Bulls n Bears Daily Market Commentary : 23 August 2018

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Bulls n Bears Daily Market Commentary : 23 August 2018

 


 

 


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Zimbabwe Stock Exchange Update

 

 

 

Market Turnover $1,322,220.55 with foreign buys at $200,628.84 and foreign
sales were $201,517.20. Total trades were 125.

 

The All Share index rebounded by 0.38 points to settle at 113.22 points.
DELTA rose by $0.0412 to close at $2.0627, OLD MUTUAL  added $0.0405 to end
at $5.2497 and NATIONAL FOODS  gained $0.0200 to trade at $5.6200. CBZ
HOLDINGS  shifted up $0.0075 to settle at $0.1300 while OK ZIMBABWE was
$0.0046 higher at $0.2350.

 

Losses were seen in INNSCOR which came off $0.0370 to close at $1.3430, ZB
FINANCIAL HOLDINGS  eased $0.0325 to $0.3000 whilst RIOZIM  dropped by
$0.0091 to close at $1.3909. SEEDCO  slipped $0.0016 to trade at $2.5784 and
STARAFRICACORPORATION closed at $0.0110 following a $0.0010 loss.

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity Markets

 

 

 

 

Kenya

 

Kenyan shilling steady, expected to ease on importer dollar demand

(Reuters) - Kenya's shilling was stable on Thursday, and traders said they
forecast it to weaken in the days ahead due to importer dollar demand from
oil companies and manufacturers.

 

At 1014 GMT, commercial banks quoted the shilling at 100.60/70 to the
dollar, compared with Tuesday's close of 100.55/65.

 

 

 

South Africa

 

South Africa's rand slips after Trump land reform tweet, stocks up

(Reuters) - South Africa’s rand fell against the dollar on Thursday, hurt by
comments by U.S. President Donald Trump on Pretoria’s land reform plans and
a stronger greenback, while stocks ended slightly higher.

 

Trump said on Twitter he had asked Secretary of State Mike Pompeo to study
South African “land and farm seizures” and the “killing of farmers”,
prompting Pretoria to accuse Trump of stoking racial divisions.

 

At 1538 GMT, the rand traded 0.95 percent weaker at 14.3075 per dollar,
trimming losses after dropping more than 1.5 percent in early trade.

 

Trump’s tweet appeared to be a response to a Fox News report on Wednesday
that focused on South Africa’s land issue and murders of white farmers.

 

South Africa’s President Cyril Ramaphosa said on Aug. 1 that the ruling
African National Congress (ANC) was forging ahead with plans to change the
constitution to allow the expropriation of land without compensation.

 

Whites still own most of South Africa’s land, more than two decades after
the end of apartheid.

 

The planned land policy has unnerved some investors already concerned about
the country’s weak economic growth, ballooning public debt and policy
missteps.

 

In June Moody’s - the last of the top three credit agencies to rate the
country’s debt at investment grade - said uncertainty around land and mining
reforms risked limiting investment.

 

Government bonds firmed, with the yield on benchmark paper due in 2026 down
4 basis point to 8.945 percent.

 

On the bourse, the blue chip Top-40 index was up 0.13 percent to 52,132
points, while the all-share index was 0.14 percent higher at 58,205 points.

 

Shares in South African precious metals producer Sibanye-Stillwater rose
2.15 percent after it swung into profit for the half-year. It was boosted by
the inclusion of its U.S. platinum assets, acquired in May 2017, and higher
platinum group metals prices..

 

Retailers Woolworths and Massmart bucked the market after they reported
profit declines that were affected by muted consumer spending.

 

Woolworths shares fell 1.84 percent, while Massmart fell 0.23 percent.

 

 

       <mailto:info at bulls.co.zw> 

 

 

 

Asia

 

Asia slips after U.S.-China trade talks end without progress

(Reuters) - Asian stocks fell on Friday after U.S.-China trade talks ended
without progress and market focus shifted to a speech by the Federal Reserve
chairman for fresh clues on the direction of U.S. monetary policy.

 

Spreadbetters expected European stocks to open mixed, with Britain’s FTSE
dipping 0.15 percent, Germany’s DAX rising 0.1 percent and France’s CAC
edging up 0.05 percent.

 

U.S. and Chinese officials ended two days of talks on Thursday with no major
breakthrough. At the same time, their trade war escalated with another round
of duelling tariffs on $16 billion worth of each country’s goods taking
effect.

 

SPONSORED STORIES

 

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.25
percent. It was still up about 1 percent on the week.

 

Hong Kong’s Hang Seng fell 0.55 percent and the Shanghai Composite Index
dropped 0.35 percent.

 

Australian stocks rose 0.15 percent and South Korea’s KOSPI advanced 0.2
percent. Japan’s Nikkei climbed 0.65 percent, lifted by a weaker yen.

 

The S&P 500 shed 0.17 percent overnight to pull back slightly from a record
high scaled midweek, with industrial shares sagging after the United States
and China imposed a fresh round of trade tariffs on each other.

 

Shares of industrial giants Caterpillar Inc and Boeing Co, bellwethers of
trade confidence, were among the biggest drags on the Dow, which lost about
0.3 percent. Caterpillar shares fell 2.0 percent, and Boeing shares fell 0.7
percent.

 

In immediate focus was the speech by the Fed Chairman Jerome Powell to be
given later on Friday at the Jackson Hole, Wyoming, meeting of central
bankers.

 

Where Powell stands on the pace of interest rate hikes will be scrutinised
after minutes from the Fed’s most recent policy meeting indicated the
central bank would tighten monetary policy soon.

 

U.S. President Donald Trump reiterated his displeasure with the Fed’s rate
hikes earlier this week and investors waited to see whether Powell would
respond to such criticism.

 

The Fed should raise rates further this year and probably next year as well,
despite Trump’s opposition to tighter policy, Kansas City Fed President
Esther George said in interviews aired on Thursday.

 

Dallas Fed President Robert Kaplan also said Trump’s comments would not
affect the central bank’s decision making.

 

The dollar index against a basket of six major currencies stood at 95.567,
holding most of its gains after rising 0.55 percent overnight to snap a
six-day losing run.

 

The greenback extended its overnight surge to touch a two-week high of
111.49 yen. The euro was 0.15 percent higher at $1.1553 after retreating 0.5
percent the previous day.

 

The Australian dollar received some respite after Australian Treasurer Scott
Morrison won a ruling party leadership vote, paving the way for him to
become the country’s next prime minister and ending a week of political
uncertainty.

 

The Aussie was up 0.4 percent at $0.7277. On Thursday, it slumped 1.4
percent as Australian Prime Minister Malcolm Turnbull faced challenges to
his leadership.

 

Onshore Chinese yuan slipped 0.2 percent to 6.8916 per dollar, its weakest
in a week.

 

Oil prices edged higher. While the trade conflict between Washington and
Beijing darkens the economic outlook, the supply versus demand position in
oil markets remains relatively tight -especially because of the looming U.S.
sanctions against Iran.

 

Brent crude futures rose 0.45 percent to $75.07 per barrel , while U.S.
crude added 0.6 percent to $68.25.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Commodities Markets

 

 

 

London copper shrugs off losses, heads for best week in 4

(Reuters) - London copper price recovered from an early dip to trade higher
for the first session in three on Friday, as investors shrugged off the lack
of a breakthrough in U.S.-China trade talks and sensed buying opportunities.

 

London Metal Exchange copper is on course to end the week 1.4 percent
higher, which would mark its first weekly jump since the week ended Jul. 27
after concerns the trade spat would hurt demand for industrial metals
weighed on prices.

 

China copper import premiums SMM-CUYP-CN are currently at$86 per tonne,
their highest since October 2016, while zinc premiums ZN-BPCIF-SHMET on a
cost, insurance, freight (c.i.f.)

basis have risen to $160 a tonne, the most since November 2017.

                    

    FUNDAMENTALS

 

* LME COPPER: Three-month copper on the LME was up 0.4 percent at $6,011 a
tonne by 0434 GMT, after a 0.3 percent drop in the previous session.  

 

* SHFE COPPER: The most-traded October copper contract on the Shanghai
Futures Exchange was up 0.8 percent to 48,630 yuan ($7,074.48) a tonne by
the mid-session interval and

is on course for a weekly gain of 1.6 percent.

 

* TRADE TALKS: U.S. and Chinese officials ended two days of talks on
Thursday with no major breakthrough as their trade war escalated with
activation of another round of dueling tariffs on $16 billion worth of each
country's goods.    

 

* ZINC: Shanghai zinc climbed as much as 2.6 percent to a one-week high of
21,190 yuan a tonne as is up 6.3 percent this week, which would be its
biggest weekly jump since the week ended Aug. 18, 2017. It lost 7.5 percent
last week.    

 

* LEAD: Shanghai lead rose as much as 2.7 percent to a two-week high of
18,280 yuan a tonne on concerns over tight stocks, and is heading for its
best week since June. 

 

* LEAD: Canadian diversified miner Teck Resources Ltd , said on Thursday
that lead smelting at its Trail, British Columbia facility was suspended for
a fourth day due to wildfires in the province.

 

 

U.S. disrupts aluminium supply chain, but not where it counts: Andy Home

(Reuters) - In the United States, old aluminium smelters are being brought
back to life.

 

On Wednesday Century Aluminum held an official ceremony to celebrate the
reactivation of the first of three idled potlines at its Hawesville plant in
Kentucky.

 

The smelter, which first started production in 1969, has been running at
just 40 percent of its 252,000 tonne annual capacity since 2015 and was
teetering on the edge of full closure.

 

Hawesville’s life-line has come from the imposition of 10-percent tariffs on
U.S. imports of aluminium and Commerce Secretary Wilbur Ross was guest of
honour at yesterday’s official bash.

 

In Russia, meanwhile, old aluminium smelters are being closed down.

 

The Nadvoitsy plant, built in the 1950s, has been operating at just 20
percent of historical capacity since 2013 but will now be permanently closed
because of U.S. sanctions on its operator, UC Rusal.

 

Such are the ripple effects of the Trump Administration’s impact on the
global aluminium market.

 

Untouched so far, however, has been the country that arguably pushed both
Nadvoitsy and Hawesville to the brink of collapse in the first place.

 

China will this year bring on line something like three million tonnes of
new, state-of-the-art aluminium smelting capacity. It may be four million.
Keeping statistical pace with China’s massive aluminium sector is tricky.

 

But either way, the rest of the world’s aluminium dependency on China is
still growing.

 

MADE IN AMERICA

The reactivation of Hawesville, which produces the sort of high-quality
metal required by the defence and aerospace industries, is being touted as a
vindication of the Administration’s imposition of import duties on the
grounds of national security.

 

So too will be the restart of the New Madrid smelter in Missouri under its
new owners Magnitude 7 Metals.

 

The plant, which was commissioned in 1973 and mothballed in 2016, has just
made its first shipment in two years, according to local media.

 

Alcoa’s restart of capacity at its Warrick smelter in Indiana was announced
last year and is, the company stressed on its Q2 conference call, “based on
cost efficiencies” rather than tariffs.

 

The historical powerhouse of U.S. aluminium production is not exactly a fan
of tariffs.

 

It has just submitted a formal request for tariff exemptions on around
40,000 tonnes of aluminium alloy coming from its own Becancour smelter
across the border in Canada.

 

The company has found no domestic source for the right sort of alloy in the
right sort of quantity it needs for its Warrick rolling mill.

 

Alcoa, according to president and chief executive officer Roy Harvey, is
“disappointed” that its three Canadian smelters are liable to tariffs, which
may be something of an understatement.

 

Much of the aluminium that is “Made in the U.S.A” actually uses as raw
material metal from a Canadian smelter.

 

That isn’t going to change any time soon.

 

As Alcoa’s Harvey pointed out, even if every single tonne of idled U.S.
smelter capacity were restarted, unlikely in itself, the United States
“would still need to import the vast majority of its required primary
aluminum, with approximately 60 percent from Canada”.

 

Graphic on global aluminium production; China and the rest of the world:
tmsnrt.rs/2Mt7WuM

 

MADE IN CHINA

The hollowing-out of U.S. aluminium production over the last couple of
decades has been mirrored just about everywhere else.

 

No-one has been able to compete with China.

 

The country’s share of global output has been running around the 57 percent
level since March, a new all-time high.

 

True, this may also be down to the unusually high number of non-Chinese
smelters that have been hit by unexpected supply outages this year, but the
underlying trend has been running for many years now.

 

China’s annualised production increased by just over one million tonnes in
the first seven months of this year, according to the International
Aluminium Institute.

 

For every tonne of “illegal” or polluting capacity closed, there is another
tonne of new capacity to replace it. The pace of growth is slowing but China
is still exporting more aluminium than ever before.

 

This, according to the U.S. Aluminum Association, is the “foundational
problem confronting the industry not only in the United States but also
around the world”.

 

Such a concentration of supply in such an important global supply chain
poses a long-term dilemma for aluminium users.

 

Automakers around the world are trying to work out strategies for sourcing
cobalt, a metal they need for the lithium-ion batteries that will drive the
electric vehicle revolution.

 

They don’t like the concentration of supply in the Democratic Republic of
Congo.

 

Last year the DRC accounted for 61 percent of global cobalt production, a
dominance of the supply chain that China is fast approaching in aluminium,
another critical metallic input to the automotive sector.

 

GOING IT ALONE

Seen in this light, the U.S. Administration’s drive to raise domestic
aluminium production is understandable.

 

So too is its criticism of what Secretary Ross describes as “the unfair
foreign trade practices” that have hollowed out its domestic capacity.

 

In fact, the previous Obama Administration thought exactly the same, which
is why in its very last days it lodged a formal complaint about China’s
aluminium sector to the World Trade Organization (WTO).

 

The difference, of course, is that the current Administration is going it
alone rather than using a multinational organisation such as the WTO to seek
redress.

 

Aluminium is no doubt somewhere on the list of difficult topics for
discussion between the U.S. and Chinese governments as they try and
de-escalate trade tensions.

 

It’s a very long list, however, and it’s probably fair to say that aluminium
isn’t near the top.

 

Tariffs and sanctions, meanwhile, are splintering a coalition of like-minded
producing nations that would form a natural alliance in tackling China’s
aluminium dominance.

 

The restart of small amounts of decades-old U.S. production capacity isn’t
going to make much difference to that dominance.

 

Building new smelters might move the dial, but that would take, to quote
Alcoa, “globally competitive capital costs”, as well as “attractively priced
long-term energy, and a competitive regulatory environment.”

 

Exactly the sort of state intervention, in other words, which China stands
accused of using to nurture its own smelter sector.

 

If the U.S. doesn’t want to go down that path, it will have to persuade the
Chinese government to rein back its own production, and it will need as many
friends as possible to pressure Beijing to upend its own “Made in China”
industrial policy.

 

A failure to do so will mean that ever more of what is “Made in the U.S.A”
will use “Made in China” inputs.   

 

 


 

INVESTORS DIARY 2018

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


The Harare Agricultural Show

The Harare Agricultural Show

The Harare Agricultural Show

August 27- September 1

 


 

 

 

 

 


 

 

 

 


 

 

 

 


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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
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any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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