Daily Report 070616 2016-06-07
Stock Index
Yesterday stock index volume decreased and slightly dropped. Securities and banks plate slightly dropped. Friday US May newly increased non-farm positions 38000, far away from 160000. Interest hike expectation declined, which is benefit to domestic capital stable. . One red line of Tuesday broke though several days short term moving average, previous sluggish was long, then rallied as a result of Shenzhen-Hong Kong Stock Connect program and Xi’s speech about technical development. Market attitude changed. Since the red line rally, 68 companies released the shares holding situation of chairman, president and senior executives. Only four companies increased holding, and 64 companies reduced holding. Industry capital isn’t optimistic about afternoon section. With index recovery, more holding reduction will appear. From 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. If policy can give investor stable and positive expectation, then index is still hopeful; should be cautious and optimistic.

Monday copper price soared and dropped. After last Friday US newly increased position was only 38000, market’s expectation to US interest hike decreased. Although Yellen claimed that US economy is still good on Monday, and will increase interest rate according to economy data, but market’s expectation for interest hike next week has decreased to freeze point. Chinese finance minister said the two sides of China and US would further strengthen macroeconomic policy coordination, as a whole, the current global economic growth remains moderate, national policies still tend to balance before each other, which makes the market risk reduced. But Monday fundamentals of the copper market were suppressed. Monday a substantial increase in LME stocks was 21000-174000 tons, and inventories increased mainly in Asia, affected spot goods premium fell $ 8 to $ 0.50. After the reduction of Chinese imports, the market has been concerned about the LME inventory change, and the reason of high copper price is because storage doesn’t get an increase. When the current macro risks is warmer, a sudden increase in LME stocks, which makes copper pressure to reproduce, we pay close attention to future changes in LME stocks. From a technical point of view, recently copper price is during rally period. We focus on LME resistance position of US 4700/800, and domestic copper resistance of 36300/600.

Domestically, DCE soybean night section fluctuated of both sides. Meal strong and oil weak situation continued. Oil against meal ratio is during fluctuation and downward situation. Spot goods side, part of Heilongjiang district price slightly decreased since last weekend, and decrease range is about RMB 20-30/ton. North Heilongjiang and Neimenggu most districts price is still strong, but basic level is mostly lack of goods. The overall situation continues to reflect the competitive prices with high quality soybeans, and general poor quality soybean market demand is low. The market is still more concerns when soybeans State Reserve auction conducted. Soybean meal, stock market extended gains in the range of 40-50 yuan / ton. Market mainly boosted by the rebound of the overseas section, the short term is expected to continue the trend of stronger shocks. This weekend USDA supply and demand report will be released, before that the market is mainly fluctuation. As for operation, soybean meal long position is held when rollback happens.

Yesterday PP futures fluctuated at high point; opened at 6798, closed at 6773. Trading volume decreased 25786 to 0.495 million lots, and holding decreased 21584 to 578000 lots. Spot goods side, today domestic PP market price is mainly internal adjustment. PP futures price fluctuated largely, and affect to market attitude is limited. Sinopec enterprise factory price is stable. Traders are lack of goods supply, so quotation is strong. Downstream factories observe cautiously, and market trading and investment is flat. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6850-6950/ton, RMB6950-7100/ton and RMB6850-7000/ton, respectively. As for operation, current moving average system changes; MACD red column lengthen, which is recover tendency. We recommend observe price near average 60.

Nature Rubber
Yesterday Shanghai rubber rallied and reached average 20. US spot market price increased: domestic spots price is 1250-1260(+30); domestic cargo price is1250-1260(+20); US RSS spots price is 1470-1490(+20); US RSS cargo price is1550-1570(+20); Singapore cargo price is 1310-1330(+20); Thai cargo price 1330-1350(+20); mixed rubber price is 9800-9900 (+200). From news side, the eighth round of China-US Strategic and Economic Dialogue will be held in the next two days. Chinese Finance Minister Lou Jiwei said that China will continue prudent monetary policy, continue the proactive fiscal policy, and make policy more proactive and more transparent. Internationally, the US non-farm payrolls data on Friday was far less than expected, although last night Yellen said the US economy is still good, future will continue to raise interest rates based on economic data. But the market’s expectation for next week meeting’s interest hike has come down to the freezing point, the domestic stock market and industrial goods increased. Rubber fundamentals are in line with the seasonal pattern of previous years. The price is expected to shock at the bottom; we recommend mainly short-term trading.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)