Daily Report 041115 2015-11-04
Macro Economy
Yesterday US stock market ended high; commodities stock led to rise; Nasdaq 100 index created record high. S&P 500 index end increased 5.74 point or 0.27% to 2109.79 point. US September plants order decreased 1% month-on-month for the second month dropping, expectation was decrease 0.9%; current manufacturing industry sluggish condition continued. ECB president Draghi indicated, December meeting would reappraise the monetary policy easing extent; if it is necessary central bank was willing and was capable of using any tools in their power to maintain proper monetary policy easing extent. This news made euro fell again to 1.1 against the US dollar from three months; we don’t exclude the possibility of further dropping; the next time window would be around Friday US non-agricultural data release moment.
On domestic side, the Xinhua News Agency issued “Thirteenth Five Year” plan suggestion: promoted to achieve RMB’s convertible capital account in 2020, method on exchange control would transform into negative list; the issuance and trading system for stocks and bonds to be improved; increase the proportion of direct financing, reduce leverage ratio. The Xinhua News Agency as well reported, President Xi Jinping indicated in the instruction of “Thirteenth Five Year” plan suggestion, Chinese economy annual average growth bottom line from 2016 to 2020 was above 6.5%, which can be regarded as decision layer had officially determined the aim on growing. At present, this round real estate cycle is coming into the last stage; investment especially real estate investment was in sluggish; economic restructure was slow; took 6.5% as the future growth bottom line was certain a challenge; it was necessarily to stimulate various measures.


Stock Index
Yesterday stock index rallied in the morning but, hammer at the high point was huge, price gradually fell back in the end of market; overall was in the weak trend. Most sectors edged down among Shenwan first grade stocks, few of which raised less than 1%; Agriculture & Farming raised the most at 1.99%. Looking at the entire sectors was all in weakening, without leadership. Keep the mindset on shorten at high point out of the fluctuation. Firstly, on macro side: although China released various measures to stimulate the stock market, the relied on debt increase stabilizing growth was increasingly hard to sustain. After the third quarter report released, overall was weak; bank default rates increased; concern from market to economy was exacerbated and would not vanish at once. 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, 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 formed from July to August at high point locked chips were enormous; 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.
 
 
Copper
Tuesday LME copper price slightly rose. Earlier stronger US dollar hammered the copper price but, crude oil rallied in the late market which driven the copper price. On fundamental side, LME spots premium $16.25, inventory turned into decrease 1625 tons. Domestic spots were discount RMB 80 to RMB 10; consumption in domestic was still weak. Recent news from supply side bolstered the copper price. The latest news, since protest against working conditions, copper workers in Chilean Lomas Bayas from Glencore started to protest; had not mentioned mining operations interrupted yet. The copper mine output in last year was 67,000 tons. In addition, Katanga issued copper output in third quarter decreased 14% to 70,000 tons year-on-year.
Technically, LME was still at $5000-5300; in domestic was RMB 37800-39500. We recommend keeping observing as for operation and, waiting for a clarified copper price.
 
 
Soybean
Soybean spots in northeast region continued downward trend; merchant 4.0 after cleaner grain quotation was under RMB 3800/ton, though recent southern protein plants started to increase purchase price which had certain bolster the weakened spots in short-term, condition as region market trading was stagnated and, demand was weak was hard to improve in short term.
Soybean meal spots in most regions decreased RMB 20-30/ton, trading on spots was still thin; basis pricing stayed in observing. Quotation was generally at RMB 2660-2720/ton; oil against meal ratio was 2.19:1, continue uptrend. As for operation, we recommend holding soybean No.1 contract in short and, arbitraging between long oil and short meal.
 
 
PP
Yesterday PP futures opened low and went lower; opened at 6855 and ended at 6780; trading volume increased 92236 lots to 876,000 lots; holding increased 18004 lots to 436,000 lots. On spots side, yesterday domestic PP market price loose out of stabilization. There was no price change news on petrifaction enterprises; market trading momentum was thin; trading at low point was slightly better. Practitioners wary on the operation in the future market; firm offer negotiation on each order.
Current main quoted prices for wires of north, east and south markets are RMB 6800-6900/ton, RMB 6900-7150/ton and RMB 7220-7350/ton, respectively.
As for operation side, current moving average system arranged in short as weaken pattern; recent price was estimated to continue weaken volatile trend.
 
 
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