Bulls n Bears Daily Market Commentary : 01 October 2018

Mon Oct 1 22:20:37 CAT 2018

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Bulls n Bears Daily Market Commentary : 01 October 2018

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Zimbabwe Stock Exchange Update

Market Turnover $358,739.74 with foreign buys at $44,752.75 and foreign
sales were nil. Total trades were 89.

The All Share index opened  the week in green after adding 1.04 points to
close at 116.16 points. ECONET  led the movers with a $0.0690 increase to
trade at $1.3050 and DELTA  traded $0.0024 higher at $2.2024. AFRICAN SUN  ,
BINDURA and NTS  were each $0.0010 higher at $0.0820, $0.0630 and $0.0120
respectively.

Gains were partially offset by losses in AMALGAMATED REGIONAL TRADING  which
lost $0.0160 to close at $0.0653, PPC  and RIOZIM  both decreased by $0.0100
to trade at $1.0900 and $1.3900 respectively. INNSCOR  also went down by
$0.0028 to trade at $1.3472 and STAR AFRICA  traded $0.0010 lower at
$0.0079.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabwe

Zimbabwe sees faster GDP growth but budget deficit could hobble economy

(Reuters) - Zimbabwe’s economy is likely to grow more than 5 percent in
2018, rather than the earlier estimate of 4.5 percent, but a widening budget
deficit risks destabilising the financial sector and the whole economy, the
finance minister said on Monday.

Rebuilding the troubled economy is the biggest challenge to President
Emmerson Mnangagwa, who was re-elected in a disputed vote in July and is
seeking to pivot away from some of the disastrous policies of his
predecessor Robert Mugabe.

New Finance Minister Mthuli Ncube said the economy would grow faster than
initially expected on the back of strong performances in agriculture and
mining, the latter of which is the biggest contributor to Zimbabwe’s export
earnings.

Ncube, however, said he was worried by the build-up in inflationary
pressures.

Reserve Bank governor John Mangudya had earlier said in his first
post-election statement that rebalancing the economy would require “painful
measures” but that growth was on the up.

Harare-based economist John Roberston called the new growth projection “very
extravagant” and said the government had not presented plans to cut a wage
bill taking more than 90 percent of the national budget.

Ncube said the budget deficit, estimated at 16 percent of GDP this year, had
led to the rise of government domestic debt from $275 million in 2012 to
$9.5 billion currently.

The debt is being financed through Treasury Bills and an overdraft facility
at the central bank, which has increased the stock of government paper to 35
percent of GDP.

Ncube said he would cut the government’s central bank overdraft, which is
three times the lawful limit, and introduce public auctions for Treasury
Bills to increase transparency.

With immediate effect, banks would introduce separate local and foreign
currency bank accounts and foreign truckers will now pay for fuel in foreign
currency, as part of measures to ease an acute shortage of U.S. dollars
since the country dumped its own currency in 2009, Mangudya said.

Mnangagwa has made sweeping changes to his cabinet and the civil service
since his election. But the election was marred by procedural lapses and a
crackdown against opposition supporters, which curbed some investor hopes
for more predictable and business-friendly policies.

Zimbabwe has cleared its IMF arrears and next week will present its plans to
clear arrears to the World Bank, Africa Development Bank and European
Investment Bank. Investors are trickling back as the country shakes off the
pariah status it acquired under Mugabe’s nearly four decades of rule.

South Africa

South African rand dips as dollar dominates, stocks inch up

(Reuters) - South Africa’s rand weakened on Monday as a recent rally gave
way to a resurgent dollar boosted by climbing U.S. treasury yields and a dip
in risk demand, as trade war concerns resurfaced.

Stocks began the week marginally higher, buoyed by general retailers.

At 1515 GMT the rand was 0.23 percent weaker at 14.1825 per dollar, having
traded as firm as 14.0675 early in the session before dollar bulls came
online in New York and were lured into long positions.

The greenback was up 0.2 percent against a group of major currencies. A poor
purchasing managers’ index print also put the skids on the rand as worries
about the economy after its recent slide into recession kept buyers on the
sidelines.

South Africa’s seasonally adjusted Absa Purchasing Managers’ Index (PMI)
fell slightly in September, to 43.2 from 43.4 in August, a 14-month low.

Bonds were weaker, with the yield on the benchmark government bond due in
2026 rising 2 basis points to 9.045 percent.

On the bourse, the blue chip top 40 index was 0.13 percent higher at 49,587
points and the all share index was 0.15 percent firmer at 55,789 points.

Aspen Pharmacare rose 3.1 percent, a slight recovery from its share price
tumble of more than 35 percent last month after it posted full-year results
and announced the baby milk disposal to French dairy group Lactalis.

Bullion miners took a knock as gold prices slipped on the back of a firmer
dollar. 

       <mailto:info at bulls.co.zw> 

Britain

Britain's FTSE steadies near 3-week highs; Boohoo jumps

(Reuters) - Britain’s top stock index held near a three-week high on
Wednesday as investors took profits from a recent rally in oil majors after
crude prices hit a four-year peak, while retailer Boohoo jumped after a
strong set of earnings.

The FTSE 100 ended 0.1 percent up, as European markets edged higher ahead of
a widely expected rate hike from the U.S. Federal Reserve later on
Wednesday.

Boohoo shares jumped 11 percent after the fashion retailer raised its
full-year sales forecast and first half profit increased 22 percent.

Miners Randgold Resources and Fresnillo were among the leading FTSE losers,
both down 2.5 and 3.6 percent respectively, while oil majors Shell and BP
also lost ground.

Mid-cap Indivior declined 16 percent after the drugmaker revised its
full-year earnings guidance as it sharply lowered its revenue expectation
for opioid addiction drug Sublocade.

AA fell 13 percent after the roadside recovery and insurance group said
extreme weather had raised its costs and hit first-half core profit.

Concerns about the progress of Brexit negotiations dogged sentiment with
British carmakers triggering some contingency plans by certifying models in
Europe.

British stocks, however, remained supported among value-hunters because of
their relatively cheap valuations compared to other major equity markets.

At around 4 percent, Britain offers a higher dividend yield than markets
such as Europe and the United States.

On a valuation basis, the 12-month forward price-earnings multiple is 13
percent below global equities while the price-to-book ratio for the index is
about a fifth below its long term average, according to Thomson Reuters
data.

As few as 630 UK-based finance jobs have been shifted or created overseas
with just six months to go before Brexit, a far lower total than banks said
could move after Britain’s surprise 2016 vote to leave the European Union,
according to a Reuters survey. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper slides as nerves about Chinese demand surface

(Reuters) - Copper prices dipped on Monday after weak manufacturing data
from top consumer China caused nervousness about demand, but falling
inventories in London Metal   xchange-approved warehouses helped support
sentiment.

Benchmark copper         on the LME closed down 0.1 percent  at $6,250 a
tonne in official rings.

CHINA: Growth in China's manufacturing sector stalled in  September as
external and domestic demand weakened, two surveys showed on Sunday, in a
sign U.S. tariffs are inflicting a heavy toll on the economy.             

DEMAND: China accounts for nearly half of global demand estimated at 24
million tonnes this year. 

STOCKS: Copper inventories in LME warehouses at 199,125 tonnes have nearly
halved since late March and are at their lowest since December last year. 

MCUSTX-TOTAL  WARRANTS: Cancelled warrants - material earmarked for
delivery - at more than 50 percent of total LME stock and a concentration of
warrants in the hands of a single entity are also worrying for users of the
exchange. One party currently holds between 50 and 79 percent of copper
warrants, data showed.

SPREADS: Concern about nearby shortages on the LME market have created a
premium for the cash over the three-month contracts in recent days. MCU0-3 

The premium, at around $6 a tonne, rose above $16 a tonne in September from
a discount of more than $40 in August. 

ALUMINIUM STOCKS: The market is also concerned about aluminium stocks on the
LME market, which at 987,800 tonnes have more than halved since January last
year and are at their lowest since early 2008.

ALUMINA: Unionised workers at aluminium producer Alcoa's Western Australian
operations agreed on Friday to end a strike that lasted more than six weeks
after securing better job

security provisions in a new wage agreement.             

This has eased concerns about alumina supplies, a key ingredient for
aluminium production. But ongoing output cuts at a Norsk Hydro  alumina
refinery in Brazil still mean

potential shortages.              

Aluminium         ended up 1 percent at $2,083 a tonne.       

ZINC: Operations at Trevali Mining Corp's Santander zinc mine in Peru have
fully resumed after a road blockade suspended delivery of supplies, the
company said on Friday.      

ACTIVITY: Traders expect subdued activity this week due to  Chinese
holidays.

PRICES: Zinc gained 1.7 percent to $2,656 from an  earlier $2,658, its
highest since August 8. 

Lead fell 0.3 percent to $2,030.5, tin  rose  0.5 percent to $18,975 and
nickel fell 0.7 percent to $12,510 a tonne.

Gold slips on expectations of higher U.S. rates and dollar

(Reuters) - Gold edged down on Monday, holding a tight range, on
expectations that a strong U.S. economy would bring higher U.S. interest
rates and boost the dollar.

Spot gold was down 0.4 percent at $1,187.18 an ounce at 1306 GMT, staying
between $1,192.22 and $1,184.21. It fell as low as $1,180.34 in the previous
session. U.S. gold futures for December delivery fell 0.3 percent to
$1,192.90

Federal Reserve Chairman Jerome Powell last week said the U.S. central bank
plans gradual increases to interest rates.

This could further boost the U.S. currency, making dollar-priced gold more
expensive for holders of other currencies and potentially subduing demand.

The Fed raised U.S. rates last week and said it planned four more increases
by the end of 2019 and another in 2020, citing steady economic growth and a
robust jobs market.

Higher U.S. interest rates tend to boost the dollar, putting pressure on
gold prices by increasing the opportunity cost of holding non-yielding
bullion.

Gold has fallen more than 13 percent from its April high, largely because of
the stronger dollar, which has been boosted by a vibrant U.S. economy and
fears of a global trade war.

Investors have also opted to buy the dollar and U.S. Treasury bonds as safe
investments instead of gold.

Speculators raised their net short position in gold by 2,923 lots to 77,313
lots, the largest in three weeks, in the week to Sept. 25, U.S. Commodity
Futures Trading Commission (CFTC) data showed.

Palladium dropped 2 percent to $1,051.50 an ounce after touching an
eight-month high of $1,094.60 in the previous session.

Silver slipped 0.8 percent to $14.48 and platinum rose 0.6 percent to $817.

Growth in China’s manufacturing sector stalled in September as external and
domestic demand weakened, two surveys showed on Sunday, in a sign that U.S.
tariffs are taking a toll on the economy.

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

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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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