Daily Report 121115 2015-11-12
Macro Economy
Yesterday US stock market dropped, market trading and investing was thin in the Veterans Day; merger news and Macy's performance triggered off retail shares dropped became the market focus. S&P 500 index dropped 6.72 point or 0.32% to 2075 point. From news perspective, San Francisco Fed president John Williams indicated during the media interview, if the economy continued improving and the decision level believed inflation increase, Fed would equipped with “strong reason” for interest rate hike. European central bank vice president Vitor Constancio indicated, it had not make determination on stimulating policy; decision level would research on the latest inflation and economy data.
On domestic side, yesterday released data revealed, China October industry added value increased 5.6% year-on-year, flat with the March data as the weakest growth since 2008. January to October non-agriculture fixed investment increased 10.2% year-on-year as the lowest growth since 2000. From the accumulated growth perspective, decreased on real estate investment growth was most plainly among the three main investment orientations; manufacturing industry remain unchanged. From the current month value side, fixed investments increased 9.35% year-on-year, improved from September 6.83%. In addition, the industry added value, investment month-on-month growth rallied which in line with the expectation on investment month-on-month growth improvement. October social retail goods increased 11% year-on-year which set the largest growth within this year. Overall, structural adjustment and economy transition was not completed yet; medium to long-term dip would continue, worth waiting for the easing policy.

Stock Index
Yesterday stock index rallied in fluctuation; all Shenwan first grade sectors rallied except for banking and nonferrous metals. On macro data side: market continues weakening which almost becoming inertia. October industry added value above designated scale increased 5.6% year-on-year for a continuously four month dropping. January to October fixed investment increased 10.2% year-on-year which set the record low over fifteen year. January to October real estate investment increased 2.0% year-on-year as the lowest level from seven year. October total retail sales of consumer goods increased 11.0% year-on-year, expectation was 10.9% and, prior value was 10.9%. January to October total retail sales of consumer goods increased 10.6% year-on-year, prior value was increased 10.5%. China January to October private fixed asset investment increased 10.2% year-on-year, growth continued dropping. Market was insensitive on the data, instead of which was furthering hoping on the investment and stimulating on financial and monetary. On policy side: President Xi talked about stock market reform in the day before yesterday and, the Thirteenth Five Year Plan; the whole reform situation was better than prior period. Overall, this reviving was emerged from over expected central reform determination, market enthusiastic stabilizing and the elevated sentiment under the sluggish asset allocation. Upward momentum continued currently, considering the condition on high point locked chips and Fed interest rate hike, do not put high hope. The ceiling of IF might at 4000 point, before that price would slowly crawl or volatile move.
Wednesday cooper price got bolster at low point, the weakest zinc market as well rallied after sluggish. Profit sign shown up for shorten holdings close positions after recent nonferrous metal continued dropping. From fundamental side, LME spots premium was $13.25, inventory continue decreased 2350 tons. Domestic spots were premium RMB 20 – RMB 50; no changes on downstream demands. From supply side, since the increased costs and decreased ore grade, Konkola copper mine under Vedanta at Zambia stopped underground mine exploiting this week, which annual output in 2014-2015 fiscal year was 116,000 tons.
Technically, copper price might rally back in a short-term. We focused on the effectiveness on the resistance point. LME is $5000, in domestic is RMB 38000.
Under the impact of bearish overseas data, DCE was fluctuated. Since there was no sharply downtrend in US market, the impact on DCE market was not huge. Soybean in northeast region downward trend slowed down, since the farmer reluctant to sell out and soybean in north china rallied. Current northeast market was in nominal price, trade grain was still unsalable; market was in the awkward condition. DCE soybean No. 1605 contract focus on the bolster at 3800; prior positions may consider taking profits at this point.
Soybean meal spots were stabilizing in most areas, entire market sentiment was still in weaken; soybean inventory at port was raising and, port arrival amount would be around 7 million tons in the next two months;  oil against meal ratio was 2.20:1, shown the sign reaching the ceiling. As for operation, we recommend soybean No.1 contract to stop profit and close positions; arbitrage holdings between long oil and short meal should pay attention on stop profit. 
Yesterday PP futures continued in low point, opened at 6530 and ended at 6498; trading volume decreased 12512 lots to 920,000 lots; holding decreased 36012 lots to 380,000 lots. On spots side, yesterday domestic PP market price was in volatile downturn trend. Overnight crude oil slightly rallied, PP futures revived after opened up high and went lower which limited boosted the market sentiment. Partial regions of petrifaction plants reduced EXW; boost to market cost continued weakening. Merchant shipped initiatively, further surrendering part of the profits to decrease inventory. Plants in downstream observed in cautious, market trading and investing was thin.
Current main quoted prices for wires of north, east and south markets are RMB 6500-6700/ton, RMB 6650-6900/ton and RMB 6900-7100/ton, respectively.
As for operation, current moving average system arranged in short, MACD green column extended as weak pattern; recent price was estimated to continue weakening.
                                                                              Dong LV (Investment Certificate NO. TZ008452)