Daily Report 140116 2016-01-14
Stock Index
Yesterday stock index continued weakened and lacked of revive momentum; the market dropped below 3000 point, bargain hunting was popular again. There was good opportunity on insurance fund into market and, asset allocation with decreased interest but, from each sector technically tendency in the stock market, the fundamental pattern was busted, revive from August fell to continue, partial shares had dropped nearly half. The upward under the circumstance of asset shortage and, the increased economy level relied on deepened reform was probably a false upward, recent slump was a true downward. Pessimism saying, index might dropped below August low point 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 previously was too optimistic on reform would promote economy which caused a sharply revive in the fourth quarter of 2015, and then turned to pessimism expectation. Hence, if there are more bullish on reforms recently, index was unlikely to rise back. Overall, the downward trend hasn’t finished yet.
Wednesday copper market got resist momentum but, still in strong performance relatively speaking. China stock market slumped again; copper market was already in strong. Though collapses US stock market hammered the copper market, it was in relatively stabilizing after all. From holding side, recent global three major exchanges holdings all increased, especially holdings from China and COMEX had reached a high point. Whilst copper price was low, holdings were still huge, showed divergence in the market was tremendous. Considering the options holding were concentrated at $4300; the 75% position-holding costs of copper price were as well at this level; copper mine output had already sharply decreased; domestic consumption was better than expectation and other factors, we tended to copper price downward scope was limited. On spots market, LME spots discount narrowed $5.75 to discount $4.25, inventory continued decreasing 1200 tons. Shanghai copper spots discount narrowed RMB 110 at discount RMB 120 to discount RMB 40. On supply side, Codelco subordinated El Teniente copper mine occurred a worker was killed by the accident, which has suspended operations there. The copper mine output in 2014 was 445,000 tons.
Technically, copper price is at the key support level, if it rises above five-day moving average system, weakly copper price pattern will vary. We recommend waiting for the long opportunity after clarifying.
DCE soybean rallied by the US market, oil against meal ratio continued hovering at periodicity low point. Soybean price in northeast production area and the area along Huaihe River both showed stabilized pattern but, trading was thin in each area. Market demand from Shandong and Juangsu, Zhejiang area was replaced by the import soybean, which further exacerbated the unsalable domestic soybean. We regard soybean No.1605 contract short term tendency was uncertain, the entire tendency before Spring Festival would mainly in weakly fluctuation, stayed in observing as for operation.
Soybean meal futures and spots market was both stabilized, US soybean revived from low and domestic was stocking up before Spring Festival has bolstered the price but, soybean meal revive pattern would be finished by the end of stocking up. Oil against meal ratio reached the lower edge of interval and then rallied, short tendency was tended to strong oil and weak meal. As for operation, we recommend appropriately holding arbitrage between long oil and short meal.
Yesterday PP futures continued fluctuated, opened at 5588 and ended at 5585, trading volume decreased 247,000 lots to 1.473 million lots; holding increased 30104 lots to 593,000 lots. On spots side, yesterday domestic PP market price was weakly adjusted. Partial petrifaction regions reduced producer price and, PP futures opened high then dropped with fluctuation has formed certain impact on spots market. But partial agencies had no intention to continue shipping with part profit surrendered, market was temporally stabilized. Plants in downstream purchased in cautious and observed the future market.
Current main quoted prices for wires of north, east and south markets are RMB 5950-6100/ton, RMB 6050-6350/ton and RMB 6350-6650/ton, respectively.
As for operation, current moving average system turned to downward, MACD formed dead cross as weak pattern. Recent price was estimated continued volatile weakening.
                                                                                      Dong LV (Investment Certificate NO. TZ008452)