Bulls n Bears Daily Market Commentary : 25 July 2018

Thu Jul 26 08:36:34 CAT 2018

 <http://www.bulls.co.zw/> Bulls.co.zw        <mailto:bulls at bulls.co.zw>
Views & Comments        <http://www.bulls.co.zw/blog> Bullish Thoughts
<http://www.twitter.com/BullsBears2010> Twitter
<https://www.facebook.com/BullsBearsZimbabwe> Facebook
<http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn
<mailto:info at bulls.co.zw?subject=Unsubscribe> Unsubscribe

Bulls n Bears Daily Market Commentary : 25 July 2018

 <http://www.posb.co.zw/> 

Zimbabwe Stock Exchange Update

Market Turnover $3,047,601.79 with foreign buys at $1,064,788.58 and foreign
sales were $97,110.69. Total trades were 123.

The All Share index went down by 2.75 points as heavyweight counters lost
ground. DELTA shed $0.1866 to close at $2.1501, AXIA  eased $0.0243 to trade

at $0.2500 as OK ZIMBABWE  retreated $0.0166 to settle at $0.2234. Other
losses were in OLD MUTUAL which traded $0.0100 lower at $5.0000 and ECONET  

which came off $0.0095 to close at $1.2636.

The losses were partially offset by gains in SEEDCO which traded $0.0761
higher at $2.5801, PADENGA  increased by $0.0046 to close at $0.6175 and
FIRST MUTUAL 

PROPERTIES added $0.0040 to close at $0.04900. PROPLASTICS  was up $0.0020
to trade at $0.0980 and ZIMPLOW  inched $0.0005 up at $0.1155.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Uganda

Uganda shilling weaker on lower demand in the interbank market

(Reuters) - The Ugandan shilling weakened slightly on Wednesday on lower
demand from commercial banks trying to firm up their hard currency
positions.

At 1057 GMT commercial banks quoted the shilling at 3,690/3,700, weaker than
Tuesday’s close of 3,685/3,695.

Kenya

Kenyan shilling firmer on remittances inflows

(Reuters) - The Kenyan shilling was firmer against the dollar on Wednesday,
helped by inflows from remittances, traders said. 

At 1212 GMT, commercial banks quoted the shilling 100.40/60 per dollar,
unchanged from Friday's close. 

America

Dollar, euro swing in narrow ranges ahead of Trump-Juncker meet

(Reuters) - The dollar and euro held tight ranges on Wednesday, ahead of a
meeting between U.S. President Donald Trump and European Commission
President Jean-Claude Juncker as investor focus shifted to the trade rift
between the two economic powers.

The dollar index against a basket of major currencies stood little changed
at 94.555, off its two-week low of 94.207 hit on Monday.

Fears of a trade war with the United States kept the euro trapped in narrow
ranges as Juncker travels to Washington on Wednesday for trade-focused talks
with Trump. The talks come after the U.S. imposed tariffs on EU steel and
aluminum and Trump’s threats to extend those measures to European cars.

The euro booked a slight gain after data released on Tuesday showed business
growth remained robust, yet below forecasts.

The single currency was trading 0.1 percent higher at $1.1695.

Against the yen, the dollar was nearly flat at 111.27 yen per dollar.

The yen has found some support early this week on expectations the Bank of
Japan might be a step closer to scaling back some of its aggressive monetary
stimulus.

Risk appetite remained mostly firm, supported by strong U.S. corporate
earnings and hopes China will boost fiscal support for its economy.

The Australian dollar was 0.1 percent lower at $0.7412 .

The Aussie gave up early gains of about 0.3 percent, following Beijing’s
promise this week to pursue a more “vigorous” fiscal policy. 

Commodities Markets

Copper clings to gains as the dollar dips

(Reuters) - Copper held at two-week highs on Wednesday as the dollar
weakened and the market awaited a resolution to wage talks at the world’s
largest miner of the industrial metal.

BHP’s Escondida mine in Chile said on Tuesday it had made a final offer to
the union representing its rank-and-file workers that includes a beefed up
contract signing bonus and a 1.5 percent increase in wages.

There was no immediate response from the union, which had asked for a 5
percent pay rise.

LME copper was bid 0.2 percent lower at $6,280 per tonne after failing to
trade in official rings. The metal used in power and construction jumped the
most since January on Tuesday.

Failure to reach a labour deal at Escondida last year led to a 44-day strike
that jolted the global copper market.

The possibility of another strike there pushed benchmark copper prices in
London to a near 4-1/2 year high of $7,348 a tonne on June 7, before fears
that a U.S.-China trade war could crimp demand pushed the price below $6,000
tonne last week.

CHINA STIMULUS: Beijing vowed on Tuesday to pursue a more “vigorous” fiscal
policy, including cutting taxes, as authorities stepped up efforts to
support growth amid rising economic headwinds.

The move would boost demand for copper and other metals in the world’s top
consumer, China, analysts say.

DOMINANT POSITION: Copper prices have been underpinned by a large position
controlling 50-79 percent of available LME copper inventories, according to
LME data. <0#LME-WHL>

ALUMINIUM STOCKS: The amount of cancelled aluminium inventory — stock
earmarked for delivery — rose 23,175 tonnes, mainly from Busan, taking
on-warrant stocks to 939,975 tonnes.

JAPAN AUTOMOBILES: Japan’s aluminium industry is more concerned over
possible U.S. import tariffs on automobiles that could impact a wider range
of the country’s industries than the U.S. duties already imposed on the
light metal, the head of a trade body said on Wednesday.

ZINC: Morgan Stanley said zinc was oversold in the first half of the year
but is expected to rebound in the remainder of the year due to its deficit
and because the peak demand season is about to start.

LME zinc was bid down 0.4 percent to $2,606 after rising 2.4 percent in the
previous session.

PRICES: Aluminium was bid 0.6 percent lower at $2,073, lead was bid down 0.4
percent to $2,152, tin added 0.8 percent to $19,830 in official rings while
nickel was bid up 0.2 percent to $13,625.

Smelter hits halt global aluminium production growth: Andy Home

(Reuters) - Global aluminium production growth ground to a standstill in the
first half of this year.

The world’s smelters produced 31.76 million tonnes of metal in January-June,
a 1 percent decline on the first half of 2017, according to the
International Aluminium Institute (IAI).

Expressed in annualised terms, global output in June was almost two million
tonnes lower than a year earlier.

Production outside of China has been creeping higher since January but the
growth rate is being constrained by an unusually high level of disruption
with multiple plants operating at reduced rates.

National run rates in China, the world’s largest single producer, have also
been recovering from last year’s combination of “illegal” capacity closures
and winter heating season restrictions but are still down on year-earlier
levels.

This stuttering production profile fits in with expectations that this year
will be one of global supply shortfall and a resulting drawdown in
inventories.

Production in North America, Latin America, Western Europe and Africa fell
in the first half of 2018 due to smelter problems.

North American production should in theory be rising with Alcoa reactivating
part of its Warrick smelter in Indiana and Century Aluminum committed to
doing the same at its Hawesville smelter in Kentucky.

In both cases, however, it’s been a case of two steps forward, one step
back.

Alcoa has restarted two lines at Warrick but the refiring of a third has
been pushed back due to a power outage in May. Century, meanwhile, has lost
one line at its Sebree plant, also in Kentucky, for similar reasons.

The biggest drain on North American supply remains the union lock-out at the
Becancour (ABI) smelter in Canada.

Rio Tinto, which owns a minority stake in Becancour, reported that
production fell to 74,000 tonnes in January-June from 218,000 tonnes in the
year-earlier period.

Alcoa, which operates the plant, told analysts on its Q2 results conference
call that the two sides are back at the negotiating table albeit “with no
update as far as when those discussions will conclude”.

Latin America production is sliding due to the curtailment of half of the
450,000-tonne per year Albras smelter in Brazil.

Hydro has cut the plant’s run-rate to align it with lower output at its
Alunorte alumina refinery as mandated by a Brazilian court on environmental
grounds.

The company has lowered expectations of a fast resolution with the Brazilian
authorities, indicating a return to full operations some time between
October and the middle of next year.

Also on the supply hit list are South Africa’s Hillside plant, recovering
from what operator South32 describes as “an electric arc incident in the
December 2017 quarter” and Rio Tinto’s Dunkirk smelter in France due to a
power outage in February.

It’s worth emphasising that this is an unusually long list of supply
disruption in the aluminium market.

Interestingly, the one region that might have been expected to register
lower output, Eastern Europe, actually saw production rise by almost two
percent.

Whatever the disruptive impact of U.S. sanctions against Oleg Deripaska and
his Rusal empire, it has not yet affected actual operating rates across its
Russian smelter network.

Chinese production of aluminium fell by three percent year-on-year in the
first half of 2018, according to the IAI.

This is an estimate.

The country’s official count of what’s happening in its huge aluminium
smelter sector has been widely rejected by market analysts and the IAI now
folds the National Bureau of Statistics figures into an envelope of
independent assessments.

It’s not ideal but is realistically as good as we’re going to get and has at
least removed some of the monthly volatility in the official figures.

China’s national run-rate has picked up to 101,000 tonnes per day in June
from 88,330 tonnes in November, the start of the forced winter curtailments
in the regions around Beijing, but is still well short of the 107,700 tonnes
registered in June 2017.

New capacity growth, on the other hand, is being slowed both by a
requirement that what starts up must match what’s been closed and plans to
force captive power plants to pay more to subsidise other electricity users.

Since much of the new planned capacity is based on exactly such captive
power, mostly coal, the heightened uncertainty as to what Beijing’s
directive means in specific provinces seems to have caused a collective
pause for thought.

Meanwhile, the prospect of more forced curtailments is looming ever larger
as the November start of the winter heating season comes around again.

Last year’s net impact underwhelmed relative to expectations but the war on
winter smog will encompass more cities and provinces this year.

Throw in the continued crackdown on “illegal” capacity and the rolling
environmental checks on the aluminium sector and the Chinese production
picture is an evolving jig-saw puzzle with multiple moving parts.

SUPPLY DEFICIT

Global production of aluminium may have ground to a halt but consumption
hasn’t.

There is a broad consensus, articulated by both Alcoa and Hydro in their Q2
results, that global consumption growth is running around 4-5 percent.

The inescapable mathematical logic is that the aluminium market is now
running in persistent supply deficit. Hydro pegs it at around 1.5 million
tonnes this year and Alcoa between 1.1 and 1.5 million tonnes.

Global stocks are being drawn down to fill the gap.

Research house CRU thinks expects global stocks to fall by 13 percent over
the January-September period this year, part of a longer-running trend that
will see inventories return to pre-Financial Crisis levels by 2019.

Just don’t expect to see this tectonic turnaround reflected in visible
exchange stock movements.

London Metal Exchange (LME) stocks, for example, have recently been rising
but this is down to the recent market squeeze.

As is often the case with LME cash tightness, metal has been sucked into the
system only to change hands and be moved out again, witness the high level
of stock cancellations over the last few days.

The push and pull on LME stocks is serving only to mask increasingly bullish
fundamental drivers.

One of which has been the unusual number of supply hits in a market that has
historically been prone to over-production rather than under-production.

These multiple smelter outages, though, are accelerating a deeper-rooted
drift into supply deficit.

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

OK Zimbabwe

AGM

OKmart Functions Room, 30 Chiremba Road, Hillside

26/07/2018 3pm

Delta

AGM

Head Office, Northridge Close, Borrowdale

27/07/2018 12:30pm

NicozDiamond

shares delist from the ZSE

06/08/2018

Zimbabwe

Heroes’ Day

Zimbabwe

13/08/2018

Zimbabwe

Defence Forces Day

Zimbabwe

14/08/2018

The Harare Agricultural Show

The Harare Agricultural Show

The Harare Agricultural Show

August 27- September 1

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.

(c) 2018 Web: <http:// www.bulls.co.zw >  www.bulls.co.zw Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
344 1674

Invest Wisely!

Bulls n Bears 

Telephone:      <tel:%2B263%204%202927658> +263 4 2927658

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw&sa=D&sntz=1&usg=AF
QjCNH8LYgdY55h-XKseuM8Kpr-JKdfhQ> www.bulls.co.zw 

Blog:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1
&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bulls.co.zw/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:
<http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimba
bwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA>
www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.jpg
Type: image/jpeg
Size: 3653 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0006.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.jpg
Type: image/jpeg
Size: 32675 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0007.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 29401 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0008.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0009.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image005.jpg
Type: image/jpeg
Size: 159128 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0010.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image006.jpg
Type: image/jpeg
Size: 4846 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20180726/1e0dd9f6/attachment-0011.jpg>