Daily Report 080316 2016-03-08
Macro Economy
US stock market rallied yesterday, crude oil drove the commodity sector to rally and, counteracted the influence from dropped technology and consumer sector to market. S&P 500 index difficultly ended high with edged up 1.77 point or 0.09% to 2001.76 point, broke through the 2000 point mark and, matching its longest upward trend over one year. From US side, Fed governor Brainard indicated US economy cannot escape from global risk and, appealed for cautiously adjust policy interest rate to maintain the economic expansion. Fed president Fischer indicated US low unemployment might unemployment stimulated inflation. San Francisco Fed indicated the retirement from generation of baby boom had lowered the average wage and, the US employment market was strong. Overall, attitude from above three officers hadn’t changed and, most Fed voting members hold neutral or dovish attitude. It is worth noting that, attitude from internal Fed officers hasn’t softened and, along with current oil price revives, though inflation in the second quarter might fall, the downward range is limited; overall inflation is in upward trend which Fed admit about it. Current interest rate hike probability in March, June and December is 0%, 28.9% and 41.8%, respectively; Fed March meeting might give guidelines and, we keep our view on one interest rate hike in the first half year; meanwhile need to beware of the risk from the hawkish. From Europe side, interest rate meeting  decision will be made intraday evening 8:45, once rate decease it will forms short term hammer on non US asset, this information need to be focused.
On domestic side, data showed Chinese foreign exchange reserve decreased $ 28.6 billion to $3.2 trillion in February; shrink range was lower than expected but, this was mainly under the influence of February US dollar weakened, factor from central bank intervene and fundamental side was tiny. From short term side, RMB exchange rate might continue fluctuating at 6.5-6.6 and, it might vary before or after intraday night or 16 March. In addition, China will release February trade data. According to estimated mid-value from Bloomberg survey from economists, export is expected to decrease 14.5% year-on-year, January is decreased 11.2%; import expects to decrease 12% and in January is decreased 18.8%. Trade Balance expects to surplus $51 billion and in January is surplus $63.29 billion, this data need to be focused.
 
 
Stock Index
Yesterday stock index opened high with fluctuation and, ended in cross star. Stock sector slightly ended in upward; nonferrous metals, steel sector rose in the leadership; bank and insurance dropped. From news side, finance minister Lou Jiwei indicated intraday that bank’s nonperforming loan ratio slightly increased would not caused system risk; house duty was still coordinating with related departments at the legislation stage, individual income tax reform was proposing scheme. The change from business tax to value-added tax will be fully implemented on 1 May.
Report on the work of the government is released at the weekend, demand side stabilize growth has been put into a more important place; not only increase deficit rate but as well “big finance” will play a more important role which represents by special construction fund and PPP; M2 growth increases to 13%, monetary easing turns to credit easing which is similar to 2009. The government report didn’t mention registration system but, the thirteenth five year plan mentioned to create conditions on implementing registration system. We regard it will be launched in the future but, timing will be postponed which is bullish the stock market. Overall, strong stabilize growth, easing credit and prolongs registration system, this is all unexpected, hence, it will have large impact on the marker. Technically, low point at 29 February seems to be a low level during a certain period, index will go strong in the fluctuation.

 
Copper
Monday copper price volatile near the resistance and, edged up at close. From copper market side, LME spots premium decreased $1.5 at $7.75; inventory continued decreasing 1475 tons. Domestic spots were discount RMB 170-80 on Monday, market source of goods started to gradually increasing and, supply was sufficient. But middleman and downstream plants were limited on discount expansion since the market price was pulled high, demand on market entering was sluggish and, trading was under hammer. Along with copper price rises to recent high, we regard hammer at higher was huge, this from one side is since spots market hammer hasn’t plainly digested from output reduction and reserve purchase; from another side, is the terminal end demand hasn’t shown plainly improvement, hence, we recommend waiting for the sign on reviving closure.  
 
 
Soybean
DCE soybean continued rallying; oil against meal ratio was hovering at 2.425:1. Soybean at northeast area still in the downward trend, partial grain purchase and export price decreased in the west and east Heilongjiang area, spread existed between high and low protein. Current market imbalance between supply and demand was huge, sales area terminal market demand was weak; surplus grain at production area was urgent to sell and, predicted price would further dropping under the peasant household eager to sell grains.
From soybean meal side, domestic soybean meal spots went strong which was mainly under drive from futures market revive trend and, spots trading volume largely increased, spots price quotation was at RMB 2480-2520/ton. But we recommend not too optimistic on short term soybean meal market outlook, breeding demand hasn’t plainly revive, hammer on spots supply hasn’t decreased. Recent commodity market asset focus has plainly increased, partial commodities with huge fluctuation, since soybean supply and demand side was relatively in calm, tendency was mainly under influence from overseas market. As for operation: soybean sector participates in cautious, arbitrage between long oil and short meal continues holding.
 
 
Natural Rubber
Yesterday Shanghai rubber opened high and went high; US dollar spots market continued strong: domestic spots price 1320-1330 (+50); domestic cargo price 1350-1360 (+60); US dollar RSS spots price 1470-1500 (+50); US dollar RSS cargo price 1500-1520 (+60); Singapore cargo price 1370-1380 (+50); RMB mixed glue price 10500-10700 (+500). Overnight US dollar index continued dropping, oil price further reviving to 38. Overall, the macro factor is driving the industry to booming; US dollar spots merchants’ quotation will follow to rally instead of dropping under the period of overseas output decreasing and, domestic stopped delivery, predicts short term price will continue strong.

 
PP
Yesterday PP futures opened high and went low, opened at 7351 and ended at 7037; trading volume increased 89418 lots to 2.351 million lots; holding decreased 50330 lots to 495,000 lots. From spots side, yesterday domestic PP market price continued rallying, futures market opened in rallied to limit and, spots market petrochemical enterprise started another round of increase producer price which boosted practitioners’ mindset, market quotation went high. Plants in downstream purchase appropriately and, observe in cautious.
Intraday main quoted prices for wires of north, east and south markets are RMB 6850-7000/ton, RMB 7050-7150/ton and RMB 7000-7050/ton, respectively.
As for operation, current moving average system arranges in long; MACD red column extends as bullish pattern, recent price expects to continue strong.
 
 
                                                          Dong LV (Investment Certificate NO. TZ008452)