Daily Report 251115 2015-11-25
Macro Economy
Yesterday US stock market closed recovered the losses in mid market; energy sector raised in the leadership; concern on Turkey shoot down the Russian warplane faded. S&P 500 index ended increased 2.55 point to 2089.14 point at 0.12% increase range. Yesterday data revealed the US third quarter GDP annualized revised was 2.1% month-on-month, higher than the initial value 1.5%. Conference Board released US November CCI decreased to 90.4, set the lowest level since September 2014. US September S&P/ Case - Shiller 20 city index increased 5.5% year-on-year, exceeded the expectation and set the largest increase range since August 2014. Overall real estate market revive trend was in uptrend. In addition, Turkey announced shoot down a Russian warplane at the border between Turkey and Syria at yesterday afternoon, it indicated had warned the pilots they invaded into the Turkish airspace but, the pilots did not pay heed on it. The Russia President Putin accused Turkey for shoot down the Russian warplane in the Syria airspace and, claimed Turkey as the accomplice of terrorists, warned this incident would bring “a very serious consequence” on the relation between the two countries. The NATO secretary-general indicated NATO identified with the Turkey statement on shoot down Russian warplane. We regarded, Turkey shoot down Russia warplane would made the Situation in the Middle East more complicated, especially under the condition of Russia and Turkey already had estrangement over the history; relationship between two countries was predicted to split; this would had adverse effect on the unified action on striking the Islamic State. But since Turkey was one of the NATO countries, once the friction increasing, it might cause the situation on Russia against whole NATO military. Hence, possibility on Russia unilaterally extended the affair was low.
From market perspective, gold gradually raised after the speech from Putin but, fell after the US GDP data released. Europe stock market as well showed large down range, VIX index edged up revealed the market panic on this affair was limited. We will keep following the development and influence.

Stock Index
Yesterday stock index rallied after dropping and, revived in weakness. Electron, Agriculture & Farming sector raised over 2%, sub-new stock was in boost momentum. Under the sluggish asset allocation, the beyond expected central government reform and the easing strength caused the revive momentum on stock index. After the Thirteenth Five Year Plan issued, expectation on deepening reform extended; President Xi mentioned “supply side structured reform” twice recently which was different from prior economy driven by low efficient investment, the determination and action from central government showed more hopes to the market. But IPO resumption, new three board switch board regime, expectation on the registration system as well hammer the index upward trend. 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. 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.
Tuesday copper market trading and investing was active, copper price sharply rallied. Including LME ended increased $153 or 3.44%, domestic copper price ended increased 3.61% or RMB 1210; domestic copper market holding decreased to 43,000 lots. From the copper market perspective, copper price dropped too soon in prior period, reached 17% down range within a month and, price dropped to the 75% enterprises cost line, caused the upward momentum on the copper price. In addition, we noticed recent aluminum, nickel price all fell to 25% enterprise cost line. This only would happen in the financial crisis, happened recently. The market had already digested all bearish factors. As a matter of fact, current global economy growth is still gentle, China is facing the risk but, it is far away from the crisis mode. China had put the focus on reforming, launching the supply end management; the permanent policy would increase the confidence of the China prospect with no doubt. Hence, we regarded recent non-ferrous metal market had already down to the bottom and, recent revive trend would continue.
Technically, copper price would further increasing, if LME may up through 4700, the next target position would at $5000. If domestic copper price may up through RMB35200, the next target position would at RMB 37000. We recommend operating in long positions.
DCE soybean all revived; soybean oil rose in the leadership, the reviving need to be further affirming. Soybean price in Heilongjiang region mainly stabilized, purchase price on cleaned grain in the grain site mainly at RMB 3700-3780/ton, grain chosen by tower price at RMB 3860-3920/ton, purchasing price in each grain inventory mainly in stabilized. Trade grain in northeast market was hard on export; soybean digestion relied on the grain inventory. Current rough grain selling price had down to the planting cost, spots further dropping scope was limited. Contract No.1605 long-short watershed was at RMB 3800/ton, operate in light holdings with caution.
Soybean spots stabilized in most regions, slightly dropped in partial regions. Market continued weaken tendency; though futures price was in reviving trend, the strong oil and weak meal pattern was plainly. Oil against meal ratio was 2.38:1, short-term tendency was in strong. As for operation, we recommend soybean No.1 contract stay in observing temporally, long oil and short meal arbitrage position can be held.
Yesterday PP futures opened flat and went high, opened at 5751 and ended at 5960; trading volume increased 158,000 lots to 1.783 million lots; holding decreased 29694 lots to 307,000 lots. On spots side, yesterday domestic PP market price was in volatile downward trend. PP futures opened low and went higher; boost to the market sentiment was limited. Most petrifaction regions reduced producer price, bolster to the market cost weakened. Merchants continued surrendering profit for promoting trading; plants in downstream observed in cautious, demand on stock up was low and mainly in rigid demand.
Current main quoted prices for wires of north, east and south markets are RMB 6150-6200/ton, RMB 6150-6450/ton and RMB 6400-6650/ton, respectively.
As for operation, current moving average system was arranged in shorts, MACD green column extended as insufficient downward trend. Recent PP spots fundamental side was still weak, yesterday price rallied under the impact from overnight Saudi Arabia reduced crude oil yield. But whether the Saudi Arabia crude oil yield would reduce was still uncertain, we recommend keeping observing.
                                                                         Dong LV (Investment Certificate NO. TZ008452)