Daily Report 031115 2015-11-03
Macro Economy
US stock market ended high, Nasdaq 100 index raised to fifteen-year high point; S&P 500 index as well raised to a record high. Up to market close, S&P 500 raised 24.69 point or 1.19% to 2104.05 point. US October ISM Manufacturing Index leveled off 50.1 which created the lowest point from May 2013; PMI index raised from September 53.1 to 54.1; Euro Zone October Manufacturing Industry PMI raised from September 52.0 to 52.3 which revealed an unexpected accelerated growth on manufacturing industry. The mixed blessing data didn’t make large impact on Euro and gold, market focused on non-agricultural data release on Friday. On European side, ECB Governing Council member Villeroy indicated, the commitment to positive monetary policy was firm; whether enhance easing in December depended on analysis. This was another hawkish statement from ECB officer after the prior speech on expanding QE from Draghi. It was estimated that before a sign on economy condition plainly improvement shown up, substantial impact from corresponding speech was limited. In addition, the previous concern on US government ran out of capital was relieved from US president Obama signed the bipartisan budget deal and, the suspended implement on debt ceiling to March, 2017.
From domestic side, yesterday data revealed, September CAIXIN China Manufacturing Industry PMI index slightly raised to 48.3. From disaggregated data, Output Index, New Order Index and Employment Index all showed improvement, including New Export Order Index transformed from prior three months downturn to extension interval. Combined with earlier official PMI data, economy was showing more and more highlights in a short-term; sign on stabilizing in a short-term was clarifying. But there was no change on overall de-leveraging and adjusting structure direction; demands especially insufficient domestic demands were still the crucial factors on restricting economy stabilizing.

Stock Index
Yesterday stock index dropped; all SHENWAN first grade sectors dropped. On concept stock side, only sub-new stock, biology breeding, ST concept three indexes raised against trend; multiple stocks related to Xu Xiang was down to the limit. Overall economy condition was continuously poor, locked chips were too huge in high point; overall was not optimistic.
On macro side: although China released various measures to stimulate the stock market, the relied on debt increasing stabilizing growth was increasingly hard to sustain. Secondly, on capital side: although current capital was surplus and, the fixed income yield was decreased, the capital flight was continuously happened; which declared the qualified capital was shrugged off domestic risk assets. On new economy side, there was no new concept exceeded the expectation currently. Merge on internet industry was increasing; recruitment was shrinking which might indicated the risk appetite from professional asset was decreasing. The last, from technical side: sixty-days moving average system was hammering, the locked chips were enormous which formed from July to August at high point; there would only be more chips unlocked in higher point and, it was hard to attract asset by money making effect, reviving was hard to sustain. As for operation, take the chance on shorten at high point within the fluctuation.
Monday domestic and overseas copper market trading and investing was thin. Copper price narrowly volatile in low point, the edged down trend in last week had restrained. On macro side, China PMI leveled off; CAIXIN PMI raised; data though lower than 50, it revealed recent stabilizing growth policy was effecting and, this trend might continue to the end of the year. European PMI continues increasing but, US PMI fell back to 50.1; the stronger US dollar with no doubt was one of the reasons. On fundamental side, there was no plainly changes on LME spots premiums at 15.25; no plainly changes on inventories. Chinese spots were improving, Shanghai Metals Market reported discount 60 to discount 10, with RMB 20 shrink. Recent global copper inventory was in the downward which bolster the copper price on a certain extent. Considered on China was still in stabilizing growth through real estate and electrified wire netting investment; on supply side copper mine output was reducing, which made the possibility on recent copper price adjustment still exist.
Technically, LME was still at $5000-5300; in domestic was RMB 37800-39500. We recommend keep observing as for operation and, waiting for a clarified copper price.
Overnight US soybean ended low which under the impact from technical selling and pressure on US soybean harvest. On domestic side, soybean spots in northeast region stabilized, merchant 4.0 after cleaner grain quotation was under RMB 3800/ton, though recent south protein plants started to increase purchase price which certain bolster the weakened spots in short term, the weakened condition in producing area was hard to improve in short term.
Soybean meal spots were weak out of stabilized; partial regions and oil plants continued edged down; spots trading and investing were still thin; basis pricing stayed in observing. Quotation was generally at RMB 2680-2740/ton; oil against meal ratio was 2.18:1, continue last Friday downturn. As for operation, we recommend holding soybean No.1 contract in short and, arbitraging between long oil and short meal.
Natural Rubber
Yesterday Shanghai rubber continued sideways fluctuation; changed in US dollar spots market was not large: domestic spots price 1230-1250 (-10); domestic cargo price 1240-1260 (-10); US dollar RSS spots price 1260-1280 (-10); US dollar RSS cargo price 1250-1270 (-10); Singapore cargo price 1260-1280 (0). On news perspective: up to the end of October, rubber inventory in Qingdao free trade zone increased 3% to 204,500 tons. Increased current inventory was mainly benefit from partial rubber entered warehouse in the last week of October, only 5,900 tons increased compare to last period; growth slowed down from prior period. To put this in perspective, natural rubber inventory increase was the crucial reason on total inventory raised. At the corresponding period, synthetic rubber inventory slightly decreased; compound rubber inventory had no plainly changes. In addition, RSS inventory slightly increased; SBR and BR inventory slightly decreased.
Overall: market asset sentiment was weak; rubber fundamental side was weak; price was predicted to weak volatile; spots enterprises selling in good opportunity.
Yesterday PP futures continue volatile; opened at 6852 and ended at 6865; trading volume decreased 111,000 lots to 784,000 lots; holding decreased 10412 lots to 418,000 lots. On spots side, yesterday domestic PP market was mainly in consolidation; partial market price volatile scope was RMB 50-100/ton. Majority petrifaction enterprises in stabilized price which certain bolster the market cost. PP futures fluctuated violently; impact on practitioner sentiment was limited. Most merchants shipped followed market price and observed market reaction. Receiving demands from downstream plants had no plainly improvement; market trading and investing momentum was thin.
Current main quoted prices for wires of north, east and south markets are RMB 6850-6900/ton, RMB 6950-7150/ton and RMB 7250-7400/ton, respectively.
As for operation side, current moving average system arranged in short as completed downward trend; recent price was estimated to continue weaken volatile trend.
                                                                 Dong LV (Investment Certificate NO. TZ008452)