Daily Report 030616 2016-06-03
Stock Index
Yesterday stock market slightly increased; tendency is stronger. 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, for example releasing surplus output, changing capital to real, reducing cost and institutional innovation. If policy can give investor stable and positive expectation, index is still hopeful.

Thursday copper market continued changing. Yesterday released US May ADP employment number is 173000, which is coincidence with expectation. Recently statement is more and more tend to the Fed interest hike at summer. US dollar also get bolster at important price. The non-farm data which will be released this night is worth attention. Back to copper market, LME spot goods premium decreased 6 dollars to 9 dollars. Storage turns to reducing 825 tons to 154000 tons. Domestic spot goods premium increased 25 yuan to premium 80-120. Most traders lead market to buy goods with low price; trading flow percent is increasing. Part downstream continued purchase at low price; trading dropped after rallied. From supply side, Peru Energy and Mining Division claimed that Peru April copper output increased 53% to 188000 tons. Increasing are mostly from Cerro Verde of Free Port, Las Bambas of Minmetals, Constancia of Hudson Bay and Toromocho of Aluminum. This output increase data is perfectly coincident of our analysts, and prove to us again that although upstream several large mine copper are in good condition, supply pressure is still enlarging. Technically, recent copper price has adjusted; as for trading we recommend first observe, and wait to short opportunity after adjustment.

Domestically, DCE night section slightly increased. Influenced by overseas section soybean meal soared, oil against meal ratio is predicted hard to end drop and keep stable. Northeast soybean main purchase price still concentrate on RMB3900-4000/ton. Since storage soybean auction is delayed, market fall in observation atmosphere again. Future market will focus on surplus grain supply and national storage soybean auction. Soybean meal side, most places increase spot goods price RMB 40-60/ton. Price increased following overseas price soar. . Now oil factories operating ratio is high; purchase needs are active. Oil plants are willing to bolster the 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; oil against meal ratio hasn’t turn stable. Arbitrage between oil and meal temporarily observe.

Yesterday PP futures opened high and dropped; opened at 6688, closed at 6617. Trading volume decreased 25786 to 0.458 million lots, and holding decreased 6148 to 600000 lots. Spot goods side, yesterday domestic PP market was stable with an upward tendency. Part of the price slightly increased RMB 50/ton. Petrochemical South, Northwest and Sinopec Middle and South China factory price increased, and bolster to cost increased. Traders sell following the increasing price, but suppressed by futures opening high and dropping, price increase range narrowed. Downstream factories reject to high piece, and firm offer can’t follow up; trade and invest atmosphere is weak. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6900-6950/ton, RMB6950-7100/ton and RMB6950-7050/ton, respectively. As for operation, current moving average system changes; MACD red column lengthen, which is recover tendency. But recent price closed below average 60 constantly; stress of average 60 is obvious. We recommend observe price near average 60.

Nature Rubber
Yesterday Shanghai rubber reached the bottom and rallied. US spot market quotation increased: domestic spots price is 1220-1240(+20); domestic cargo price is1230-1240(+20); US RSS spots price is 1440-1460(+20); US RSS cargo price is1520-1540(+20); Singapore cargo price is 1280-1300(+20); Thai cargo price 1310-1330(+20); mixed rubber price is9600-9700(+200). Shanghai rubber fundamental side didn’t change much, producing districts all operate normally. Macro side still focuses on the Fed interest rate hike. US May ADP employment number is in coincidence with expectation. Newly increased positions are totally from service industry. Manufacturing industry reduced 3000 positions. US will release May ADP non-farm employment number. Overall, nature rubber is in coincidence with seasonal factors. From macro level, main bulk industry is in a rush. Shanghai rubber futures price is predicted to be lower than RMB 10,000, but is technically near the bottom. Short position can be reduced at low point, and overall is a weak tendency.
                                                                           Dong LV (Investment Certificate NO. TZ008452)