Daily Report 280116 2016-01-28
Stock Index
Yesterday stock index rallied after slumped and gained back most profits; Petro China, Sinopec, coal, banking sector strongly bolster the market. But index was still in the downward trend; rally was caused by the oversold in a short term. Profits from industrial enterprise decreased 4.7%, economy situation and enterprise management condition was still in the downturn. Technically, the downward trend hasn’t end yet, only the price oversold in a short term and, if pay attention on the market, it is already lower than the compact district in 2015 or even in the end of 2014. There is no bolster at lower edge. For fundamental side, there is no news boosts the stock market. Firstly, market’s confidence on reform boosting stock market has decreased; short term reform bullish is unable to pull the index. Secondly, bailout from national team is over and over again effecting in 2015, the effect has decreased with paying lots of price; government hasn’t take a stand on rescuing market currently. Thirdly, the supply side reform may effect after bust, which means the continuously accumulated real economy bubble bursts after RMB 4 trillion. Fourthly, enterprises’ each financial index vertical proportion of A Share is getting worse, net profit ratio, operating cycle, business activities portion of corporate earnings, asset-liability ratio and other factors, combine with macro economy situation, the enterprise performance is in the downturn trend. Index is weakening in the future.

Wednesday copper price continued soaring, crude oil price rallied drove the copper price. Wednesday numerous oil companies in Russia discussed to coordinate acting with OPEC which bolstered the crude oil price. We tend to consider the OPEC and non-OPEC will work together eventually but, the reaction from market currently is still too early. Wednesday Fed meeting maintained the interest rate but, showed the concern attitude on economy situation in the future which lower the expectation on Fed interest rate hike times and, hammered the US dollar. Back to cooper market, LME spots premium decreased $0.5 to $6.25; inventory turned to increase 2950 tons. Shanghai copper spots discount narrows RMB 20 to discount RMB 150-90. On supply side, Escondida copper mine will implement another job cut, workers already blocks the way to Escondida copper mine with protests, this copper mine output is totally 345,000 tons in 2015. Technically, recent copper price rallies too soon, we tend to consider there is possibility on adjustment in the future, wait for the new buying opportunity after making profits as for operation.     
DCE soybean slightly weakened in the night session, trading pace started to slow down; oil against meal ratio was 2.31:1. Current south, north soybean and, selling area market price was all dropped in weakly trend; along with Spring Festival was approaching, market buying and selling tended to thin; supply and demand side was unable to provide more supports; for overseas market, US soybean was in the dilemma of up and down, it was hard to have bullish to drive the price rally in a short term. We regard soybean No.1605 contract will mainly in weakly fluctuation tendency.
Domestic soybean meal spots price slightly fluctuated, terminal concentrated stock up were about to an end; spots price stabilizing, demand of price supporting might be loosen. Trading and investing cautiously in current stage, partial assets left the market; quotation of oil plants at port was mostly at RMB 2600-2650/ton. Oil against meal ratio was still in anxiety situation, as for operation, we recommend holding arbitrage between long oil and short meal in light holdings.
Yesterday PP futures opened high and went higher; opened at 6097 and ended at 6194; trading volume increased 303,000 lots to 1.741 million lots; holding increased 8460 lots to 714,000 lots. On spots side, yesterday domestic PP market tendency continued edging up, price slightly high quoted RMB 50-100. Partial petrifaction producer price of Petro China north china, Sinopec south china rallied which increased the bolster to supply cost; merchant continued shipping follow the trend; futures opened high and went higher further boosting the practitioners’ confidence. Plants in downstream covered positions appropriately according to own situation; real market trading continued increased, market overall trading and investing momentum increased.
Current main quoted prices for wires of north, east and south markets are RMB 6250-6350/ton, RMB 6400-6450/ton and RMB 6450-6700/ton, respectively.
As for operation, current moving average system turned to upward; MACD red column extended as longing tendency; recent price predicted to continued rallying.
                                            Dong LV (Investment Certificate NO. TZ008452)