Bulls n Bears Daily Market Commentary : 13 June 2018

Wed Jun 13 15:52:40 CAT 2018

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Bulls n Bears Daily Market Commentary : 13 June 2018

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

Zimbabwe Stock Exchange Update

Market Turnover $1,980,638.49 with foreign buys at $1,014,067.60 and foreign
sales were $723,063.31. Total trades were 87.

The All Share index added 0.36 points to close at 118.69 points. OLD MUTUAL
gained $0.3866 to close at $6.4786, RIOZIM  was up $0.0500 to trade at
$1.4000 and EDGARS   was $0.0069 stronger at $0.0599. Other gains were in
PADENGA  which added $0.0041 to close at $0.6616 and OK ZIMBABWE was up
$0.0008 to trade at $0.2375.

Three counters lost ground; BRITISH AMERICAN TOBACCO  lost $0.0452 to close
at $24.9548, ECONET slipped $0.0031 to settle at $1.11469 and INNSCOR
traded $0.0023 lower at $1.4975.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Uganda

Ugandan shilling weakens to new low on elevated demand

(Reuters) - The Ugandan shilling extended losses on Wednesday, as surging
demand from commercial banks and importers met with tight supplies of hard
currency.

At 1046 GMT commercial banks quoted the shilling at 3,840/3,850, a record
low. The shilling closed at 3,830/3,840 on Tuesday.

The currency has posted sharp losses in recent weeks, prompting the central
bank on Friday to intervene and sell dollars to try to curb losses. 

Kenya

Kenyan shilling steady on inflows, thin dollar demand

(Reuters) - The Kenyan shilling was steady against the dollar on Wednesday,
on the back of hard currency inflows from offshore investors and thin dollar
demand from importers, traders said.

At 0828 GMT, commercial banks quoted the shilling at 100.95/101.15 per
dollar, unchanged from Tuesday's close.

World stocks capped by trade war concerns, central banks

(Reuters) - World stocks hovered near one-month highs on Wednesday as an
expected U.S. interest rate rise and risks of a fresh outbreak of trade
tensions between China and the United States overshadowed a generally benign
political and economic backdrop.

Wall Street appeared set for a modestly firmer open, potentially building on
the previous session’s gains, which were fuelled by buoyant mergers and
acquisitions activity among media and telecoms firms .

European shares rose too as global company earnings have been revised up,
according to Thomson Reuters I/B/E/S.

However, assets such as Chinese stocks, European autos and the Mexican peso
are under pressure from the risk of protectionist measures from the United
States which is preparing to unveil more tariffs on $50 billion worth of
Chinese goods.

And the U.S. Federal Reserve, the European Central Bank and the Bank of
Japan all hold policy meetings this week, with the Fed expected to announce
its second rate rise of 2018.

Equity markets are “marking time and finding it difficult to make upward
progress despite reasonably good economic data”, said Andrew Milligan, head
of global strategy at Aberdeen Standard Investments.

These issues eroded slim gains made around Tuesday’s summit between U.S.
President Donald Trump and North Korean leader Kim Jong Un. The meeting has
soothed some geo-political fears, as a joint statement pledged to work
toward the “denuclearization” of the Korean Peninsula.

MSCI’s all-country share index was flat, recovering slightly from deeper
losses caused by a half percent fall in non-Japan Asian equities.

European stocks too were 0.3 percent higher after a weak start, led by a 1.4
percent rise in the tech index and an 80 percent leap in Dutch fintech firm
Adyen on its first day of trading.

An index of auto stocks lagged, however, with gains of 0.2 percent.

Milligan downplayed the impact of U.S. trade measures on global commerce but
noted “the direction of travel is not positive, which is why equities are
not making as much progress and investor sentiment is not more positive.”

Investors see trade wars as the biggest market risk, a closely watched
survey from Bank of America Merrill Lynch (BAML) showed. It showed investors
bullish on equities but still holding high levels of cash in portfolios — a
clear sign of wariness.

In a reminder of the danger of trade disputes, shares in Chinese
telecommunications giant ZTE Corp fell as much as 41.5 percent, wiping $3
billion off its market value, as it resumed trade after agreeing to pay up
to $1.4 billion in penalties to the U.S. government.

Its Shenzhen shares fell by their 10 percent limit, dragging down mainland
Chinese shares around 1 percent

The Mexican and Canadian currencies, remained under pressure from trade war
fears, the former hitting 16-month lows against the U.S. dollar.

POLICY

Investors see central bank policy mistakes as the second-biggest risk for
markets, the BAML poll showed.

Projections from the Fed’s March meeting suggest a benchmark rate of 2.1
percent at end of 2018. That implies a total of three rate rises this year.
But some reckon four increases are possible.

As the Fed meeting approached, the dollar traded flat against a basket of
currencies giving up some earlier gains but stayed near three-week highs
versus the yen.

It firmed sharply against some emerging currencies — the Turkish lira fell
one percent towards recent record lows

The euro eased off last week’s three-week high of $1.1840 but remained
underpinned by expectations the ECB will mention plans to wind up its
stimulus and even hint at the timing of its first interest rate rise when it
meets on Thursday.

However, Italian bond yields fell further with two-year yields down 14 bps
to below 1 percent after EU affairs minister Paolo Savona, considered a
eurosceptic, said the euro was “indispensable”.

Such comments have soothed worries about Italy’s euro membership, but
analysts say the government’s high-spending plans could boost yields again
once the relief rally ebbs.

Britain’s pound and bond yields slipped as data showing subdued inflation
checked expectations for an interest rate rise this year.

Commodities Markets

China demand worries drive copper to one-week low

(Reuters) - Copper prices hit one-week lows on Wednesday, pressured by
worries over demand in top consumer China, loans data and a firmer dollar,
though labour negotiations at the giant Escondida mine in Chile provided
some support.

Benchmark copper on the London Metal Exchange traded 0.2 percent down at
$7,211 a tonne in official rings from an earlier $7,169, its highest since
June 6.

LOANS: Chinese banks extended 1.15 trillion yuan ($179.6 billion) in net new
yuan loans in May, below analysts’ expectations of 1.2 trillion yuan but up
slightly from April’s 1.18 trillion yuan.

FINANCING: China’s total social financing, a broad measure of credit and
liquidity, dropped sharply to 760.8 billion yuan in May from 1.56 trillion
yuan in April, central bank data showed on Tuesday.

DOLLAR: A firmer U.S. currency makes dollar-denominated commodities more
expensive for non-U.S. firms, which could subdue demand.

INTEREST RATES: The U.S. Federal Reserve is widely expected to raise rates
on Wednesday and investors will scan its announcement for clues on how many
more rises might be on the cards this year.

ESCONDIDA: Global miner BHP said it had responded to the latest contract
proposal from unionised workers at its Escondida mine, the world’s largest,
triggering a new round of talks that could last a month or more.

The union’s proposal, filed with the company in early June, included a
salary increase of 5 percent and a one-off bonus of $34,000, equivalent to 4
percent of dividends distributed to shareholders.

PRICES: Aluminium traded 1.1 percent down at $2,276, zinc ceded 0.1 percent
to $3,195, lead fell 0.2 percent to $2,470.5, tin was bid 1.2 percent lower
at $20,875 and nickel was bid up 0.2 percent to $15,235.

Gold market muted ahead of expected Fed rate rise

(Reuters) - Gold edged lower on Wednesday, pressured by a slightly stronger
dollar, but activity was muted ahead of a Federal Reserve policy
announcement that could trigger a sharp move in prices.

Investors expect the Fed to raise interest rates but want to know if it
intends to tighten policy four times in 2018 or three times, as it indicated
earlier this year.

A clear hint in the announcement at 1800 GMT or press conference at 1830 GMT
could knock gold out of the tight range of about $1,290 to $1,305, in which
it has been trapped since mid-May.

More rate rises would hurt gold because they push up bond yields, making
non-yielding bullion a less attractive investment, and tend to strengthen
the dollar, increasing the cost of gold for buyers using other currencies.

Gold prices have tended to fall before recent U.S. interest rate rises, as
investors anticipate the change, but rally afterwards.

Spot gold was down 0.1 percent at $1,293.96 an ounce at 1151 GMT and U.S.
gold futures for August delivery fell by 0.2 percent to $1,297.50.

Reinforcing the cautious mood were policy announcements expected from the
European Central Bank (ECB) on Thursday and Japan’s central bank on Friday,
which could affect gold prices.

The ECB is expected to signal a wind-down of its huge bond-buying programme,
which could strengthen the euro and boost gold demand in Europe.

Holdings of gold by exchange-traded funds (ETFs) tracked by Reuters have
decreased by 1.4 million ounces, or 2.4 percent, since late May, while bets
on higher prices on the Comex exchange remain low after falling last month
to the fewest since January 2016.

Reuters technical analyst Wang Tao said gold had to break from its trading
range, which has been gradually tightening, and is likely to drop towards
$1,263-$1,278 an ounce.

Fibonacci technical support was at $1,286, with resistance at $1,301.40,
said ScotiaMocatta analysts. Gold is likely to fall unless it moves back
above the 200-day moving average around $1,307, they said.

In other precious metals, silver was flat at $16.85 an ounce after hitting a
seven-week high of $16.95 on Tuesday.

Platinum was down 0.4 percent at $890.25 and palladium dropped 1.2 percent
to $1,006.70.

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

FMHL

AGM

Royal Harare Golf Club

11/06/2018 2:30pm

RioZim

AGM

Head Office, 1 Kenilworth Road, Highlands

21/06/2018 10:30am

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.

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