. But in real terms, Euro zone QE is plainly expedite in the last two weeks, the remarks may aim at maintain market confidence.
On domestic side, Chinese President Xi Jinping and US President Barack Obama issued a joint declaration that, US support incorporate RMB into SDR on the premise of meet IMF existing SDR assessment criteria. Xi indicated, China will continue exchange rate reforming; there is no reason for RMB devaluation in long term. The secretary for the ministry of foreign affairs of international economy, Zhang Jun indicated, US would only consider joining AIIB after AIIB started operating and, result showed it would not challenge US authority. In addition, China August Industrial enterprise profits will be issued on intraday 9:30 AM, which shall focus on.
 
 
Stock Index
Last week stock index edged down after rallied, only back sector ended higher in Friday at 1.23%. Computer sector fell 5.7%. Media, electron, mechanical equipment were all down about 4%. Current market is in the low point, leverage from stock index was down and, market selling pressure was not large. From bullish side, state-owned enterprise was developing in depth; top-level design was already issued; the State Council required operating state-owned enterprise mixed ownership reform categorizing and classifying; the second reform of state-owned capital investment experiment was expected to be launched. Liu He said would establish property right protection system focused on protect fair. Since the force on reform in prior was light, this may create new concept to except. But overall economy was in downward trend currently, difficulties from real enterprise plainly reflect on each economy data. We recommend keeping volatile sentiment.


Copper
Last week copper price slumped, among which LME fell 3.78%. Concern on Chinese economy has becoming the main reason. After fed showed maintain interest rate in September since wary of global economy, last week China Caixing PMI data again created record low, which exacerbated the wary of Chinese economy and, became the main reason of copper price downward tendency. Last Thursday Yellen indicated would raise interest rate in later this year, on the one hand was for release the concern on global economy from market. On the other hand, showed US economy was in reviving trend; US second quarter GDP growth increased from 3.7% to 3.9% in last Friday announcement. Economically, market required a plainly trend. Overall, the risk still exists for now.
On fundamental side, last week LME spots premium increased to $19.5, domestic spots were discount RMB 70 to premium RMB 10. Domestic spots were still weak. Last week copper inventory in three main exchanges was decreased 1419 tons, among which SHFE inventory increased 7668 tons, LME inventory decreased 10150 tons and, COMEX inventory increased 1063 tons. Stagnant domestic consumption was the major pressure. Technically, copper price was still weak; LME may continue trying prior low price in this week, resistance was at five-day moving average system. Domestic copper price may also down to bolster line. We recommend keeping holding shorten positions and, wait for a clarified market.
 
 
Soybean
There are three trading days before the National holiday; we predicted the market would bilateral fluctuated. Supply and demand side from DCE soybean was flat; new beans gradually came into northeast and, domestic soybean in south area was in the listing period which exacerbated the weaken pattern in northeast area. It was predicted price would continue weak trend before holidays. Current new bean purchase price was RMB 4100-4160/ton in Heilongjiang region, selling and buying was thin.
Soybean meal spots were firm under the influence of rallied overseas market; market still lacked of bullish news for boosting in short term, meals may continue volatile weaken trend and seek the direction for breaking through. We recommend holding slight short positions or close positions for soybean No.1 contract and, holding slight long positions or close positions for soybean meal.
 
 
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