Daily Report 151215 2015-12-15
Macro Economy
US stock market rallied and, soared in the last moment on account of bullish from rebounded oil price outweighed weak credit market and volatile commodity stocks. S&P 500 index closed at edged up 9.57 point or 0.48% to 2021.94 point. A two-day Fed monetary policy meeting will be held at local time 15 December, according to current market news, most investors expect Fed will hike 25 benchmark interest rates, but meanwhile market decreases the expectation on interest rate hike speed in 2016. We consider the possibility of Fed hikes interest rate in this meeting is extremely high but, from next year perspective, both US economic recovery pace and global economy uncertainty are going to drag the Fed decision making process. The interest rate hike speed in 2016 will slow down. On Europe side, ECB president Draghi indicated on Monday, current stimulating policy was sufficient for inflation rate in Euro Zone reached the 2% target, and ECB was ready to issue more stimulating policies as occasion requires. Prior ECB stimulating policy failed to meet market expectation which caused Euro soared and, Europe stock dropped.
On domestic side, China's ministry of finance website announcement revealed, November nationwide general budget revenue was RMB 1.1087 trillion, increased 11.4% year-on-year; current month fiscal expenditure was RMB 1.6069 trillion, increased 25.9% year-on-year, laid a good foundation for financial boosting in later period. In addition, PBOC issued balance sheet on the website, foreign exchange reserves was RMB 25.6 trillion in the end of November, decreased RMB 315.8 billion month-on-month. According to this and combined with trade surplus data, November capital outflow was calculated at RMB 650 billion, hammer from outflow was enormous.
Monday cooper price narrowly fluctuated near recent rallied high point. Overnight crude oil price once slumped but, copper price got bolster on account of Fed meeting would be held in Tuesday and Wednesday, before which market was mostly in observing. It is widely believed that Fed will increase interest rate at present but, path on interest rate hike is the focus from now on. On fundamental side, LME spots premium decreased $6 to $8; inventory decreased 475 tons. Shanghai copper spots sharply decreased RMB 70 to discount 140-50, overall market performance was oversupply and, lacked of buying momentum. Enterprises in downstream stayed in observing on Monday and, entered the market for maintaining rigid demand. Domestic futures spot month contract to following month contract stayed in premium indicated domestic smelting plant receiving was continuing. 2016 China smelting plant will unite to reduce 350,000 tons output and, has possibility on purchase and storage which is still the bolster factor on market. Technically, copper price is in the reviving trend and, if rises above 4740, next target is $5000. Domestic copper price if rises above 36000, next target is RMB 38000. We recommend continue holding long positions on operation.
DCE soybean was in divergence performance; oil meal went strong, soybean No.1 contract continued weakening. Recent soybean purchase and sale in northeast area increased compare to earlier period. Spots price were stronger out of stabilizing, price in north Heilongjiang, Inner Mongolia and Jilin all increased RMB 40-60/ton. New Year's Day and Spring Festival is drawing near and, market shipment is turning better. Purchase volume increases in selling area and is expected to drive the price continues increasing but, the upward ceiling is estimated to be limited. We consider if soybean No.1605 contract fail to back RMB 3800/ton, short-term tendency will stay in weak pattern.
Soybean meal spots were in stabilizing; spots trading were sluggish and, basis pricing was in ordinary level. Though domestic demand slightly revived, spots were still sufficient in most areas; oversupply was still the crucial problem in current market and, was the source of hammer on spots market. Monday oil against meal ratio slipped to 2.38:1, short-term tendency further weakening. We recommend arbitrage between long oil and short meal to close positions; arbitrage between soybean oil and palm oil need to pay attention on phased stop-profit.
                                                                   Dong LV (Investment Certificate NO. TZ008452)