Bulls n Bears Daily Market Commentary : 20 December 2018

Fri Dec 21 08:36:47 CAT 2018

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Bulls n Bears Daily Market Commentary : 20 December 2018

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Zimbabwe Stock Exchange Update

Market Turnover $14,551,895.78 with foreign buys at $2,520,266.29 and
foreign sales were $4,905,477.25. Total trades were 360.

The All Share index retreated 1.38 points  to settle at 147.26 points as
heavyweight counters lost ground. CASSAVA SMARTECH ZIMBABWE LIMITED  shed
$0.0423 to close at $1.4817, DELTA lost $0.041 to $2.8090 and ECONET  was
$0.0330 weaker at $1.4414. AFDIS  dropped by $0.0200 to trade at $1.5300
while NATFOODS   eased $0.0155 to settle at $7.1045.

However, LAFARGE   gained $0.1850 to $1.1150 and NAMPAK   increased by
$0.0450 to trade at $0.3000. FIRST MUTUAL HOLDINGS  closed at $0.1400
following a $0.0060 increase,  AXIA   put on $0.0054 to $0.4100 whilst
PROLPLASTICS  was 0.0030 higher at $0.1950.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South African rand gains as dollar falls after Fed meeting

(Reuters) - South Africa’s rand firmed on Thursday, recouping some of its
overnight losses as the dollar fell on growing concerns that U.S.
policymakers may keep raising interest rates just as the world’s biggest
economy faces a slowdown.

Stocks ended lower as Shoprite dipped more than 3 percent after the
Competition Commission recommended that the company’s retail unit be fined
10 percent of its turnover for anti-competitive behaviour.

At 1511 GMT, the rand traded at 14.2300 versus the dollar, 1.08 percent
stronger than its previous close.

With little domestic data and tepid market activity, the currency is
tracking global trends this week.

On Wednesday, the U.S. central bank’s “dot plots” of rate-path projections
signalled two hikes next year, down from three previously. A slower path of
monetary policy tightening in the world’s largest economy should relieve
some pressure on emerging market currencies such as the rand.

A weaker dollar on the day also supported the rand as it recovered from its
losses in the aftermath of the Fed hike, when it weakened to 14.4300.

The currency touched a week best of 14.1100 on Wednesday ahead of the U.S.
interest rates decision.

Government bonds also firmed, with the yield on the benchmark instrument due
in 2026 dipping by 5 basis points to 9 percent.

On the bourse, the Top-40 index fell 0.41 percent to 45,352 while the
broader all-share ended 0.43 percent lower at 51,347.

Shoprite closed 3.10 percent lower as its retail unit Shoprite Checkers
faced a hefty fine for anti-competitive behaviour. The case centres on
Shoprite Checkers’ event ticket-selling subsidiary, Computicket, which was
also charged and fined 10 percent of turnover. 

Most African currencies seen firming next week

(Reuters) - The Kenyan, Tanzanian and Zambian currencies are likely to
strengthen in the coming week while Uganda’s shilling is expected to post
moderate losses.

NAIROBI

The Kenyan shilling is expected to strengthen against the U.S. dollar due to
tight liquidity and increased foreign remittances amid flat demand from
importers ahead of the holiday season.

Commercial banks quoted the shilling at 101.45/65 per dollar, compared with
102.55/75 at last Thursday’s close.

TANZANIA

Tanzania’s shilling is expected to gain, helped by low U.S. dollar demand
due to a slowdown of activity during the holiday season.

Commercial banks quoted the shilling at 2,295/2,305 per dollar, compared
with last Thursday’s close of 2,306/2,312.

ZAMBIA

The kwacha is likely to hold firm against the U.S. dollar in the coming week
due to low demand for hard currency during the holiday season.

On Thursday, commercial banks quoted the currency of Africa’s second-largest
copper producer at 11.8750 per dollar, stronger than a close of 11.9500 a
week ago.

The break below the 11.9000 psychological barrier could see it post further
gains in the short to medium term, local commercial bank Cavmont said in a
note.

UGANDA

The Ugandan shilling is seen weakening moderately next week on the back of
expected demand from mainly commercial banks who will be squaring positions
ahead of year end.

At 1205 GMT commercial banks quoted the shilling at 3,685/3,695, compared to
last Thursday’s close of 3,695/3,705.

       <mailto:info at bulls.co.zw> 

Asia

Asia stocks underwater as funds seek safe harbours

(Reuters) - Global stocks were sinking in a sea of red on Friday as the
threat of a U.S. government shutdown and of further hikes in U.S. borrowing
costs sent dismayed investors sailing for safer harbours.

The S&P 500 was heading for its worst quarter since the dark days of late
2008, with a loss of 15 percent so far. The Nasdaq has shed 19.5 percent
from its August peak, just shy of confirming a bear market.

Oil prices slid just over 4 percent overnight, bringing Brent’s losses since
its October top to 37 percent. The dollar had suffered its biggest one-day
drop on the yen since November 2017 as investors stampeded to safe havens.

Michael McCarthy, chief market strategist at CMC Markets, said the downward
spiral was becoming self fulfilling with selling begetting more selling.

E-Mini futures for the S&P 500 were off another 0.3 percent, while spread
betters pointed to a soft start for the major European bourses. MSCI’s
broadest index of Asia-Pacific shares outside Japan shed 0.5 percent.

Japan’s Nikkei fell 1.5 percent, and was down more than 6 percent for the
week so far, while Australian stocks slipped 1.3 percent to a two-year
trough.

Chinese blue chips lost 1.6 percent, in part after the United States accused
Beijing of orchestrating the hacking of government agencies and companies
around the world.

Sentiment had turned sour on Thursday when the U.S. Federal Reserve largely
retained plans to increase interest rates despite mounting risks to growth.

Markets were further spooked when U.S. President Donald Trump refused to
sign legislation to fund the U.S. government unless he got money for a
border wall, thus risking a partial federal shutdown on Saturday.

Adding to the air of crisis was news U.S. Defense Secretary Jim Mattis had
resigned after Trump proposed withdrawing troops from Syria and sources said
a military pullback from Afghanistan was on the cards.

The brittle mood showed on Wall Street where the Dow ended Thursday with a
loss of 1.99 percent. The S&P 500 dived 1.58 percent and the Nasdaq 1.63
percent.

STAMPEDE FOR THE EXITS

The mood change has triggered a rush out of crowded trades, including
massive long positions in U.S. equities and the dollar and short positions
in Treasuries.

Lipper data on Thursday showed investors pulled nearly $34.6 billion out of
stock funds in the latest week and were heading for the biggest month of net
withdrawals on record.

There was also a sense of capitulation in currency markets as the dollar
dived 1.1 percent on the yen on Thursday to hit a three-month trough at
110.80. It was last changing hands at 111.38 having shattered several layers
of chart support.

The euro stood at $1.1444, having jumped to its highest in over six weeks at
$1.1485. Against a basket of currencies, the dollar stood at 96.457 after
suffering its largest single-session fall in two months.

The flight from risk was a boon to sovereign bonds, where U.S. 10-year
yields struck their lowest since early April at 2.748 percent. As recently
as October, they had been at a seven-year top of 3.261 percent.

The gap between two- and 10-year yields shrank to just 9 basis points at one
stage, the kind of flattening that has heralded recessions in the past.

The rally in longer-dated bonds has been fuelled by the huge slide in oil
prices, which will pile downward pressure on inflation at a time when the
global economy is already slowing.

Both Brent and U.S. crude futures reached their lowest in more than a year
overnight, but edged higher on Friday on talk production cuts by OPEC might
be larger than first thought.

U.S. crude eked out a 38 cent bounce to $46.26 a barrel, while Brent rose 31
cents to $54.66.

Gold was underpinned by the reversal in the dollar to hold at $1,259.29 an
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

 <mailto:info at bulls.co.zw> 

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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