Bulls n Bears Daily Market Commentary : 27 November 2018

Wed Nov 28 08:31:43 CAT 2018

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Bulls n Bears Daily Market Commentary : 27 November 2018

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Zimbabwe Stock Exchange Update

Market Turnover $1,194,791.07 with foreign buys at $742,475.27 and foreign
sales were $412,274.78. Total trades were 112.

The All Share index added 0.74 points  to close at 158.81 points. INNSCOR
was $0.1358 higher at $1.9500, OLD MUTUAL  added $0.0208 to settle at
$7.8708 and PADENGA  gained $0.0194 to $0.9400. AXIA  also went up by
$0.0051 to trade at $0.4423 and ZIMRE PROPERTY INVESTMENTS   traded $0.0042
stronger at $0.0252.

Trading in the negative was AMALGAMATED REGIONAL TRADING which lost $0.0145
to $0.0855, AFRICAN SUN  dropped $0.0141 to close at $0.1019 and ECONET
traded $0.0056 lower at $1.7534. GENERAL BELTINGS HOLDINGS   also eased
$0.0020 to $0.0160 and BINDURA   was $0.0008 down at $0.0700.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Egypt

Egypt's state banks helping to support currency - bankers, economists

CAIRO/DUBAI, (Reuters) - Egypt’s central bank has enlisted the help of
state-owned commercial banks to keep the Egyptian pound from weakening
against the dollar by getting them to supply any extra hard currency the
market may need, bankers and economists say.

The pound has held steady in a narrow band of 17.78-17.98 to the dollar over
the last six months - even as foreign investors have fled emerging markets
around the world, including Egypt’s.

The central bank is not able to support the currency directly. In 2016 it
abandoned an expensive campaign to support the pound, letting it float
freely under reforms that persuaded the International Monetary Fund to lend
Egypt $12 billion.

Since then, the IMF has urged Egypt to keep its exchange rate flexible,
arguing this will in the long run keep inflows of foreign capital more
stable. But Cairo is keen to avoid speculation against the currency and to
curb inflation. Annual urban price inflation hit 17.7 percent last month.

Rather than returning to direct intervention, the central bank is enlisting
the help of state-owned commercial banks to keep the pound steady, several
bankers and economists said.

The central bank did not respond to questions on the matter.

As portfolio funds flow out - foreign ownership of Egyptian Treasury bills
and bonds fell $8 billion in the six months to the end of September to $13
billion - supplies of dollars needed to support the pound are mainly coming
from the banking system, rather than from the central bank’s reserves.

The two biggest state-owned commercial banks seem to be taking up most of
the slack, often stepping into the interbank market towards the end of the
day to fill outstanding requests for dollars, seven bankers and several
economists told Reuters.

The two state banks could not immediately be reached for comment.

In the interbank market, NBE has been offering to sell dollars for 17.88
pounds and Banque Misr for 17.89 pounds, while private banks offer to buy
them for up to 17.95. But bankers say the state banks rarely if ever make
trades at 17.88-89, selling dollars closer to the central bank’s fixing rate
of about 17.91.

Bankers say the central bank also sometimes calls up private banks to
inquire why they let the pound weaken, a move which the bankers take as a
sign of displeasure.

IMPACT

Some major emerging economies such as China or India use state-owned banks
to step in and help smooth currency movements when markets are under
pressure.

But these countries allow considerable movement in exchange rates, whereas
Egypt has been holding its exchange rate steady.

The impact of the policy can be seen in a sharp decline in the net foreign
assets of the commercial banking system, which plunged by $8.5 billion in
the six months to the end of September to $12.2 billion.

Economists say there is no immediate threat to the financial system. Foreign
reserves are at an all-time high of $44.5 billion, remittances from
Egyptians abroad rose to a record $26.5 billion in the year to June, and a
black market in dollars has disappeared.

All this suggests Egypt may be able to resist pressure on the pound for many
more months or even years. Requests by bank customers for foreign currency
are being met through the interbank market without major delays, bank
treasury officials and other senior bankers say.

But if demand for the Egyptian currency weakens further over the long term
without any exchange rate adjustment, capital inflows could shrink, Egypt’s
exports might become less competitive, and foreign exchange reserves could
be run down.

South Africa

South Africa's rand, stocks slide as trade tensions weigh

(Reuters) - South Africa’s rand weakened on Tuesday, surrendering earlier
gains as risk aversion over trade tensions between China and the United
States seeped back into currency markets.

Stocks fell in line with global markets on dwindling hopes of a truce in the
US-China trade war.

At 1545 GMT the rand traded at 13.9500 per dollar, 0.25 percent weaker than
its New York close of 13.9150.

The currency touched an intraday best of 13.7900 before retreating as
volumes in offshore trade picked up and brought a tide of dollar bulls.

Bonds also weakened, with the yield on the benchmark paper due in 2026
rising 3 basis points to 8.99 percent.

U.S. President Donald Trump said on Monday he expected to press on with
raising tariffs on $200 billion in Chinese imports to 25 percent from 10
percent currently, wobbling demand for riskier currencies.

Locally, business confidence fell for the third straight quarter, squeezing
out some of the lingering rand bulls ahead of gross domestic product figures
due early next week.

In equities, the All Share index was down 0.65 percent to 51,354 points
while the blue chip Top 40 index fell 0.70 percent to 45,225 points.

South African chemicals and fertiliser maker Omnia Holdings was 5.38 percent
higher at 89.50 rand after saying it would cut about 125 jobs and reduce
costs. 

       <mailto:info at bulls.co.zw> 

America

Dollar buoyed by Fed expectations, trade tensions support safe haven bids

(Reuters) - The dollar held near two-week highs on Wednesday, as concerns
about Sino-U.S. trade tensions propped up safe haven currencies and as
investors awaited cues from the U.S. Federal Reserve on the path of future
interest rate increases.

The dollar has been under pressure in recent weeks on signs the Fed might
slow the pace of future rate increases due to slowing global growth, peak
corporate earnings and escalating trade tensions.

Attention has now turned to a speech by Fed Chairman Jerome Powell later on
Wednesday and the minutes from the Fed’s Nov. 7-8 meeting on Thursday.
Markets hope to gain fresh insights into the Fed’s thinking on the speed and
number of rate hikes in the current cycle.

The U.S. central bank is widely expected to raise rates by 25 basis points
next month.

In an interview to the Washington Post on Tuesday, U.S. President Donald
Trump said he is unhappy with the Fed’s policy stance and Powell, whom he
picked last year to lead the bank.

Trump has repeatedly criticized the Fed and Powell on the U.S. central
bank’s monetary policy stance, saying rising U.S. rates were harming the
economy.

But analysts think it is unlikely that political interference can alter the
Fed’s approach to formulating monetary policy.

In comments made on Tuesday, Federal Reserve Vice Chair Richard Clarida
backed further rate hikes though he said the tightening path would be data
dependent. He said monitoring of economic data has become even more critical
as the Fed edged ever closer to a neutral stance.

The dollar index .DXY, a gauge of its value versus six major peers, traded
at 97.38 having risen for three sessions in a row. It is just below this
year’s high of 97.69.

Dollar strength also reflected risks around the upcoming G20 summit in
Buenos Aires between Nov. 30-Dec. 1 where Trump and his Chinese counterpart,
Xi Jinping, are scheduled to discuss contentious trade matters.

Trump’s comments this week that it was “highly unlikely” he would accept
China’s request to hold off a planned increase in tariffs drove investors to
safe-haven currencies such as the dollar and the yen.

The yen JPY= hit a two-week low of 113.85 on Wednesday.

Wall Street edges higher

The euro EUR= gained 0.07 percent versus the dollar to $1.1295. The single
currency has lost 1.5 percent of its value in recent sessions due to signs
of weakening eurozone economic momentum and ongoing tensions between the
European Union and Italy over Rome's free spending budget.

Elsewhere, sterling GBP= was a touch lower at $1.2742. The pound is likely
to remain under pressure as traders bet that British Prime Minister Theresa
May would fail to get the nod for her Brexit agreement in a fractious
parliament.

The Australian dollar AUD=, often considered a gauge for global risk
appetite, gained 0.15 percent to $0.7231 as Asian equities pushed higher.

However, analysts expect the Aussie dollar to remain vulnerable to further
declines amid sharp losses in the price of iron ore, a key export earner for
the country, and as U.S.-Sino trade tensions showed no signs of abating.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Platinum market set for big surpluses in 2018 and 2019 - WPIC

(Reuters) - The global platinum market will be oversupplied by around half a
million ounces both this year and next, an industry report said on
Wednesday, suggesting little respite for producers facing prices languishing
near 10-year lows. 

In its latest Platinum Quarterly report, the World Platinum Investment
Council (WPIC) revised its forecast for oversupply this year to 505,000
ounces from 295,000 ounces, blaming weak

demand for platinum jewellery, and said 2019 would see a surplus of 455,000
ounces. 

Platinum prices hit a 10-year low in August and are down 9 percent this
year. 

The market flipped from deep deficit earlier this decade to surplus as
falling use by automakers, jewellers and investors pushed demand from 8.5
million ounces in 2013 to an estimated

7.5 million ounces this year, said the WPIC, which is funded by platinum
miners.      

 Raymond said the decline in demand from carmakers would slow next year,
while jewellery demand would expand for the first time since 2014, and
consumption by industry and investors would grow strongly, lifting total
demand by 2 percent. 

Demand from automakers -- which embed platinum in emissions-reducing
catalytic converters and account for around 40 percent of platinum use --
will fall by 1 percent in 2019 after a 7 percent plunge this year as a
decline in sales of diesel vehicles in Europe slows, the WPIC said. 

  Carmakers use both platinum and sister metal palladium in autocatalysts,
but platinum is used more in diesel engines whose popularity plummeted after
Volkswagen was found to have cheated emissions tests in 2015. 

The WPIC said it assumed no significant substitution next year of palladium
for platinum, which is trading at a roughly$300 discount to its sister metal
after last year becoming cheaper than palladium for the first time since
2001. 

  Demand for platinum in jewellery will rise by 1 percent in 2019 after a 2
percent decline this year, the WPIC said. 

Use in industry will increase by 4 percent in 2019 after an 8 percent rise
this year and demand for platinum bars and coins for investment will double
from 125,000 ounces this year. 

On the supply side, the WPIC said higher output at mines in South Africa and
North America and increased recycling would push supply up 2 percent in 2019
after a 1 percent fall this

year.

Aluminium producer seeks Q1 premium of $91/T from Japan buyers -sources

(Reuters) - A global aluminium producer has offered Japanese buyers a
premium of $91 per tonne for primary metal shipments during the January to
March quarter, down 12 percent from the current quarter, two sources
directly involved in pricing talks said on Wednesday.

Japan is Asia’s biggest aluminium importer and the premiums for primary
metal shipments it agrees to pay each quarter over the London Metal Exchange
(LME) cash price set the benchmark for the region.

For the October-December quarter, Japanese buyers agreed to pay a premium of
$103 per tonne PREM-ALUM-JP, down 22 percent from the prior quarter to
reflect a slide in Asian spot premiums amid ample supply. 

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Econet

AGM

Econet Park, Msasa

29/11/2018  (9am )

Econet

EGM

Econet Park, Msasa

29/11/2018  (10am )

GetBucks

AGM

Conference Room 1, Monomotapa Hotel

04/12/2018 (10am )

Innscor

AGM

Royal Harare Golf Club

05/12/2018 (8:15am)

Truworths

AGM

Boardroom, Prospect Park, 808 Seke Road

06/12/2018 (9am)

TSL

EGM

Head Office, 28 Simon Mazorodze Road, Southerton

07/11/2018 (10am )

Cassava shares list on the ZSE

11/12/2018

 <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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