Bulls n Bears Daily Market Commentary : 04 October 2018

Fri Oct 5 08:05:24 CAT 2018

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Bulls n Bears Daily Market Commentary : 04 October 2018

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Zimbabwe Stock Exchange Update

Market Turnover $1,333,145.67 with foreign buys at $2,576.45 and foreign
sales were $212,066.92. Total trades were 113.

The All Share index lost 0.75 points to close at 123.72 points after ECONET
reversed yesterday’s gains by dropping $0.1004 to trade at $1.5501. EDGARS
was $0.0038 weaker at $0.0850 and GBH  lost $0.0014 to end at $0.0111.

Trading in the positive was  OLD MUTUAL  which added $0.2469 to close at
$5.9000, PADENGA  increased by $0.0347 to settle at $0.7077 and OK ZIMBABWE
traded $0.0138 higher at $0.2635. NMB  also went up by $0.0125 to end at
$0.1400 and  INNSCOR  was $0.0103 stronger at $1.4104.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabawe       

Zimbabwe's budget deficit soars after pre-election splurge

(Reuters) - Zimbabwe’s budget deficit swelled to $1.3 billion in the first
half of 2018, nearly five times the initial target after government spending
spiraled ahead of an election in July, a Treasury document showed on
Thursday.

Before a tight election on July 31, President Emmerson Mnangagwa’s
government distributed free seed and fertilizer to rural voters, upgraded
roads and dams, and injected fresh capital into struggling government-owned
companies.

Treasury’s quarterly report to June showed the government overshot its
budget deficit of $266 million after spending $616 million on farm inputs
for the rural poor and grain imports.

The government resorted to issuing Treasury Bills to plug the deficit and
cover massive public wage spending, which accounts for more than 70 percent
of the budget.

New Finance Minister Mthuli Ncube said on Monday government borrowing via
Treasury Bills and an overdraft with the central bank were feeding a growing
fiscal deficit that could overwhelm the financial system.

Mnangagwa’s government is under pressure to quickly deliver on promises to
revive an economy that was brought to its knees by former leader Robert
Mugabe, who ruled for nearly four decades before being removed after a coup
last November.

Treasury said the economy was now expected to grow by as much as 6.3 percent
this year against an initial target of 4.5 percent due a better performance
in agriculture and mining. 

Ghana

Ghana's cedi to hold ground while Zambia's Kwacha could strengthen

(Reuters) - Ghana’s cedi and Zambia’s kwacha are seen holding their ground
or moving toward the stronger side over the next week, lifted by local tax
payments.

GHANA

Ghana’s cedi could hold its own against the dollar on the back of hard
currency inflows from a $1.3 billion cocoa loan that is expected to boost
the central bank’s interbank support capacity, analysts said.

The cedi, which had been under pressure for weeks mainly due to global
factors, recouped some of its losses this week. It was trading at 4.9500 to
the greenback compared with 4.9850 a week ago.

(Dollar) demand is also not expected to be as strong in the early weeks of
(the quarter)

ZAMBIA

The Kwacha is expected to remain firm next week as dollar supply from
companies that will be paying taxes continues to outweigh demand in the
market.

On Thursday, commercial banks quoted the currency of Africa’s second-largest
copper producer at 11.4000 per dollar, far stronger than a close of 12.3750
a week ago.

KENYA

The Kenyan shilling is expected to remain stable in the coming week due to
thin importer and corporate dollar demand meeting with some inflows from the
horticulture and tourism sectors.

At 0925 GMT, commercial banks quoted the shilling at 100.90/101.00 per
dollar, the same level as last Thursday’s close.

A trader at a leading commercial bank said the shilling would trade stable
because appetite for hard currency was “at the moment... a bit quiet,” while
inflows from tourists and exporters of flowers were offering support.

UGANDA

The Ugandan shilling is seen trading with a broadly strengthening tone after
the central bank hiked its benchmark lending rate amid worries over
inflationary pressures.

At 1009 GMT commercial banks quoted the shilling at 3,770/3,780, compared to
last Thursday’s close of 3,815/3,825.

A trader at a leading commercial bank said he anticipated the shilling to
“benefit from the impact of the rate decision.”

Bank of Uganda this week raised its policy rate by 100 basis points to 10
percent as policymakers cited worries over growing inflationary pressures.
The trader said the shilling would oscillate between 3,760-3,800 over the
next week.

NIGERIA

Nigeria’s naira is seen stable next week as traders resist weaker quotes on
the currency after the unit fell below 364 to the dollar for investors last
week due to tight liquidity, traders said.

The naira has weakened in recent months due to thin dollar liquidity in the
wake of low foreign investor interest for local assets and declining foreign
reserves.

Traders said liquidity had improved this week with lenders quoting to sell
dollars at 364, which is expected to continue next week, as importers put
off demand for hard currency at weaker levels.

       <mailto:info at bulls.co.zw> 

America

Dollar elated by yield surge, Asia stocks downcast

(Reuters) - The dollar scored an 11-month top on the yen on Thursday as
stunningly strong U.S. economic data drove Treasury yields to their highest
since May 2011, while Asian stocks were sideswiped by rising borrowing costs
at home.

Higher U.S. yields are anything but favourable for emerging markets as they
tend to draw away much-needed foreign funds while pressuring local
currencies.

Bond prices fell across Asia and long-term Japanese yields reached ground
not visited since early 2016, a market tightening not warranted by domestic
economic conditions.

MSCI’s broadest index of Asia-Pacific shares outside Japan skidded 1.7
percent in response, with South Korea, the Philippines, Indonesia and Taiwan
all down.

Even the Nikkei eased 0.3 percent, as rising yields offset the boost to
exporters from a weaker yen. EMini futures for the S&P 500 also lost 0.4
percent in Asian trade, while European bourses were seen starting mixed.

The dollar had taken off after an influential survey of the U.S. services
sector showed activity at its strongest since August 1997, sparking
speculation the payrolls report on Friday could also surprise.

Federal Reserve Chairman Jerome Powell declared the economic outlook was
“remarkably positive” and said rates might rise above “neutral”, currently
anywhere from 2.5 to 3 percent.

DOLLAR TRACKS YIELDS

A Fed hike in December is now put at an 8 in 10 chance, while investors
lifted expectations for how high rates may eventually go.

Fed fund futures for December 2019 sank to a contract low of 97.095,
implying a rate of 2.905 percent. At the start of this year they had looked
for only 2.1 percent.

Yields on 10-year Treasury debt were up at 3.225 percent, having spiked 12
basis points overnight. That was the steepest daily increase since the shock
outcome of the U.S. presidential election in November 2016.

The jump in yields boosted financial shares on Wednesday, putting the S&P
500 within striking distance of a record. The Dow rose 0.2 percent, while
the S&P 500 gained 0.07 percent and the Nasdaq 0.32 percent.

The groundswell of economic optimism swept the U.S. dollar to a six-week
high on a basket of currencies and it was last trading up 0.34 percent at
96.086.

The gains were broad based with the euro falling back to $1.1471 after being
as high as $1.1593 on Wednesday.

The dollar shot to its highest so far this year on the yen at 114.55 before
steadying at 114.40. It was now threatening a major peak from November 2017
at 114.735.

In Asia, the Indian rupee and Indonesian rupiah have been under heavy fire,
in part because both countries are being squeezed by the soaring cost of
imported oil.

Oil prices have reached four-year peaks as the market focused on upcoming
U.S. sanctions on Iran while shrugging off the year’s largest weekly build
in U.S. crude stockpiles.

Brent eased 17 cents to $86.12 a barrel on Thursday, while U.S. crude fell
15 cents to $76.26.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Japan's Pan Pacific plans 11 pct increase in H2 copper output y/y

(Reuters) - Pan Pacific Copper, Japan's biggest copper smelter, said on
Friday it plans to produce 296,800 tonnes of refined copper from October to
March, up 11 percent from a year earlier.

Pan Pacific Copper (PPC) is 67.8 percent-owned by JXTG Holdings Inc and 32.2
percent-owned by Mitsui Mining and Smelting Co Ltd.

London aluminium steady, eyes biggest weekly gain since April

(Reuters) - London aluminum held its ground on Friday as worries over an
alumina shortage stoked cost inflation concerns, sending prices towards the
biggest weekly gain in nearly six months.

FUNDAMENTALS

* ALUMINIUM: London Metal Exchange (LME) aluminium was little changed at
$2,167 a tonne, down just 0.1 percent after hitting its loftiest since June
at $2,267 the session before. Prices were on track for a 5.8 percent weekly
rise, the biggest since April.

* ALUMINIUM: The Brazilian state of Para on Thursday said it was surprised
when Norsk Hydro decided a day earlier to halt operations at Alunorte, the
world’s largest alumina refinery, and asked for a report explaining the
decision.

* COPPER: Other metals came under pressure from a stronger dollar. LME
copper eased by 0.8 percent to $6,238 a tonne by 0152 GMT, after the U.S.
currency was boosted by solid demand for Treasuries following a strong
payrolls report.

* U.S. ECONOMY: The number of Americans filing for unemployment benefits
fell to a near 49-year low last week, pointing to sustained labor market
strength, which should continue to underpin economic growth.

* SHFE: The Shanghai Futures Exchange remains closed for the Golden Week
holiday and will reopen on Monday. Trade is expected to be lighter than
usual next week as the year’s biggest industry event, LME Week, begins in
London.

* OUTLOOK: Uncertainty about how metals demand will be hit by trade wars,
rising U.S. interest rates and a slowdown in China are weighing on
industrial metals prices, submerging signals pointing to potential
shortages.

* LITHIUM: Chile’s antitrust court approved on Thursday a deal struck
between Chilean regulators and Tianqi, allowing the Chinese miner to
purchase a nearly one-quarter stake in lithium producer SQM

* ALUMINIUM: Demand for automotive aluminium is set to more than double by
2025, driven by surging growth in Asia, a senior executive at Novelis Inc,
the world’s largest maker of rolled aluminium products, said on Thursday.

MARKETS NEWS

* Asian shares were fragile on Friday after benchmark U.S. Treasury yields
surged to a seven-year high and strong economic data fanned concerns about
inflation and the risk of faster-than-expected interest rate rises.

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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