Daily Report 241115 2015-11-24
Macro Economy
Yesterday US stock market closed low; under the impact from record-breaking merge transaction and the downward technology stocks, S&P 500 index fell 2.58 point or 0.12% to 2086.59 point. US October second-hand housing sales volume decreased 3.4% month-on-month, fell from the second high point in 2007. Markit released US November manufacturing industry PMI initial value 52.6, expected was 54. Markit released Euro Zone November manufacturing industry PMI initial value 52.8, expected was 52.3. Fed Chari Yellen indicated, Fed would slowly tightening policy, “over radical” interest rate hike would hurt the US economy growth. Fed board member Tarullo indicated, the US economy was still mixed since the September FOMC meeting, and he emphasized the inflation expectation index was sluggish. From the later perspective, we regarded the possibility on inflation index rally was huge and, it would not become a policy fetter in a long run. Speed on policy tightening would depend on whether the economy can sustain from the interest rate hike. If the inflation increased rapidly, which seemed in low possibility, it was still possible for continuously hiking interest rate. Since the market has already digested the continuously speculated interest rate hike since the Fed FOMC meeting in the end of October, recent growth on US dollar slowed down after reached 100 point mark; downward trend on commodities as gold, crude oil and other metal contracts as well slowed down. But along with the new data coming up, especially the inflation data and, the market uncertainty in the mid of December, US dollar was predicted to have a certain upward momentum.

Stock Index
Yesterday stock index dropped after rallying; commodities went weak as well impacted the stock index. On sector perspective, only the textile and garment, commercial trade, media sector ended slightly high without the leader. The upward trend on concept sector had not broken yet. Recent stock index revived was mainly on sufficient asset, the beyond expected central government reform and the easing strength under the sluggish asset allocation. After the Thirteenth Five Year Plan issued, expectation on deepening reform extended; President Xi mentioned “supply side structured reform” twice recently, different from prior economy driven from low efficient investment, the determination and action from central government showed more hopes to the market, hence the buying momentum in the low point was constantly emerging. Central bank used several measures to stabilize the capital, reduced SLF interest rate in branch offices. On market sentiment, momentum was raising and the amount of major clients was increasing. From bearish side: IPO resumed and, if the price rose too high and back to the bull market, registration system might open and, registration system was the bane of bull market. Hence market would be hovering at this point. Overall, prior reviving showed the bolster was strong but, the hammer from above position was also huge. It was hard to out of the bear market before the economy data went bull. We recommended operating in volatile mindset in a short-term, with caution and optimism.
Monday copper price continued hammered from new bearish momentum; LME down to $4440, domestic copper price down to RMB 33500. From the dominant factor side, US dollar exchange rate was the direct factor. On fundamental side, LME spots premium decreased $3 to $22.5; inventory further decreased 1200 tons. Domestic spots were discount RMB 50 to premium RMB 30. According to the report, middleman started to entering the market in low point; enterprises in downstream still in bearish and wait for a lower price. The latest data revealed, October China refined copper import increased 12.3% to 343,000 tons year-on-year, total imported 2.896 million tons, decreased 1.98% year-on-year. There is news showed, Newmont had gained a six-month-long export permission from the Indonesia government, export quota was 432,000 tons. In September, since export permission from the Batu Hiaju copper mine was expired, export had been suspended. The Batu Hiaju copper mine annual output was 71,000 tons in last year. Technically, copper price was still in the downward trend, we tend to regard the copper price down scope was limited. We focused on the performance of LME $4300/400, domestic RMB 32500/33000.
Overall DCE soybean was weak; both two meals dropped in the leadership; pattern on strong oil and weak meal was plainly. Domestic soybean spots price were stabilized; trading in northeast remain poor; partial region was in nominal price; price lacked of conditions for continuously rally in a short term. Though recent DCE soybean was in strong front month and weak back month tendency, market lacked of substantiality bullish material, contract No.1605 remained weak mindset under 3800.
Soybean meal spots dropped RMB 20-40/ton in most regions, quotation remained at RMB 2460-2520/ton; weak pattern was plainly. Futures price was impacted from supply hammer and sluggish demand in downstream, under the hammer from assets, weak pattern was plainly. Oil against meal ratio was 2.39:1 in upward trend in short-term. As for operation, we recommend soybean No.1 contract stay in observing temporally, long oil and short meal arbitrage position can be held.
Natural Rubber
Yesterday Shanghai Rubber continued dropping with increased holdings, spread between months raised again and, US dollar spots market continued downward: domestic spots price at 1110-1140 (-40); domestic cargo price 1120-1140 (-20); US dollar RSS spots price 1160-1180 (-20); US dollar RSS cargo price 1150-1180 (-20); Singapore cargo price 1170-1200 (-30). On news side: General Administration of Customs released data revealed: China October natural rubber import volume decreased 28.6% month-on-month but, increased 19% year-on-year. In addition, synthetic rubber increased 63%. Overnight US dollar broke through 100 mark at the mid market, commodity price further dropping; copper price dropped through $4500/ton as the first time since 2009. Spots silver dropped 1.5% to $13.978/ ounce, set the record low since August 2009. Current market had strong expectation on Fed interest rate in December. Overall: market asset sentiment was weak; the rubber fundamental was weak; spots enterprises sold on rallies.
Yesterday PP futures opened up low and went lower; opened at 5915 and ended at 5734; trading volume increased 38424 lots to 1.625 million lots; holding decreased 23364 lots to 337,000 lots. On spots side, yesterday domestic PP market was in volatile downward trend. PP futures opened low followed the trend and, dropped in volatility, which further shattered the market sentiment. Partial petrifaction region reduced producer price, bolster to the market cost weakened. Most merchants shipped initiatively and, extended surrendered profits for promoting trading. Plants in downstream observing in cautious; demand in stock up was low; trading was mainly in low price supply.
Current main quoted prices for wires of north, east and south markets are RMB 6150-6400/ton, RMB 6200-6450/ton and RMB 6500-6800/ton, respectively.
As for operation, current moving average system was arranged in shorts, MACD green column extended as downward trend. Recent price was estimated to continue weak. Recent holdings were gradually switched to contract No.1605, pay attention on the switch month rhythm.
                                                                                   Dong LV (Investment Certificate NO. TZ008452)