Daily Report 161215 2015-12-16
Macro Economy
Yesterday US stock market closed high; S&P 500 index railed the second straight day for the first time within this month. Crude oil price increased drove the energy stock raise in the leadership. S&P 500 index increased 21.47 point or 1.06% to 2043.41 point, US WTI oil price rallied to $36.74. Yesterday released major US economy data revealed, November CPI was leveled off month-on-month, increased 0.5% year-on-year. Core CPI excluded volatile food and energy for the third straight month raised 0.2%, increased 2% year-on-year. This data completely in conformity with our expectation on US inflation index revive trend in the end of the year. In addition, core CPI had reached 2% and, headline CPI showed huge growth as well provided necessarily bolster to Fed first interest rate hike. US core CPI may keep the 2% high level from the end of this year to the beginning of next year, headline CPI is expected to raising above 1%. In addition, at 14:00 US Eastern time on Wednesday (3:00 Beijing time on Thursday), FOMC will announce policy statement, market estimates decision makers will hike interest rate for the first time since 2006 on this meeting; Fed president Yellen will attend press conference in half an hour. Possibility of Fed hike interest rate is extremely high (about 81.4%) on this meeting and, the interest rate hiking speed after the initial hike is the next market key focus. We regard from next year perspective, both US economic revive progress and uncertainty from global economy will drag Fed decision-making process, interest rate hike speed in 2016 may slow down.
On domestic side, PBOC released financial institutions RMB credit balance sheet showed Chinese financial institution RMB foreign exchange reserve decreased RMB 221.3 billion to RMB 27.2 trillion in the end of November. The four major bank RMB total loans were RMB 35.8 trillion in the end of November; November new RMB loan was RMB 121 billion. Change on financial institution foreign exchange reserve is basically the same as central bank statistical result; we calculate the capital outflow down revises to RMB 560 billion and still in the high level. In addition, according to the news from Thomson Reuters, PBOC is ready to ease off the plainly offshore RMB downward trend; if the balance of offshore and on shore is unstable, central bank will have to intervene.
 
 
Copper
Tuesday domestic and overseas copper market trading and investing was thin; copper price was in retracement, including LME dropped 2.3% and domestic copper price down to RMB 35200. Market trading and investing in cautious before Wednesday FOMC since the expectation on US will hike interest rate for the first time; US dollar as well goes stronger, correspondingly, copper price decreases is normal. But apart from that, Tuesday domestic spots market was in weak performance, spot month contract performance was poor as well in the last trading day which influenced the market momentum. Holdings slumped during these two days copper price downward trend, caused from long positions closed holdings. From market reports, the reason was on Rio Tinto financing to extend Oyu Tolgoi. But this expansion project would not be put into production until 2021, it can be seen that impact would be as large as market reaction. Tuesday Jiangxi Copper Company signed process cost with Atofagasta at $97.35 in 2016, lower than $107.4 in this year. Under this influence, spots process cost dropped through $100 mark, which showed the copper output reduction has played its role. We tend to consider copper price was overreacted, in consideration of Fed meeting would be clarified in Wednesday evening; we would focus on copper market performance.
Technically, we recommend focusing on $4550 at LME market temporally and, domestic market at RMB 35000.


Soybean
Soybean No.1 contract fell to prior low point; pattern on strong meal and weak oil continued. Soybean shipment was exceptionally slow in northeast, demand subject mainly staying in observing; grain in production area was hard to export, no trading momentum on the short-term market. Price upward trend still has twists and turns in the future. Overall, soybean tendency was stabilizing in north and south; merchants mainly purchasing high quality soybean. We consider soybean No.1605 contract will fluctuated during RMB 3600-3800/ton in a short-term, recommend selling at high point and buying at low among this interval.
Soybean meal price edged up in most areas and, continued stabilizing. Though domestic demand revived, spots supply in most areas were sufficient, oversupply was still the crucial problem in current market and was the source of market hammer. Monday oil against meal ratio slipped to 2.37:1, predicted to further weakening. As for operation, we recommend holding arbitrage between long meal and short oil appropriately.
 
 
 Dong LV (Investment Certificate NO. TZ008452)