Daily Report 130116 2016-01-13
Macro Economy
Yesterday US stock market soared in the end of market for the second straight day, commodity stock gained the losses and, technology stock rose in the leadership. S&P 500 index increased 15.01 point or 0.78% to 1938.68 point. On data perspective, US November JOLTS job vacancy was 5.431 million, expected was 5.45 million, prior value was revised from 5.383 million to 5.349 million. Raised voluntary turnover showed labors’ confidence on employment in the future has enhanced, combined with strong December non-agriculture data, the US employment situation continuously improving. According to the meeting minutes released in Washington on Tuesday, US regional Fed board supported the gradually interest rate hike during meeting from 3 December to 10 December and, indicated that economy growth was “moderate”, economy report from different industry and areas showed a mixed condition. Richmond Fed Jeffrey Lacker indicated, Fed would interest would at least hike fourth in 2016 and, expected Fed would not fell behind the situation on interest rate side. Currently, variation on inflation environment still had adverse effect on Fed’s policy. We recommend continuously pay attention on the weakly inflation upward trend which caused from decreased energy price in the future.
On China side, the Hong Kong Monetary Authority indicated on Tuesday that pay attention on Hong Kong RMB interest rate soared and offshore RMB liquidity tightened and, had provided more liquidity for bolster to Hong Kong banking system. HIBOR interest rate soared was probably because of central bank was intervening RMB interest at offshore market. Up to intraday morning session, RMB offshore interest was further dropped under 6.575. On shore term perspective, strong intervene from central bank might weak the market bearish momentum, the continued devaluation might be relieved. Focus on variation on the US monetary policy in the future, if there is sign on Fed interest rate hike slowed down, RMB interest rate might further stabilizing or reviving.  In addition, China December trading data will be released at 10:00 on intraday morning, market expected December trading surplus would at $51.3 billion; November was surplus $54.1 billion. The US dollar export was expected to decrease 8% year-on-year, November was decreased 6.8%. Import was expected to decrease 11% year-on-year, November was decreased 8.7%. These data need to be focused.
Stock Index
Yesterday stock index slightly volatile, RMB short covering had provided confidence to market temporally. The revived economy level since the end of August, under the circumstance of asset shortage and deepened reform might be a false rally; recent downturn might be the true collapse. Pessimism saying, the price might dropped over the prior low point in August in the future. It is the time to de-capacity and de-leverage in 2016, under this circumstance, corporate profit was hard to rally; supply side reform might boom after bust which would shock the economy. RMB sharply devaluated and registration system led the market optimism expectation rapidly turned to the concern on economy downturn and corporate value, comprehensively turned to pessimism. On supply side, financial burden increased, leeway was decreased compare to last year. On policy side, since prior was too optimistic on reform would promote economy which caused a sharply revive in the fourth quarter of 2015, then turned to pessimism expectation. Hence, if there is more bullish on reform recently, it is hard to pull up the index. Overall, the downward trend hasn’t finished yet.

Tuesday copper price rally trend got resisted but, the pressure was relieved. Tuesday copper price rallied first, global stock market all showed stop drop which relieved the market panic momentum; gold as well dropped but, crude oil fell again which hammered the copper market. China reinforced the management on both stock and exchange market, most risk was released. At the meantime, China accelerated to solve problems; Tuesday NDRC convened a press conference and proposed five measures on resolve the over capacity, CBRC would lifting efficiency on serving the real economy in the key task in 2016. It is reported that up to the end of last November, newly started projects had reached 352 pieces, accomplished RMB 470 million investment; OECD as well indicated the Chinese leading index rallied, Chinese economy would not largely slowed down. From what we know so far, the industry order and output condition was better than expectation. On copper spots market, LME spots discount extended $1.25 to discount $10; inventory turned to decrease 1900 tons. Shanghai copper spots discount narrowed RMB 10 at discount RMB 230 to discount RMB 150; trading was still thin. Since the traditional slack season and the overall pessimism over China manufacturing industry, market was hard to have solid buying market. Market demand was focused on the clarified Chinese consumption after the Spring Festival. From potions side, February and March put options concentrated upon $4300, considering the 75% cost line was as well near this passion, this was the technically support level. We tend to copper price might stabilized in the near future, wait for clarified trend on operation.
DCE soybean fluctuation was strong in the night session, oil against meal ratio continued in interim low point. Soybean spots price in northeast area continued weaken out of stabilization; market bearish sentiment was thick; grain merchants in south and north lacked of enthusiasm to come into market; trading grain was critically unsalable, current cleaned grain purchase price was concentrated at RMB 3720-3820/ton. We regard soybean No.1605 contract short tendency was uncertain, the overall trend before Spring Festival would mainly in weakly fluctuation; stay in observing as for operation.
Soybean meal market was weak out of stabilizing, partial spots area dropped. Feeding enterprises stocked up before Spring Festival made oil plants bolstered the price. Soybean meal revive trend would be finished along with the end of stock up. Oil against meal ratio dropped back to the lower edge of recent fluctuation, pay attention on the bolster of volatile lower edge in short term. As for operation, we recommend arbitrage between long meal and short oil stopping profit or decreasing holdings.
Yesterday PP futures fluctuated in low point, opened at 5580 and ended at 5574; trading decreased 89236 lots to 1.719 million lots; holding increased 21814 lots to 563,000 lots. On spots side, yesterday domestic PP market price dropped in slightly fluctuation. Partial petrifaction reduced producer price which further weakening the bolster to market costs. PP futures operated in low point and, continuously shattered the demand of receiving in downstream. Merchants actively made shipment and, surrendered slightly profit in actual market to promote trading. Downstream plants observe cautiously, initiative receiving demand was low; market trading and investing momentum was thin.
Current main quoted prices for wires of north, east and south markets are RMB 5950-6000/ton, RMB 6000-6300/ton and RMB 6350-6500/ton, respectively.
As for operation, current moving average system turned; MACD dead cross formed as weak tendency; expected would continued weak trend recently.
                                                               Dong LV (Investment Certificate NO. TZ008452)