Daily Report 130616 2016-06-13
Stock Index
RMB dropped again during holiday. US stock dropped; influence is negative. After the breakthrough of red line in 31 May, market emotion is high. We recommend cautious and optimistic of the afternoon market. First, according to authority article and Xi’s speech about technical development, government changes from demand government to supply reform and innovation. It has a positive influence in the long term, but a success reform is limited by many actual factors. Authorities got rid of economy’s V and U shape tendency, and it won’t be optimistic. Secondly, strict governance increased the difficulty of cash at high point rely on stories, which increases the willingness of reduce share holding. 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. Overall, if policy can give investor stable and positive expectation, then index is still hopeful. Difficulties are a lot, and uncertainty exists; should be cautious and optimistic.

During the Dragon Boat Festival, overseas section copper price recovery was wrecked. Copper price continued dropped. Last Friday closed with $4516, decreased by $57 compared with China closing on Wednesday. The worry about the UK withdrawal of European referendum caused market increase of avoiding risk. US dollar increase put stress on copper price. The Fed FOMC will release interest hike decision on 16 May, and the possibility of interest hike is almost zero. Monday China will release macro data, which will not be optimistic. Copper market, LME storage increase becomes the biggest pressure to the market. The first four days of last week LME storage increased; Monday increased 57000 tons, reached 210000 tons. Influenced by this, LME spot goods turned to discount, and increased to $145000, which is the biggest pressure to the market. In short term, market stress still exits, we recommend copper price will tend to $4400 and former lowest point $4318. As for operation, recommend short operation.

Domestically, influenced by overseas section increase, today DCE soybean will increase in compensatory. The situation of strong meal and weak oil won’t change. Spot goods side, domestic soybean spot market performed stable. Besides few districts increased, other districts price remained stable. Surplus grain quality decreased, and high quality soybean supply is short. Spot goods purchase and sale of all districts is near the end. Market rumored that this week national storage soybean will be auctioned; concentrate on the following progress. Soybean meal side, driven by the overseas section increase, domestic soybean meal spot price increased. Partial oil plant quotation increased RMB 70-160/ton; some oil plant without quotation. 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.

Macro Economy
Domestically, according to inflation data released Thursday by State Statistical Bureau, May consumer price index increased 2% month-on-month, lower than expected 2.2%; PPI decreased 2.8% month-on-month, which is the smallest decrease range since November 2014. Specifically, pork price is still at the high point. But increase speed hasn’t increase. Fresh vegetable price increase speed rolled back, which is the main reason of CPI roll back. In the later period, pork storage and capacity has recovered; pork price will be stable and roll back. Recent CPI still has no worry, and inflation worry of middle and long term reduced. What’s more, China central bank will release May credit data today, social financial scale is expected to increase one trillion RMB.
                                                                                          Dong LV (Investment Certificate NO. TZ008452)