Daily Report 281015 2015-10-28
Macro Economy
Yesterday US stock market ended low; corporate performance was mixed, order of durable goods was weak. S&P 500 index fluctuated the whole day, ended down 5.29 point or 0.26% to 2065.89 point. Yesterday data revealed US September durable goods order had decreased 1.2% from last month. Markit released US October Flash U.S. Services PMI Business Activity Index was 54.4. Conference Board released US October CCI decreased to three month low point. August S&P/Case – Shiller 20-city index increased 0.1% month-on-month; year-on-year increase range raised from 4.9% to 5.1%. Above data was mixed with good and bad, but overall was poorer than prior period, this might made a base for US dollar interest rate increase prolongation. Fed would make announcement on monetary policy on 2 AM Beijing time, it was predicted the benchmark interest rate would remain the same or, would admit weakened economy data and global situation was still poor; meanwhile would emphasize the positive side on long-term trend, reserve the flexibility on interest rate increase in December. The fed funds rate futures had already shown the fed first interest rate increase timing would be prolonged to March next year. In addition, in the next few months of this year might appear technical rally on inflation index; need to focus on the attitude from Fed to inflation to estimate following monetary policy.
On domestic side, MOHRSS spokesman Li Zhong claimed, the basic pension funds investment operation would be implemented on 2016, currently was together with ministry of finance to research the collation and appropriation measure on advisory funds. Pension funds come into market would inject about RMB 2 trillion capitals. But capitals would be gradually injected from next year entry market operation, which had limit impact in short term for stock market long term bullish; this year stock market may still mainly in fluctuation.
 
 
Stock Index
Yesterday stock index rallied after dropping, booming from afternoon. Sectors as space satellite, military industry, and maritime equipment led to rise. From news side, MOHRSS indicated the pension funds into market might exceed RMB 2 trillion to stimulate the market. Current economy fundamental side was weaken, country had launched various kinds of measures to stimulate market; fiscal expenditure initiatively; central bank reduced interests and reserves and, there still exist further decreasing scope had strengthened this expectation, made the bolster for stock market in low point stronger. But we also may see the worse and worse economy data, traditional industry over capacity continue hammered the manufacturing investment; no sign for improving and, capitals constantly outflow might caused the reviving on increased risk appetite hard to sustain. Overall, it is hard to come out the volatile pattern at this moment.

 
Copper
Tuesday domestic and overseas copper market trading and investing was thin; copper price narrowly volatile. Market was waiting for the result on Wednesday Fed meeting. On fundamental side, LME spots premium was $9, inventory decreased 3875 tons. Domestic spots market trading and investing was thin, discount RMB 50 to premium RMB 30. Latest news, Peru September copper output increased 41% to 148,000 tons year-on-year. Southern Copper third quarter copper output increased 3.7% to 174,000 tons year-on-year. South America was still the main growth point for copper mine. Technically, copper price was still fluctuated in low point. We recommend observing in short-term and waiting for clarifying.
 
 
Soybean
Soybean spots in northeast region were weakening out of stabilizing, quotation in producing area was generally at RMB 3800-3840/ton; peasant household was reluctant to sell and purchase was in cautious caused thin market trading and, lower price in north China had further hammered the export sale on northeast region spots; It was predicted slow digested new grain would extend the sales cycle, soybean No.1 contract was predicted to maintain weaken in low point pattern.
Soybean meal spots price in partial regions reduced RMB 10-20/ton, current quotation generally at RMB 2680-2740/ton; feed demand was low, price of feed raw materials as corn decreased had caused reduced meals demand. Recent grease was stronger than meals; caused domestic meal price fell through prior low point. After price up through 2600, keep reverse weak mindset. As for operation, we recommend holing shorten in light positions for soybean No.1 contract; long in grease and shorten in meal.
 
 
Natural Rubber
Yesterday Shanghai rubber further dropped, US dollar spots market followed the downturn: domestic spots price 1250-1260 (-10), domestic cargo price 1250-1260 (-20), US dollar RSS spots price 1290-1300 (-20), US dollar RSS cargo price 1270-1280 (-20), Singapore cargo price 1260-1280 (-30). Overnight Europe and America stock market, both crude oil and gold dropped; market sentiment was weak; rubber fundamental side was weak; spot enterprises short selling in high point.
 
 
PP
Yesterday PP futures continue volatile, opened at 6965 and ended at 6972; trading volume decreased 216,000 lots to 788,000 lots; holding decreased 8996 lots to 391,000 lots. On spots side, yesterday domestic PP market price continue weaken slipped pattern. Partial petrifaction regions declined EXW which further weakened the bolster to market cost. Market was lacked of bullish factors; merchant lacked confidence on future market, continue surrendering profits for promoting trading to maintain operating in low inventory. Reserved sentiment from plants in downstream was heavy, small orders purchased on demand.
Current main quoted prices for wires of north, east and south markets are RMB 6870-7000/ton, RMB 7000-7250/ton and RMB 7200-7400/ton, respectively.
As for operation side, current moving average system arranged in short as weak pattern; recent price was estimated continue weaken volatile trend.
 
 
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