Morning News PICK: May Ending Outlook June Market

　　 Industrial profits increased by 91.5% in the first half of April.

Shanghai Securities Daily: the National Bureau of statistics released 28 data shows that in 1-4 months, the profits of Industrial Enterprises above Designated Size reached 24 yuan in the 24 regions of the country, an increase of 91.5% over the same period last year, an increase of 11.1 percentage points lower than that in the first quarter. In the 39 industrial sectors, the profits of the 37 industries increased year by year. Compared with the first quarter, the profit growth rate of the 25 industries has dropped, and the profit growth of the 14 industries has increased.

[comment] data show that not only the industrial profits in the former April dropped by 11.1 percentage points compared with the previous March industrial profit growth rate, but the industrial profit growth rate in the former March was 21.1 percentage points lower than that in 1-2 months. In view of this, the domestic industry profit reduction trend is established. The causes are caused by two factors. First, in the first quarter of last year, especially in the first two months, the domestic economic growth rate dropped significantly, resulting in a relatively low base in the same period; secondly, the European sovereign debt crisis since April has revival of the global economy, and the regulation and control policies of real estate and two high and one capital industries have been promulgated. This has caused a considerable blow to the traditional power industry of economic growth, and this effect will continue for quite some time in the future. We believe that with the continuous increase of base and the gradual cooling of domestic economy, there is still room for further reduction of relevant data. The performance of listed companies is also worrying and will have some impact on market confidence. However, we must realize that this not only means that the domestic economy is returning to rationality, but also the only way to achieve economic restructuring and quality improvement, which will be more conducive to sustained and stable growth of the national economy. (the message is macro short term).

　　 The open market will release 780 billion of funds in June.

New express: the unexpected financial strain that started in mid May disrupted the central bank's two month net return process. This month, the open market has invested 224 billion yuan into the market. And after entering June, the open market will once again usher in the peak of huge capital release. About 780 billion yuan of funds will continue to "lift the ban" or cool the price of money market funds with high fever.

[comment] last week, when the amount of funds expended was as high as 180 billion, the central bank issued only 300 billion one-year central bank votes and 5 billion and 3 month central bank votes in the open market. This seems to indicate that the market funds situation has changed. However, we note that the recent 3 year issue of central bank bills has been increasing frequently, and the yield of government bonds has also been flattened. This indicates that the current tense situation of market funds is actually a kind of stage tension and structural tension rather than substantial tension. Therefore, in the future, the central bank may inject some liquidity through the open market. Due to the large amount of funds due in June, there may be some liquidity in June, but the sustainability of this situation is not strong, and the net return is still the main tone. (the message is macro and market neutral preference) {page_break}

　　 Ministry of Agriculture: vegetable prices begin to fall seasonally

China Radio Network: according to the voice of China "news and newspaper digest" 6:43 report, for the recent part of the variety of agricultural products (000061) prices remain high, the Ministry of agriculture 28 said, idle fund speculation is not the main reason for the rise in agricultural products, China's agricultural products supply is adequate. According to the Ministry of agriculture's monitoring, the price of agricultural products in China has been stable since the beginning of this year. The supply of the market is adequate and the operation is generally normal. Grain prices rose moderately, the prices of beef, mutton and eggs were generally stable, but the prices of live pigs continued to slump. Ma Shuping, deputy director of the Department of crop management of the Ministry of agriculture, said: "vegetable prices have started to fall seasonally, and there is ample market supply."

[comment] recently, vegetable prices in various parts of China have been falling continuously, which is mainly related to seasonal factors. In addition, according to monitoring data, the prices of edible agricultural products and producer goods both dropped in the past two weeks. Therefore, inflation pressure in China will be eased in the short term, which will weaken the market's anticipation of the necessity of withdrawal of monetary policy and help the market go well. However, from the whole year, we think that the inflation situation in China is still more severe this year. It is very difficult to control 3% of the whole year. The main reason is that the upward risk of pork prices will appear in the second half of the year, and grain prices will further rise. Meanwhile, many problems such as import inflation, resource price reform, elimination of backward production capacity and so on can not be ignored. (the message is temporary macro and market neutral preference).

　　 Bank 42 billion refinancing scheme approved

Xinhua: on Friday, the Bank of Communications (601328) announced that the SFC issued the application for the rights issue of the bank. The bank intends to refinance no more than 42 billion yuan, and the plan will be allotted to all shareholders on the basis of the ratio of not more than 1.5 shares per 10 shares, while the share rights of A and H-share will be the same.

[comment] in April 20th this year, the provisional shareholders' meeting adopted the A+H share allotment bill with a total financing amount of not more than 42 billion yuan. On Friday, the securities and Futures Commission approved the application of the rights issue of the bank, which was approved by the Bank of China (601988) 40 billion yuan RMB convertible bonds but only 4 days. We believe that intensive financial integration will bring financial pressure to the market, but we think that the pressure on the market itself is limited. The reasons are as follows: first, because of the same rights issue to shareholders of A shares and H-shares, 47% of the amount of financing is borne by the shareholders of H shares. In the A share market, the Ministry of finance, as the largest shareholder, takes up 20.36% of the total share capital, and then removes the large shareholders of other state-owned enterprises. The amount of funds actually digested by the A share market is about 11 billion. Two, the allotment price will have a certain discount relative to the market price. For the bank shares with very low price, the allotment price has the advantage of considerable value investment. Although the bank itself has little pressure on the market, the amount of credit released by banks last year has consumed a lot of capital and how much capital gap there is. There is no uniform prediction yet, but the total scale of the total financing has been up to 142 billion 700 million yuan in addition to the Agricultural Bank of China. (the message is neutral to the market) {page_break}

　　 Next week, the two cities lifted the market value of about 12 billion 949 million yuan, creating a new low in the past 30 weeks.

Xinhua: next week (May 31st -6 4), the lifting of market share limit of A shares will be substantially reduced compared with this week. The two cities will have 727 million restricted shares to be listed and circulated after lifting the ban. The market value of the lifting of the ban is about 12 billion 949 million yuan, a new low of nearly 30 weeks.

[comment] we are still saying that "lifting the ban" is only related to the height of the market and has nothing to do with the lifting of the month or week. The lifting of the ban will only affect the mentality. From the lifting of the ban next week, it is the lowest level of lifting the market value since the middle of November 2009, and the main lifting of the ban in June 4th is China's Tai Po (601601), the first restricted shareholder of the stock market. The lifting of the ban is 107 million shares and the lifting of the market value is 2 billion 374 million yuan, but the issuing price of China's Pacific Insurance Company was 30 yuan / share. The initial shareholders' losses will be lifted. In recent years, from the central bank's monetary regulation, and from the "lifting the ban" and the current corresponding position of the market, we believe that the lifting of the ban is not big because the reduction in the size of the April market is only 6 billion yuan from the "big size" adjustment. (neutral preference of the message market)

　　 Qinhuangdao port coal shipping fees refall again

Shanghai Securities Daily: 28, reporters learned that after rising for 8 weeks, the price of market power coal in Qinhuangdao region finally rested temporarily, which was flat with last week, and the price of the power coal with calorific value of 6000 kcal is 785-795 yuan / ton. But the price of coal shipping fees fluctuates significantly. According to the latest data, as of May 26th, with the 20 thousand ton to thirty thousand tons ship type provided by Qinhuangdao Tong Ying Shipping Co., Ltd., the shipping cost of Qinhuangdao port to Shanghai, Zhangjiagang and Guangzhou fell again to 58 yuan / ton, 62 yuan / ton, 85 yuan / ton, which was basically the same as that of May 5th, which decreased 10.77%, 10% and 5.56% respectively.

[commented] from January 1 to 21, the average daily consumption of coal in the national power generation enterprises was 3 million 54 thousand tons, a decrease of 4.3% over the previous month. With the reduction of consumption of electricity coal, the electricity coal inventory of the national power generation enterprises has recovered, basically maintained for about 15 days. Coal shipping costs fluctuate to a certain extent, reflecting the changes in the demand of downstream coal enterprises. However, with the summer approaching, the peak period of electricity will gradually appear. As a result, the demand for coal will remain at a high level. If the coal price falls down and the space is sealed, the space for the reduction of the ocean freight fee will be relatively limited.

　　 The National Tourism Administration will invest 20 million annually to support Xinjiang tourism.

Xinhua: from the beginning of this year to the end of 12th Five-Year, the National Tourism Administration will invest 20 million yuan a year to support Xinjiang's expansion of tourism industry functions in terms of policies, funds, talents and tourists, so as to build Xinjiang into an important tourist destination in China.

[comment] Xinjiang tourism has the characteristics of many kinds of resources, high endowments, good development conditions and advantages of resource combination. This provides a solid foundation for the development of Xinjiang's tourism industry. With the increase of policy support, Xinjiang's tourism will have broader prospects. As the tourism industry is a widely driven industry for other industries, we believe that the key support of the state to Xinjiang's tourism industry is to drive the whole Xinjiang economy to take off. In this regard, we continue to suggest that investors can focus on the Xinjiang listed companies in the long term. (the message is neutral preference for the Xinjiang plate) {page_break}

　　 Spain's downgrade was low on Friday.

Fitch downgraded Spain's sovereign debt rating and bad economic data, and US stocks closed this month with low earnings last Friday. The Dow Jones Industrial Average fell 122.36 points to 10136.63 points, or 1.19%. The Nasdaq composite index fell 20.64 points, closing at 2257.04 points, or 0.91%. The standard & Poor's 500 index fell 13.65 points, closing at 1089.41 points, or 1.24%. The New York Mercantile Exchange's July light crude oil contract fell 58 cents, or 0.8%, to 73.97 dollars / barrel. The New York Mercantile Exchange became a gold contract in August, rising 60 cents to 1215 U.S. dollars / ounce, or less than 0.1%.

European shares closed down on Friday, and the decline in BP and Prudential's share price dragged down the market. After a strong rise in two consecutive trading days, the pan European 600 index fell 0.3%, closing at 244.09 points. In the main European stock index, the German DAX index rose 0.2%, closing at 5946.18 points, the FTSE 100 index fell 0.1%, closed at 5188.43 points, and the French CAC-40 index fell 0.3%, reporting 3515.06 points.

[comment] last Friday, the bad news was enveloped in the European and American markets. Fitch announced that Spain's long-term foreign currency and local currency issuer default rating decreased from AAA to AA+. Although the US consumer confidence index ended at 73.6 in May, more than 72.2 in April and slightly higher than the 73.3 initial value released at the beginning of the month, the Chicago PMI index, which reacted to the key economic data of the United States, dropped to 59.7 lower than expected in May. The US consumer spending figures are also disappointing, triggering fears that the pace of economic recovery in the US may be slowing down, as the debt crisis in the eurozone has led investors to worry that global demand will weaken and industrial stocks are under greater selling pressure, while Bank of America and Disney are down more than 2.5%. Next Monday, the US stock market will be closed due to memorial day. Many investors are reluctant to hold shares in the long weekend. A combination of factors led to a sharp decline in the US stock market on Friday, and the stock index has been running below the closing point of the previous session. In May, the standard & Poor's 500 index and Dow showed the worst performance since February 2009. The NASDAQ fell 8.3% in the current month, the biggest monthly decline since November 2008. Last Friday, the performance of European and American stock markets had a negative psychological impact on the A share market on Monday. However, the correlation between the A share market and the external market is weak, and the impact on the A share market trend is relatively small. The A share market is still in accordance with its own operation rules and information.

The news is numerous on weekends. On the capital side, Agricultural Bank of China, Bank of Shanghai and Bank of communications's financing plan are in full swing. But the lifting of the ban next week is the smallest week in the year. At the same time, the open market will also release 780 billion of the funds and the short-term capital pressure is limited. In the face of macroeconomic statistics, the secretary is confident that price control is within 3 points, while Xie Xuren said that it should continue to implement a proactive fiscal policy, which is not bad news. The Ministry of Agriculture said vegetable prices began to fall seasonally, which helped to ease inflation expectations. However, industrial profits in the previous April increased by 91.5% compared with the previous year. Data show that industrial profits are gradually dropping, which will make the market worried about the performance of listed companies. Look at the industry, the contract energy management series policy is expected to be introduced next month, the natural gas price adjustment this year, will form a positive impact on the industry. Shanghai denies the property market diving, will adopt more stringent credit and tax policy, making the housing pattern more complicated and confusing. We can see that the demand for steel in June has dropped, and the steel mills have begun to cut production, which needs to be vigilant for the plate in the short term. And "Qinhuangdao port coal, shipping fees again fall", the news is relatively neutral, the degree of impact on the market may be relatively limited. Hu Jintao accelerated the construction of the basic medical system, so that the masses could see the disease and form a positive effect on the essential drugs. But for the expensive drugs, the price fixing policy was expected. The central government has increased investment in the development of the western region, which has made positive contributions to regional development. We believe that the market can not miss this investment opportunity. The National Tourism Administration will invest 20 million annually to support Xinjiang's tourism, which is a major support for local tourism, especially western tourism. {page_break}

The market came to the last trading day in May. First, from the capital side, in the first 5 months of 2010, the central bank returned a total of 38470 billion yuan through the open market, which appeared to be a lot, but the funds expended in the same period amounted to 34890 billion yuan. After that, the net return of funds was 358 billion yuan. In addition, the reserve ratio was raised three times, and the withdrawal amount should be around 900 billion yuan, totaling more than 1 trillion and 200 billion yuan. Even so, considering the hot money and credit release and the future maturity funds, the situation of excess liquidity in the market still exists. And if investors look at the whole record process of jade name, we can see that the central bank has made two notable changes since the beginning of this year. At the beginning of the year, the central bank continuously raised the reserve requirement rate in 1.12 and 2.12 to warn the market. Then 3 and April were the first peak of funds expired in the current year, so the central bank began to increase the strength of the withdrawal, and took a huge amount of short-term 28 day and 91 day repo, as well as the March central bank vote. However, in May, the central bank found that the effect was general. It only stabilized the large and medium maturity funds in 3 and April to 6 and July. Then, in May, the central bank adopted 3 and 1 year central bank votes as the main force to withdraw the funds. The force was locking funds with long term varieties, and for this 4 weeks, the repo operation was stopped. If such behavior is not yet effective, then only the interest rate increase tool will be used.

In the past month, the external market has also been on the alert. Especially on the 5.6 th, the US shares fell nearly 1000 points in the intraday market, creating the biggest decline in a single day. Then, although the upward trend, the closing rate also dropped by more than 6%, almost all the gains in 2010. Subsequently, the US stocks also rebounded 2 days later, but then it was still difficult to escape the trend of decline. All the way down, as the 5.31 US shares closed, so it has completed the May trend. The US stock market's three largest stock index has fallen more than 8% in the whole month, the largest monthly decline in more than a year. The reason why the jade name is to talk about the outward trend is that although the A share fell, the whole international stock market is still stable, and the phenomenon of frequent external markets has often found that it has become a psychological comfort for investors in the A share market. Now, whether it is because of the European debt crisis or the adjustment after the market rises, the peripheral market has entered a significant downward channel. Will it further affect the sentiment of A share investors? Since the adjustment in late November 2009, A shares have entered the bear market. Under the control of the empty market, market confidence is less. Therefore, it is suggested that investors should use more empty thinking at this time to keep the vigilance of risk control at all times.

A monthly line with a long lower lead line, and the actual part is equivalent to April. This means that if there is no extreme over 7% of Changyang on the 5.31 day, then it will be certain to return the shade again this month. Then the triangle convergence form started on September 2009 on the monthly line will end with a downward displacement, and the amount can continue to shrink. However, due to the existence of stock index futures, quite a number of recent days have been transferred to the stock index futures market, so there is not much capital flowing out of the entire A stock. This is the biggest difference from that before. Even if the market trend is weaker, the duration is longer, the two-way operation era, four operations can generate profits, and there will always be no lack of money making effect, which is the biggest difference from before. In contrast, the 5 month line of A shares can be found to be This is also the most need for investors to change the thinking, which I have repeatedly introduced to you before May, maybe you can not directly participate in stock index futures, but its impact on the market is real. Judging from the current trend, the current arbitrage interval is getting smaller and smaller, forcing funds to achieve profits only through speculative speculation. After IF1006 has become the main contract, transactions and positions are showing rapid growth, and the power is rising and the divergence is increasing. This will inevitably lead to the increase of the stock index oscillation. And because the market is empty and many are short, the investors should be short selling.

On the weekly line, 5 crosses followed by a cross star, followed by a Yin, Yang and two k-lines. This shows that the stock index is still in a big downward trend. It is only because 5.21 and 5.24 false one true two Changyang have experienced a temporary downward trend. Last week, the Yang line can only be regarded as a reverse after a long period of decline. However, in order to rebound, it is necessary to ascertain the bottom of the market, whether the capital vegetable continues to go into the market, and whether the 2481 point is a low level, it must be known by repeated confirmation. At present, the stock index is in a downward trend. On the other hand, it is small Yang and the next is long Yin. Therefore, in the new week, investors should take a wait-and-see operation as the main factor, still adopt the strategy introduced before, short selling, short and multiple, and make adequate preparations for the downward adjustment of the stock index at any time. At this point, the operation needs some patience. The stock market of T+1 is less active, while T+0's stock index futures are actively engaged in short-term intra day operations, and can start to hold a small amount of empty overnight.