Daily Report 231215 2015-12-23
Macro Economy
US stock market ended high for a second straight day, commodity sector led the market to rally; US GDP data was higher than expectation. S&P 500 index increased 17.82 point or 0.88% to 2038.97 point. Yesterday data revealed US GDP rose an annualised 2% in the third quarter, higher than expected 1.9%. The core PCE index unexpectedly increased to 1.4% quarter-on-quarter in the third quarter from a prior estimate of 1.3%. US existing home sales plummet 10.5% in November to a seasonally adjusted annual rate of 4.76 million, almost lower than the entire market’s expectations. October home price increased 0.5% month-on-month met the market expectation. Looking at the above factors, though the GDP data revised down compare to last data, the overall reviving trend still exist. Real estate is still the crucial driving force and, though it turns a certain setback currently, the private sectors which are out of the financial crisis will gradually promote the real estate market in strong tendency under the condition of balance sheet extension.
On domestic side, China's Central City Conference was held in Beijing at 20-21 December, it was clarified in this meeting to reinforce the strategic research on migrated rural population citizenization; to coordinated promote supporting reforms in land, finance, education, employment, medical treatment, pension, housing security and other territories; to accelerate reconstruction on urban shantytowns and dangerous buildings, on old residential communities. There was no intention to release policy on housing reconstruction and, actually there had no more new policies introduced; real estate market situation was still not optimistic in the future. In addition, Bloomberg reported, Chinese authorities had already required partial banks to extend the RMB trading period for a united test and, it planned to implement during 23-30 December. We expect the RMB domestic trading time will be extended recently, this is a process on RMB internationalization and, a normal movement for the investors who hasn’t invest abroad after join in SDR; it basically has no effect on recent weakens RMB.
Stock Index
Yesterday stock index slightly dropped in the mid market and rallied in the afternoon; blue chips were in stabilizing trend; among Shenwan first grade industries, only the leisure service and banking sector went down. The important content from the Central Economic Working Conference was released in the weekend, the five targets in 2016 was to solve over capacity, reduce inventory, de-leverage, reduce enterprises’ cost and improve the vulnerable spot. Meeting released messages, financial deficit might over RMB 2 trillion in next year and break through the 3% red line, hundreds of billions higher than this year. Overall, there are lots of bullish exist which manifests the reform determination and strength from the central government; moreover, tax reduction and reduce capacity, they are different from prior using RMB 4 trillion to drive in unilaterally demand side; logically, these reforms provide better outlook to market. During a period, market is intertwined with economy downturn and reform expectation, along with the continuously introduced policies and, a proper stabilized economy data, the expectation on bullish reforms will lead the market sentiment.
A booming from expectation on reform was showed after the Thirteenth Five Year Plan issued, this meeting mainly practiced the spirit of the Thirteenth Five Year Plan. Within this period, stock market was rallying in the fluctuation, which actually was a process on gradually digested economy downturn.
Technically, stock market was continuously digesting the hammer from locked up chips from prior August bailout. From the policy expectation side, measures as reduce capacity, tax reduction has not fully implemented, cannot include it into out of bullish and was not bearish. On market perspective, real estate and brokerage is in the leadership. Overall, stock index is expected to continue increasing.
Tuesday overseas copper market closed low since long holdings closed for profits. On fundamental side, LME spots further dropped $6.5 to discount $11.5; inventory slightly increased 175 ton. Shanghai copper spots were discount RMB 150 to discount RMB 50; market was lacked of buying momentum and, was mainly focused on shipping. From industry side, China November imported copper concentrates from Peru increased 24.6% year-on-year; concerns on China’s demand had sharply decreased was under suspicions. On Zambia side, it planned to bring in a set of new variable charge system on mines, it would charge from operator based on the metal price, royalty fee levy interval was 3%-9% and, indicated would implement it at the first quarter in 2016. In addition, Mexico October total copper yield was 42,000 tons, increased 10.9% year-on-year.
Technically, copper price may fluctuate approaching Christmas and New Year; if LME rise above $4750, next target is $4900; domestic copper resistance is 36350, RMB 38000.  

Soybean No.1 contract continued fluctuation pattern; strong and weak tendency on oil and meal was not plainly in recent days. Domestic soybean spots market tended to strong out of stabilizing but, north and south market was restricted by its different requirement structure, soybean price was in slightly divergence tendency. We regard soybean No.1605 contract will fluctuate among RMB 3640-3800/ton in a short-term, recommend selling at high and buying at low within this interval.
Yesterday domestic soybean meal spots slightly increased, partial regions’ quotation increased RMB 20-40/ton. Oil plant supported price and rose followed the market. Current demand from selling market didn’t recover, only because market rose had stimulated the traders’ mindset and, promoting the trading. It was estimated domestic soybean spots would operate in strong fluctuation in a short-term. Oil against meal ratio was 2.34:1, focused on bolster at 2.3:1. As for operation, we recommend holding arbitrage between long meal and short oil.
Natural Rubber
Yesterday Shanghai rubber continued fluctuation after rose to limitation; US dollar spots rose $20: domestic spots price was 1120-1140 (0); domestic cargo price was 1150-1170 (0); US dollar RSS spots price was 1240-1250 (+10); US dollar RSS cargo price was 1250-1270 (+10). Overnight overseas market was mixed with increase and decrease, lacked of news. Overall, market sentiment was neutrally; rubber fundamental was weak; though the medium to long term bearish trend led by fundamental was hard to change, need to pay attention on price phased rallying.
Yesterday PP futures opened high and went higher, opened at 5708 and ended at 5794; trading volume decreased 86330 lots to 1.511 million lots; holding increased 9756 lots to 575,000 lots. On spots side, yesterday domestic PP market price rose out of fluctuation. Petro China east china and north china increased producer price and, PP futures opened high had certain boosted the market sentiment. Merchants’ demand on selling in surrendered part of profits decreased; tried to quote in high and observed the market reaction. Plants in downstream observed in cautious, demand on initiatively receiving had no plainly improvement and, trading was in general level.
Current main quoted prices for wires of north, east and south markets are RMB 6000-6350/ton, RMB 6200-6500/ton and RMB 6300-6500/ton, respectively.
As for operation, current moving average system turned into upward; MACD red column extended as technically rally tendency. We recommend buying at low point in a short-term.

                                                                       Dong LV (Investment Certificate NO. TZ008452)