Daily Report 220416 2016-04-22
Macro Economy
US stock dropped from four-month-high point; enterprise financial statements mix with good and bad. Investors have no momentum to long. S&P 500 index dropped 10.92 points or 0.52% to 2091.48 point, which is the biggest drop range of two weeks. From news side, US last week initial jobless claim decreased 6000 to 247,000, which is lowest of 1973. Market participants indicate that the Fed has space for tighten policy, and hints other data might overstate first-quarter economy weak degree. We indicate US employment remains bullish during this recovery, and manufacturing industry data is turning good; economy has power for continuous recovery.

Stock Index
Yesterday stock market rallied then dropped; lack of popularity formed a contract with commodity market. Recently easing credit and fiscal stimulation have caused a plainly reviving on economy data, but this stimulation’s long term affect isn’t optimistic, and might cause sequela like that of “4 trillion”; investors don’t agree with that policy will improve long term profit forecast of enterprises. Under the easing monetary background, investors are worry about expected inflation; it’s generally accepted that no bull market under inflation, which is bearish to stock market. Under inflation, capital prefers commodity but stock. As for asset shortage, nowadays credit default happens a lot, and credit interest margin creates stage new point; credit default causes more than 70 issuer cancel or put off all kinds of bonds since April, more than total of March, capital amount reaches RMB 68.79 billion. It caused investor’s worry about enterprise profit ability and cash flow. Overall, effect from current easing credit, strong financial, stimulation from real estate market and other policies to structural adjustment of economic entity and, enterprise profit improvement is limited, or even in negative effect; investors are in huge concerns. We recommend operating in short out of the fluctuation.

Thursday copper market trading and investing momentum was thick, and copper price fluctuated at high point; nowadays continuous rally tendency is under suspect. Thursday whole commodity market was under fluctuation, after continued soaring, market divergences were increasing. We agree with the economy activity brought by estate industry in the beginning of the year, but that only stabilizes the increase, and won’t bring economy to rising period. Nowadays commodity price rallied, which boosts the consumption of estate industry; other industries are mostly seasonal warm, but periodical. After price has back to high cost, supply pressure is creasing. Meanwhile, more than half of consumption season has passed away, so we tend to copper price will fall back. On spots market, Thursday LME spots premium increased $3.75 to $17.25; inventory increased 75 tons. Import data shows that, March China copper export amount was 23000 tons, increasing 33%, but the negative number after mid March means China export will remain high increasing rate. Technically, we tend to copper price is just rally and will fall after rising. We recommend waiting for a good opportunity to short.

Domestically, DCE soybean night section mixed with up and down; DCE soybean meal rallied following overseas market; oil against meal ratio declined to 2.38:1. Soybean spots price slightly rally at Heilongjiang and most areas of Inner Mongolia, increasing about RMB20-60/ton. Recently basic soybean market sells more and grain merchants enter market with enthusiasm, which brings price increase. In addition, Shandong port import soybean is under commercial inspection. Ports of Shandong Qingdao, Rizhao and Jiangsu Dafeng import soybean suspend quotation, and delivery amount decrease; domestic especially northeast China soybean market price is boosted.
From soybean meal side, spots price increases for the second straight day, most oil plants increased RMB 50-100/ton. Though fundamental side hasn’t change, but the soaring domestic and overseas sector future price causes domestic spots price increases; it has intrigued traders and the market purchase has transformed form cautious to active. As for operation: soybean meal longing in light volume when price is low; we recommend short arbitrage between oil and meal closing out and observation.

Nature Rubber
Yesterday Shanghai rubber opens high then falls, up to spots trading period: domestic spots price is 1550-1560(+40); domestic cargo price is 1550-1560(+50); US RSS spots price is 1730-1740(+40); US RSS cargo price is 1740-1760(+40); Singapore cargo price is 1600-1670(+40); Thai cargo price 1610-1650(+30); mixed rubber price is 11800-11900 (+100).
From new side, Bloomberg indicates Thai official claims to sell 0.2 million tons rubber storage. Shanghai Futures Exchange adjusted trading commission fee of steel rebar and other contracts, and noticed risk control. Overall, yesterday short and long momentume both decreased, market enthusiasm dropped under the regulation from exchanges; tendency was estimated turned to strong volatile from unilateral upward trend.

Yesterday PP futures opened high and went higher, opened at 6629 and ended at 6852; trading volume increased 923,000 lots to 3.628 million lots; holding decreased 45054 lots to 652,000 lots. From spots side, yesterday domestic PP market showed slightly downward trend. Partial regions of petrochemical reduced producer price which was further weakened the bolster over marker costs. PP futures operated at high, boost to market sentiment was limited. Merchants initiatively shipped, real market surrendered partial profits for promoting trading. Plants in downstream observed in cautious, demand on initiatively receiving didn’t plainly improved; market trading and investing momentum was thin.
Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6600-6800/ton, RMB 6700-7000/ton and RMB 6850-6950/ton, respectively.
As for operation, current MACD exposure downward extended as weak pattern. But intraday price raised anomaly, market was in unusual variation, we recommend paying attention on risks and staying in observing.
                                                                                   Dong LV (Investment Certificate NO. TZ008452)