Bulls n Bears Daily Market Commentary : 19 December 2018

Thu Dec 20 05:30:46 CAT 2018

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Bulls n Bears Daily Market Commentary : 19 December 2018

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Zimbabwe Stock Exchange Update

Market Turnover $11,149,977.10 with foreign buys at $246,329.30 and foreign
sales were $425,594.27. Total trades were 154.

The All Share index gained 0.85 points  to settle at 148.64 points. CASSAVA
SMARTECH ZIMBABWE LIMITED   put on $0.0312 to close at $1.5240, SIMBISA
went up by $0.0200 to $0.7200 while ECONET   recovered $0.0171 to trade at
$1.4745. AXIA  advanced by $0.0146 to close at $0.4046 and SEEDCO  closed at
$2.0000 following $0.01260 gain.

Losses were seen in OK ZIMBABWE  and FIRST MUTUAL HOLDINGS  which shed
$0.0060 each to close at $0.2504 and $0.1340 respectively.  HIPPO VALLEY
ESTATES came off $0.0055 to end at $1.7100, PADENGA   slipped $0.0039 to
settle at $0.8500 whilst INNSCOR was 0.0025 weaker at $1.8475.

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  Global Currencies & Equity Markets

South Africa

IMF's Lagarde says South Africa has not requested financial support

(Reuters) - The International Monetary Fund has not received any request
from South Africa for a financial aid programme, it’s managing director
Christine Lagarde said on Wednesday, as the country struggles with weak
economic growth and rising debt.

Africa’s most industrialised economy slipped into recession after
contractions in the first two quarters of the year, but bounced back
strongly in the third quarter helped by growth in manufacturing, agriculture
and retail.

Growth is seen below one percent this year and unemployment stands at near
record highs, triggering speculation that South Africa may ask the IMF for
financial support.

President Cyril Ramaphosa has pledged to re-start growth after a decade of
stagnation under his predecessor Jacob Zuma, but faces an uphill battle to
fix struggling state companies that rely on government guarantees and
bailouts for survival.

Commenting on economic developments in neighbouring Zimbabwe, IMF’s Africa
Department director Abede Aemro Selassie said it would be difficult for the
fund to support the country’s reform programme as it still had significant
outstanding debt.

Abede also said the preconditions for moving forward on a programme with
Mozambique included clarifying the circumstances around its prior borrowing,
as well as ensuring its overall debt position is sustainable, which could
include further debt restructuring.

Mozambique admitted in 2016 to $1.4 billion of previously undisclosed loans,
prompting the IMF to cut off support and triggering a currency collapse and
debt default. 

Uganda

Ugandan shilling a touch firmer on interbank selling

(Reuters) - The Ugandan shilling was slightly stronger on Wednesday, on the
back of an interbank sell off as some players sought to pare their hard
currency positions.

At 1010 GMT, commercial banks quoted the shilling at 3,685/3,695, a touch
firmer than Tuesday’s close of 3,693/3,703.

       <mailto:info at bulls.co.zw> 

Asia

Asia tenses for Fed call, oil slide boosts bonds

(Reuters) - Asian share markets played second string to bonds on Wednesday
as a spectacular fall in the price of oil spurred speculation the U.S.
Federal Reserve might be done with tightening after its policy meeting later
in the session.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4
percent, while Shanghai blue chips were flat.

Japan’s Nikkei steadied after an early dip and E-Mini futures for the S&P
500 added 0.4 percent.

Oil had stolen the show as a supply glut saw Brent shed almost 6 percent
overnight. U.S. crude was last down another 13 cents at $46.11 a barrel,
while Brent recouped just 4 cents to $56.30.

Brent’s 35 percent plunge since October is sending a disinflationary pulse
through the world at a time when trade and economic activity are already
cooling.

That has only added to pressure on the Fed to abandon its commitment to yet
more hikes.

U.S. President Donald Trump on Tuesday warned the central bank not to “make
yet another mistake”, while a Wall Street Journal editorial called for a
pause.

So far, the futures market is sticking with a two-in-three chance of a rate
increase on Wednesday.

He also expects the median Fed forecast, or dot plots, to drop to two rate
rises for next year, from the three projected back in September. The market
is well ahead of that and pricing in less than one rise in 2019.

Talk of a dovish turn helped Wall Street steady and the Dow ended Tuesday up
0.35 percent. The S&P 500 edged up 0.01 percent and the Nasdaq 0.45 percent.

BOND BONANZA

Stocks were left in the dust by bonds as 10-year Treasury yields hit their
lowest since August at 2.799 percent , testing a major chart level at 2.80
percent.

Yields on two-year U.S. notes touched a three-month trough of 2.629 percent,
a massive turnaround from November’s 2.977 percent peak. Yields in Japan and
Australia also reached multi-month lows.

Reasons for the rally were easy to find. The latest survey of fund managers
globally from BofA Merrill Lynch showed the third biggest decline in
inflation expectations on record, while just over half expected the world
economy to slow next year.

Investors rushed into bonds, with the largest ever one-month rotation into
fixed-income assets, while cutting equities.

The steep drop in Treasury yields undermined one of the U.S. dollar’s major
props and pulled its index back to 96.921 , from a recent top of 97.711.

The dollar fell to 112.46 yen, from a 113.70 high last week, while the euro
nudged up to $1.1379 from a $1.1266 low.

In commodity markets, gold held near its recent five-month peak as the
dollar eased and the threat of higher interest rates waned. Spot gold stood
at $1,248.85 per ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Aluminium hits 16-month low as U.S. withdraws Rusal sanctions

Reuters) - London aluminium prices sank to a 16-month low in early Asian
trade on Thursday after the United States said it would withdraw sanctions
on Russian aluminium producer United Company Rusal.

Most dollar-denomintaed metals, including copper, weretrading lower after
the U.S. Federal Reserve on Wednesday raised interest rates for the fourth
time this year and signalled further hikes ahead.

Higher interest rates tend to push commodity prices lower,  because they
mean higher borrowing costs, which can reduceeconomic activity and
consumption, as well as higher costs for

inventory financing.         

    FUNDAMENTALS

* ALUMINIUM: Three-month aluminium on the London Metal Exchange fell by as
much as 1.1 percent to $1,905.50 a tonne, the lowest since Aug. 4, 2017, and
stood at $1,910 a tonne as of 0144 GMT. The most-traded February alumnium
contract on the Shanghai Futures Exchange slipped by 0.4 percent to 13,635
yuan ($1,974.37) a tonne. 

* RUSAL: The Russian aluminium giant's Hong Kong shares   rose as much as
26.8 percent to their highest since April, the month when the sanctions were
announced and sent aluminium prices soaring on fears of a supply squeeze.

* LME RESPONSE: The LME said it proposed to lift its  suspension on
aluminium produced Rusal if U.S. sanctions arelifted.

* ALUMINIUM: Representatives from China's biggest aluminium producers will
hold a meeting on Friday in the southern region of Guangxi to discuss
slumping demand and falling prices,  hree

sources familiar with the matter said.

* OTHER METALS: LME copper slipped 0.2 percent to $6,003.50 a tonne having
gained 0.8 percent in the previoussession on hopes a pause in Fed rate hikes
would boost demand.

ShFE copper fell by 0.3 percent.

* FED: The U.S. Federal Reserve on Wednesday pushed its key overnight
lending rate to a range of 2.25 percent to 2.50 percent, the fourth hike of
the year, and signalled "some

further gradual" increases.

Gold steadies, Fed signals 'some' rate hikes for 2019

(Reuters) - Gold steadied on Thursday, after declining about half a percent
in the previous session as the U.S. Federal Reserve did not deliver as
dovish a statement as some investors had expected.

FUNDAMENTALS

* Spot gold was up 0.1 percent at $1,244.41 per ounce, as of 0141 GMT.
Prices slipped about 0.5 percent on Wednesday, in their sharpest decline
since Nov. 27.

* U.S. gold futures declined 0.7 percent to $1,247.4 per ounce.

* Spot palladium climbed 0.7 percent to $1,268.50 per ounce after hitting a
record high of $1,283.49 in the previous session.

* The dollar index, which measures the greenback against a basket of six
major currencies, was slightly weaker.

* Asian shares retreated after the Fed raised rates, as expected, and kept
most of its guidance for additional hikes next year, dashing investor hopes
for a more dovish policy outlook.

* The Fed raised interest rates on Wednesday and noted that “some” rate
hikes would be needed next year, a more aggressive stance than many
expected.

* In a news conference, Fed Chairman Jerome Powell said the central bank
would continue trimming its balance sheet by $50 billion each month, leaving
open the possibility that continued strong data could force it to raise
rates to the point where they start to brake the economy’s momentum.

* U.S. benchmark Treasury yields fell to more than eight-month lows on
Wednesday following Powell’s statement, which spurred safety buying of U.S.
government debt.

* Most banking, insurance and other financial firms in Britain would be cut
off from the European Union if there is a no-deal Brexit, the bloc’s
executive body said on Wednesday.

* Italy’s two-year bond yield hit its lowest in almost seven months on
Wednesday, following news that Italy had reached a deal over its 2019 budget
with the European Commission.

* China’s economic growth is likely to slow to 6.2 percent in 2019 from an
expected 6.5 percent this year, as headwinds increase due to its trade
dispute with the United States, the World Bank said in a report published on
Thursday.

* A South African union has filed an appeal to overturn a mining deal in
which Sibanye-Stillwater intends to acquire rival Lonmin, Sibanye said on
Wednesday. 

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Unity Day

22/12/2018

Christmas Day

25/12/2018

Boxing Day

26/12/2018

New Years’ Day

01/01/2019

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
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
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
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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