Daily Report 260416 2016-04-26
Macro Economy
US stock rollback from highpoint in four months; investors are waiting for result of the Fed conference and BOJ policy conference this week and more enterprise financial statements. S&P 500 index slightly dropped 3.79 points or 0.18% to 2087.79 point. US newly built housing sales declines for the third straight month, cumbered by the dropped west district sales volume; declines 1.5% month-on-month, which expects of increasing 1.6%. US March existing house total sales is 0.511 million, less than expected 0.52 million. Although nowadays US economy including estate industry shows fluctuation, this might come from some seasonal reasons. With the trend of stable employment, increasing salary, low credit cost and household increasing leverage, the recovery of estate industry and economy won’t stop. US will release March durable goods and housing price index at intraday night. Started from today, Fed will hold FOMC meeting, partial investors believe Fed will release dovish statement again. It seems unlikely for the Federal Reserve of the US to raise interest rates in April under the current market status. And it is noteworthy to the statement on the global economic risk and inflation in the conference. Besides, slight depreciation has come to RMB in recent days. If the announcement of the Federal Reserve tends to be hawkish, investors should be cautious of the depreciation of RMB.



Stock Index
Yesterday stock index fluctuated narrowly; coal stocks increased slightly. Capital side, seven enterprises got IPO approval, which will tighten the capital chain. The market value of non-tradable shares that are unlocked this week amounts to 94.57 billion RMB. And the total number in May and June in the two exchanges has reached 460 billion RMB (268.27 billion RMB in June). The total volume of debts in China accumulates dramatically, accounting for 237% of GDP. Although economy data is rising again, this kind of rising data boosted by stimulation is not benefit to restructure and long term profit forecast. The increase of inflation and default will raise market risk premium, and is bearish to stock upward trend. Financial statements released late April are mostly not good. Profitability of enterprises totally went down. Overall, although the long term prospect is confused, short term data can bolster the stock index. We recommend operating in fluctuation.



Copper
Monday domestic and overseas copper market slightly rollback; market trading and investing is thin. Overseas market long position shows possibility of profit; domestic market shows signal of new short momentum is entering market. During the period of the Fed conference opening soon, market is cautious, because the hint of future interest hike after meeting is focus. Back to copper market, besides copper price rally is weaker than other varieties, the most important concern is on weakly domestic and overseas spots market. Monday LME spots discount declined to $8, which was first time below $10 since the 8 March; at the same time, inventory increased 4600 tons to 152400 tons. Ever Since LME inventory turned to China from March, spots discount had once increased to $33. After China import window was closed, the market was focusing on the change over domestic and overseas inventory and spots. At present, this change has begun to realize, which weaken the momentum of overseas sector rising. We still emphasize consumption in April is weaker than March, and with off-season coming, the possibility of copper price rollback is increasing. We recommend waiting for the new opportunity to short after the end of rally.


 
Soybean
Domestically, DCE soybean rallied following overseas market; oil against meal ratio declined. Northeast China soybean spots price rallied; Heihe, Suihua and Jiamusi district price increased RMB 60-100/ton. Basic high quality raw grain price increased to near RMB 3600/ton. As a result of port closure and sales suspension of soybean storage, spots market rallied.
From soybean meal side, influenced by US stock market callback, spots price declined RMB80-100; port oil plant quotation was around RMB 2560-2620/ton. Callback of spots and cautious of downstream purchase decreased the market trading. As for operation: reduce soybean meal long holdings and, arbitrage between oil and meal operates at 2.4-2.65:1.



Nature Rubber
Yesterday Shanghai rubber fluctuated at the high point, up to spots trading period: domestic spots price is1530-1540(+20); domestic cargo price is 1540-1550(+40); US RSS spots price is 1710-1730(+20); US RSS cargo price is 1740-1770(+20); Singapore cargo price is1570-1600(+10); Thai cargo price 1590-1620(+20); mixed rubber price is 11700-11800(+100).
From news side, until mid April, Qingdao bonded zone rubber inventory declined 3.4% to 248300 tons, was 8700 tons less than last term. For specific species, natural rubber decrease more, which pull down the total inventory for 11400 tons to 210300 tons. Synthetic rubber inventory increases, and mixed rubber increases most. Overall, Three Futures Exchanges adjusted trading commission fee and margin of many contracts, and noticed risk control; market enthusiasm dropped after market short and long momentum both decreased; tendency was estimated turned to strong volatile from unilateral upward trend.
 
                                                                                     Dong LV (Investment Certificate NO. TZ008452)