Daily Report 191015 2015-10-19
Macro Economy
China central bank report issued, gold reserve was 54.93 million ounce in the end of September and, it was the fourth month increase. Data released on Friday from China central bank as well revealed, financial institutions foreign exchange reserves decreased RMB 761.3 billion in September, exceeded the RMB 723.8 billion decrease range in August and created the record high. But in the meantime, central bank foreign exchange reserves only decreased RMB 264.1 billion month-on-month which was the lowest decrease range from three months, revealed the condition of Chinese capital outflow had relieved. This may indicated in the September action of stabilize market had draw on more foreign exchange from financial institutions. National Bureau of Statistics of China will release the third quarter economy data on intraday 10:00, market expectation revealed, GDP would increase 6.8% year-on-year as the lowest level from 2009; in the second quarter was 7%. In addition, September industrial added value was expected to increase 6% year-on-year; in August was 6.1%. September total retail sales of consumer good was expected to increase 10.8% year-on-year; in August was 10.8%. Fixed investment from January to September increased 10.8% year-on-year; in the last eight months was 10.9%, above data need to be focused.

Stock Index
Last week stock index was in upward trend, each first grade sector raised; communication, military industry sectors were the top gainers. Delivery in Friday was stabilizing. From capital side, after prior slumping, positions from institutions were rather low; the momentum of coming into market was strong. From policy side, stabilizing growth continues effecting; Li Keqiang: precision implement directional regulation to strengthen conversion period regulation; “one hundred-day battle” on stabilizing started. From reform side: the state-owned enterprise reform continues boosting and pays attention to the experience from grassroots; the classification guidance on state-owned enterprise reform expected to release within two or three weeks; market has certain expectations on it. From data perspective: Third quarter economy data will release intraday, below expectation might signify more effects need to be strengthened for stabilizing growth; higher than expectation might signify the economy is not that bad and it tend to bullish. Overall momentum is tending to long currently but, institution is hesitant and had not come into the market, the rebound scope still exists on technically. But there is large number of locked chips at the high point and, IF has large pressure at 3600 point. The market will revive in short term but do not be too optimistic.
Last Friday copper price had dropped and the main reason was the concern on Chinese demand. On fundamental side, last Friday LME spots premium increased to $18.5, domestic spots discount RMB 40 to premium RMB 40. Copper inventory in three main exchanges increased 7988 tons in last week, among which SHFE inventory increased 17415 tons; LME inventory decreased 11825 tons; COMEX inventory increased 2398 tons. On supply side, third quarter copper output from Vale in this year raised 4.9% to 110,000 tons year-on-year, yet the total copper output from prior three quarters was 212,000 tons; decreased 22.6% year-on-year. In addition, Anglo American announced cut 120-140 pieces staffs in Chile Corporation, the total copper output from which was 748,000 tons in last year. Technically, the copper price was still in reviving, paid attention on the possibility of challenging prior high point.
Domestic soybean spots continued weaken, quotation on spots in Heilongjiang area dropped below RMB 3900/ton, new bean in south as well dropped below RMB 3900/ton, demand from northeast market was predicted to further sluggish in short term.  We regarded soybean NO.1 contract price in short-term was influenced by weakened spots, the weakened midterm pattern is obviously.
Soybean meal market was volatile in strong pattern in this week, spots rallied in stabilizing; quotation was generally at RMB 2750-2850/ton. On one hand, US soybean broke through 900 cents; on the other hand was under the boosting from good basis sales and tighter supplement. But the global oversupply pattern still remained; the altitude and strength of DCE soybean meal reviving in short-term still rely on sales rhythm from oil plants and the further performance from US soybean.
As for operation, we recommend holding soybean NO.1 contract in shorten at high; holding soybean meal in long at light positions.
Last week PP futures went low in fluctuation. In upstream side, up to Friday night, FOB Korea propylene average price was $565.5/ton. As for device side, operation ratio in current PP manufacturing enterprise was about 86.9% and was lower than the week before last week. On spots side, crude oil temporally increased after holiday which boosted the sentiment. But the futures price fell back soon, the demand from downstream was limited; hammer from supply side was huge; volume in firm offer was weak; the observing momentum was thick.
Current main quoted prices for wires of north, east and south markets are RMB 7200-7500/ton, RMB 7300-7600/ton and RMB 7550-7750/ton, respectively.
As for operation side, current five-day moving average system turned down again, ten-day and twenty-day moving average system ranged in shorten as shorten arrangement. Recent variation on macro side was huge, crude oil still under the influence of oversupply expectation; the possibility of futures price continue weaken was high.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)