Daily Report 010616 2016-06-01
Stock Index
Yesterday stock index soared with securities rose in the leadership; computer sector as well sharply increased. One red line broke though several days short term moving average, previous sluggish was long, the hammered long positions concentrated broken out which was unexpected. From bullish side: 1. Goldman Sachs expected probability of MSCI index inclusion A share in June has rose to 70%, blue chips valuations depressions showed. 2. Shenzhen-Hong Kong Stock Connect program is approaching, securities boosted from which and drove the stock index. 3. Xi Jinping emphasized to put scientific and technological innovation at a more important place boosted the growth enterprise market. But intraday soar should not over optimistic, we recommend cautiously optimistic. Because of: supply side reform is the principal line which shows hope on a long term but, enterprises temporarily profit is hard to rise which may hammer the investors’ long term confidence.
Attention is on the supply side reform in the future, if policy brings stabilization and positive expectation, the index stands a chance. As for included into MCSI index is just a burst combines with long positions sentiment in a short term. From other countries experience, it is hard to have long term significance.
 
 
Copper
Tuesday Copper market lacked of upward momentum, copper price volatile at intraday low point. LME spots premium increased $0.25 from last Friday to $25.75, inventory decreased 2025 tons to 152,000 tons. Domestic spots premium decreased RMB 15 to RMB 30-60; holders initiatively cut premium and trade spots; supply growth premium decreased but, lacked of trading under the limitation from asset in the end of month and settlement; market showed characteristic end of month.
From supply side, Mexico March copper output decreased 3.7% year-on-year to 40,000 tons but, prior three months output increased gradually; first quarter total copper output 112,000 tons. In addition, Minmetals Copper starts to produce cathode copper on 27 May and, first batch cathode copper will be produced in June, this project plans to produce cathode copper 100,000 tons annually.
Technically, current copper price is weak, we tend to copper price revive trend might near to an end; we recommend waiting for a good opportunity to short.
 

Soybean
Domestically, DCE night section rose, as a result of delay of national storage soybean. Oil against meal ratio changed; concentrate on its constancy. Spot goods side, domestic soybean price tends stable. Storage soybean auction delayed, forcing market back to stronger tendency. Since expected auction price is low, will put stress on spot goods market. Stress vanished when auction delayed, and focus on further policy news. Now Northeast district soybean surplus is limited, and quality is different. Traders and oil plants purchase activity is low. From soybean meal side, spot market is stable. Some oil plant slightly raise price to simulate dealing. Now the fundamental side is still strong. Soybean meal price is easy to increase and drop. Weather is focused after June. US soybean demand increased slightly, which is benefit for soybean meal price. Since we hold the opinion of fluctuation and strong tendency for US section, and domestic breeding recovery situation is good, soybean meal is long in the middle term. As for operation, soybean meal long position is held when rollback happens; oil against meal ratio is at the lowest point, and long position can be tried, which is buy oil and sell meal; the ratio is 1:2.
 
 
PP
Yesterday PP futures opened high and rose; opened at 5484, closed at 6700. Trading volume increased 144000 to 0.76 million lots, and holding decreased 8260 to 628000 lots. Spot goods side, yesterday domestic PP market slightly increase. Sinopec factory price remains stable; bolsters the market cost. PP futures rose with fluctuation, boosting the market attitude. Traders quoted with a higher price, observing the market reflection. Downstream factories receive goods more actively, market trading as needs. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6750-6850/ton, RMB6850-7000/ton and RMB6800-6900/ton, respectively. As for operation, current moving average system changes, MACD green column lengthened; MACD form golden fork. Downward motion is not enough, and we recommend observe around average 60.
 
 
                                                       Dong LV (Investment Certificate NO. TZ008452)