Daily Report 091115 2015-11-09
Macro Economy
US stock market almost revived the lost profit in the end of last Friday market; employment growth promoted the positive expectation on US economy; S&P 500 index closed slightly down 0.73 point or 0.03% to 2099.2 point. From data perspective, US Department of Labor released data in last Friday that October non-agriculture employment increased 271,000 pieces, exceeded majority market expectation and, set the largest growth within this year. Unemployment rate slipped to 5% as the lowest level from April 2008. Up to 7 November, according to Fed funds rate futures, the possibility of Fed hike interest rate in December had raised to 69.8%. Chicago Fed president Evans indicated after Friday non-agriculture data released to CNBC, the employment data was quite good and, it was possibly hike interest rate in December; before which, Evans was a dovish most of the time, the transformed attitude as well increased the possibility on interest hike in the end of year. We had mentioned before, US inflation ratio would have plainly increase in the end of year, the duplex improvement from employment and inflation would further consolidating the economy expectation from Fed and market. Overall, the possibility on interest rate hike in the end of year was high; US dollar would remain in strong within a period of time; certain hammer would be on the non-US currency and commodities.
On domestic side, Deng Ke, spokesman for the CSRC indicated on the conference on Friday, would resume IPO on ten enterprises by present system; the remaining eighteen enterprises IPO before the end of the year. China's custom announced on Sunday, October dollar-denominated export dropped 6.9%; import dropped 18.8%; trade surplus was $61.6 billion; RMB-denominated export dropped 3.6% year-on-year as the forth month downturn; RMB-denominated import decreased 16% year-on-year as the twelfth month downturn; October trade surplus was RMB 39.32 billion. Data from PBOC: foreign exchange reserve in the end of October was $3.53 trillion, increased $11.4 billion compared to last month which ended the five-month dropping trend. Gold reserve was $63.3 billion; in September was $61.2 billion. There was no big surprise on foreign trade data, US export growth downturn was faster compared with last month and the same period last year, which might be the main reason for this poor data; in addition, current global economic situation made the overseas market demand hard to boost, foreign trade was estimated to maintain weak trend in the later period. For the situation on the central bank foreign reserve increased, speculated from combined recent months commercial bank money exchange and, the difference statement from central bank and financial institution, we regarded commercial banking system had undertaken more hammer on capital outflow recently; the actual outflow pressure didn’t plainly reduce. 

Stock Index
Last week stock index soared after the Thirteenth Five Year plan released, reform innovation continued; brokerage shares led to rise; Shenwan second grade sector all rallied. Resumption on IPO was bullish to brokerages which had advance reacted in last week. From economy side, both import and export data slumped, continued the poor macro data. US non-agriculture employment was sharply higher the expectation, possibility on interest rate hike had increased, which would further striking the domestic economy. Current bullish was mainly from policy and reform side, though the bull market in the first half year was reform bull, the actual progress condition was lower than market expectation; current market was sluggish, reform strength increased. As for asset allocation perspective, asset got momentum into stock market. Technically: the trend performed from market would not stop for the time being; hammer on locked up chips might emerge when IF rise to 4000; during this period price might slowly or fluctuated moving.
Last week copper market got resistance at rally trend, copper price sharply dropped and tested the bolster line from the eight month consolidation range. Copper price got bolster in the earlier last week, China increased the strength on stabilizing growth in the fourth quarter to bolster copper price but, there was speech and expectation on US hike interest rate in the end of year on the second half of last week, US dollar had sharply increased which hammered the copper price. The weak trend from fundamental side had revealed, LME spots premium decreased $6.5, three main exchanges inventories increased 19918 tons, including, SHFE increased 17610 tons, LME decreased 675 tons, COMEX inventory increased 2983 tons. Latest news, China wrought copper and copper import was 420,000 tons by the end of October, only increased 5.83% year-on-year. Technically, LME down to the bolster line in consolidation range, whether price can rise back to $5000 on Monday would determined the copper price downward window.  We recommend for domestic price, focused on RMB 38000.
Soybean in northeast region continue downward trend, spots price had dropped over RMB 3700/ton; dealers from various regions generally reflected, demand from terminal side currently was thin; slowly shipment made market trading sluggishly. North China spots price though rallied, boost to northeast soybean was limited; weakened domestic soybean was hard to change in a short-term. Contract 1605 showed the sign on rally, focus on bolster at 3800; prior positions may consider to take profits at this point.
Soybean meal spots were resilient, this week would mainly in slightly decrease but, market shorten momentum was thick. Import soybean port arrival amount was huge and, import cost reduced; domestic soybean meal was in sufficient supply; demand on feed was low; grease was in strong trend, oil against meal ratio was 2.23:1, still in the uptrend. As for operation, soybean No.1 contract short holdings should stop profit and closed positions; hold arbitrage between long oil and short meal.
Last week PP futures continue downward. In upstream, up to Friday night, FOB Korea propylene average price was $582.5/ton. As for device side, current operation ratio was about 87.5%, slightly lower than last week. As for spots side, this week PP market was in volatile downturn. The continuously dropping crude oil hammered the practitioners’ confidence. Plants in downstream purchase on demand; spots trading was poor; market was hard to get bolster. Merchants observed in cautious.
Current main quoted prices for wires of north, east and south markets are RMB 6650-6850/ton, RMB 7000-7300/ton and RMB 7100-7300/ton, respectively.
As for operation, current moving average system arranged in short, MACD green column extended as downward trend; recent price was estimated to continue weaken trend.
                                                                                            Dong LV (Investment Certificate NO. TZ008452)