Daily Report 020616 2016-06-02
Stock Index
Yesterday stock index slightly rolled back; securities and banks section slightly dropped. PMI is 50.1, better than predicted 50, attributes to real estate secton. One red line of Tuesday broke though several days short term moving average, previous sluggish was long, along with possibility of join MSCI increased to 70%, 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
Wednesday copper market dropped with pressure; recover part of loss at the end. Through May PMI data of main countries released yesterday, although China is better than expected 50.1, but breakdown data shows that emotion is not enough. Euro zone is flat with expected, which is 51.5. US is 51.3, higher than 50.3. Through beige book of Fed released yesterday, economy activity increased appropriately. Overall, except US economy performs well, Europe and China still don’t have improvement. Under this atmosphere, copper demand forecast is still not optimistic. Back to copper market, LME spot goods premium dropped $10.75 to $15. Storage increased 2625 tons to 154000 tons. Domestic spot goods premium increased RMB 30 to premium 50 to premium 100. Market trading is active relatively. Not only traders receive goods and change to long order, downstream joins to goods receivers. Latest news, First Quantum finished the selling of Kevitsa. Kevitsa produced 17000 tons copper, but production cost is high. Free port sold its mines before; this shows that facing the unfavorable reflection to operation, upstream enterprises now tend to sell mines but closing. Technically, after two continuous days drop, fluctuation is unavoidable in short term. We recommend observation at first, and wait for now short opportunity after adjustment.
 
 
 
Soybean
Domestically, DCE night section rose following overseas section; oil tendency is better than meal; oil against meal ratio slightly increased. Spot goods side, domestic soybean price is flat; part of districts increased RMB 40-60/ton. Most areas stay stable. Surplus grain quality decreased; high quality soybean surplus is in short supply. Spot goods purchase and sell is near the end. Since storage soybean auction is delayed, market fall in observation atmosphere again. Soybean meal side, pride decreased RMB20-40/ton of several places, which is affected by overseas section roll back. Now oil factories operating ratio is high; purchase needs are active. Oil plants are willing to bolster the price. Price is mainly fluctuation and adjustment in the short term. 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 continued fluctuation; opened at 6665, closed at 6648. Trading volume decreased 276000 to 0.484 million lots, and holding decreased 22498 to 606000 lots. From spot goods side, yesterday domestic PP price increased. Sinopec factories price increased, and bolster to market cost increased. PP futures operated at low price, stroke to downstream goods receiving willing. Although traders quoted high follow tendency, but downstream factory receipt willingness and trading volume is low. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6800-6900/ton, RMB6950-7100/ton and RMB6900-6950/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)