Daily Report 300316 2016-03-30
Stock Index
Intraday stock index continued retracing out of fluctuation, the security brokers which prior rose in the leadership continued retracement. From bullish news side, Yellen made dovish speech and, external environment was bullish. NDRC: overall investment of January newly operating projects soared 41.1% year-on-year, growth increased 42.9% year-on-year; industrial enterprise profit growth rallied. But the rally on industrial enterprise profit was benefited from the slumped commodity raw material; prior rallied cyclical stocks had already indicated this news. From bearish news side: the first tier cities had enhanced regulation and control on real estate market; Northeastern special steel broke the contract which might broke the superstition on local state-owned enterprise and China Development Bank, again it revealed the problems which covered from the bail out; market sentiment turned to negative. From registration system: ST Boyuan delisted might again pave to expand IPO and the registration system which mentioned at the thirteenth five year plan; in addition, chairmen Liu only indicated would not one-sided development instead of not to develop. Technically, the reviving trend was almost been dropped back, the security brokers were already weakened. Overall, this revive trend was weak but, we recommend not to bearish it since the supply side management from government would boost the market and, exchange rate would stabilize; operating in volatile mindset and do not over pessimism.
Tuesday copper market was weak, copper price was mainly in downward trend but, got bolster at the end of market. On copper market side, LME spots premium decreased $4 at $28; inventory decreased 2250 tons. LME inventory hadn’t increased which as well relieved the hammer on copper price. Domestic spots were discount RMB 120 – RMB 60; downstream enterprises showed observation mindset on slumped copper price. Technically, copper price might fluctuate in a short term; we recommend waiting for a good opportunity to short.
DCE soybean was strong out of fluctuation, oil continued rallying; oil against meal ratio was 2.56:1. Soybean price at northeast continued dropping, current major production area after filtered grain purchase price decreased RMB 3595/ton; except for the areas around Harbin, the production area after filtered purchase price down below RMB 3600/ton; market observation mindset exacerbated.
From soybean meal side, partial oil plants spots price slightly adjusted RMB 10-20/ton; spots price in partial areas were stabilized; forward month basis quotation became the mainstream of market, lower basis trading was thick and, spots trading was flat. Partial oil plants outage rate increased which might switch into consuming meal inventory, stronger the mindset from oil plants to bolster price. As for operation: we recommend longing the soybean No.1 contract and soybean meal by light positions in a short term; paying attention to stop profit on shorting the arbitrage between oil and meal.
PP 1605 contract continued fluctuating, opened at 7388 and ended at 7389; trading volume increased 158,000 lots to 1.748 million lots; holding decreased 17930 lots to 382,000 lots. From spots side, yesterday domestic PP market slightly swung out of stabilization around RMB 50/ton; wires overall price raised in the stabilization; partial merchants in south china showed sign on slightly profit surrendered. Practitioners’ mindset didn’t plainly changed under the boost from most petrochemical stabilized price; merchants shipped according to own supply condition. Plants in downstream purchase appropriately based on orders and, excluded the high price supply of goods; real market trading mostly slightly surrendered partial profits.
Intraday main quoted prices for wires of north, east and south markets are RMB 7350-7400/ton, RMB 7350-7550/ton and RMB 7600-7750/ton, respectively.  
As for operation, current moving average system still arranged in long but, MACD continued forming dead cross, upward momentum weakened; recent crude oil volatile increased and, risk exacerbated; we recommend staying in observation.
                                                       Dong LV (Investment Certificate NO. TZ008452)