Bulls n Bears Daily Market Commentary : 08 October 2018

Tue Oct 9 06:15:27 CAT 2018

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Bulls n Bears Daily Market Commentary : 08 October 2018

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Zimbabwe Stock Exchange Update

Market Turnover $11,153,974.76 with foreign buys at $25,885.18 and foreign
sales were $5,500,236.06. Total trades were 180.

The All Share index opened the week on a positive note adding a hefty 9.16
points  to close at 134.23 points. BAT  led the movers with a $4.5000 gain
to trade at $31.5000, OLD MUTUAL  traded $1.1968 higher at $7.3709 and
NATFOODS  was $1.0400 stronger at $6.7000. DELTA also went up by $0.2325 to
settle at $2.5302 and ECONET  increased by $0.1493 to trade at $1.7074.

There were no trades in the negative as HIPPO VALLEY ESTATES  and STAR
AFRICA  traded unchanged at $1.6800 and $0.0090 respectively.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand slides over fin min crisis, stocks hit 6-month lows

(Reuters) - South Africa’s rand weakened more than one percent on Monday
over a newspaper report that Finance Minister Nhlanhla Nene had asked
President Cyril Ramaphosa to sack him rocked the currency.

Stocks dipped to their lowest since early March led by gold and banks
shares, tracking the weaker currency.

The rand trimmed some of its losses to trade 0.58 percent weaker at 14.8800
per dollar at 1557 GMT, having hit a session low of 14.9875 in early trade
after the Business Day newspaper citing government sources as saying Nene
had asked President Cyril Ramaphosa to be released from his position.

Ramaphosa’s spokeswoman told Reuters his office was not aware of Nene’s
request.

Last week Nene told an inquiry into government corruption he had made
numerous visits to the Gupta family, friends of former leader Jacob Zuma
accused of unfairly winning state contracts and influencing the firing of
ministers. Both Zuma and the Guptas have denied any wrongdoing.

Nene is due to read the mid-term budget later this month.

Moody’s is set to review its rating on Friday, and Nene’s departure risks
rattling fragile investor sentiment towards an economy in recession.

South Africa has had three ministers in the last two years, with rand and
bonds reacting badly to the upheavals.

Bonds also slumped, with the yield on the benchmark paper due in 2026 up 6
basis points to 9.3 percent.

On the bourse, the All-Share index fell 0.35 percent to 54,219 points while
the blue chip Top-40 index fell 0.45 percent 48,042 points.

Banks were down 0.44 percent and the gold index fell 1.07 percent to 1,032
rand.

MTN bucked the trend, rising 2.6 percent after the Nigerian central bank
said it may reduce the amount it has ordered the telecoms firm to
repatriate.

Gold fell partly on the back of gains in the dollar which is benefiting from
a run of strong U.S. economic data reinforcing expectations of further
interest rate rises.

Uganda

Uganda shilling weakens as interbank players cover short positions

(Reuters) - The Uganda shilling weakened on Monday, erasing some slight
gains in early morning trading as some players in the interbank exerted hard
currency demand to cover short positions, traders said.

At 1007 GMT commercial banks quoted the shilling 3,785/3,795, weaker than
Friday’s close of 3,775/3,785. 

       <mailto:info at bulls.co.zw> 

Europe

Euro hits 7-week low on Italy budget row, yuan slips

(Reuters) - The euro fell to a seven-week low against the dollar on Monday
on a spat between Italy and the European Union over Rome's budget plans,
while the yuan weakened as Beijing's move to spur more lending failed to
ease concern about economic growth.

Sterling retreated as traders booked profits on recent gains tied to
optimism about a Brexit deal.

Nervous investors piled more money into the dollar, as speculators' bullish
bets in the greenback grew to their highest level since December 2016 last
week.

On Monday, Italian 10-year bond yield increased nearly 20 basis points to
3.60 percent, the highest level in 4-1/2 years, while the country's stock
market fell to its weakest since April 2017. 

Italian Deputy Prime Minister Matteo Salvini, speaking at a media conference
with French far-right leader Marine Le Pen, denounced European Commission
President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici as
enemies of Europe.

The single currency fell 0.38 percent against the dollar to $1.14755 and not
far from a more-than one-year low of $1.1355 hit in mid-August.

The euro fell 0.3 percent to 1.14020 Swiss franc , and shed 0.85 percent
against 129.890 yen. 

    YUAN FALLS

The Chinese currency ended at its lowest official close in seven weeks at
6.9315 yuan per dollar despite the latest attempt from Beijing to calm
investor worries about the trade war between China and the United States.

China's central bank on Sunday announced a steep cut in the level of cash
that banks must hold as reserves, marking the fourth such decrease this
year. 

Meanwhile, the pound fell 0.48 percent to $1.3062, wiping out all of its
gains last week, as markets focused on any substantial breakthrough in
Brexit negotiations as Britain moves

nearer to an exit deal with the European Union.

EU Brexit negotiators believe a deal with Britain on leaving the bloc is
"very close", sources said, in a sign that a compromise on a major sticking
point - the future Irish border -

might be in the making.

In the meantime, the dollar continued its recent march higher on upbeat
domestic economic data and safe-haven demand amid geopolitical concerns.

An index that tracks the greenback against a basket of major currencies was
up 0.27 at 95.885.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Shanghai zinc hits 3-1/2-mth top on dwindling supply, LME aluminium sags

(Reuters) - Shanghai zinc rallied nearly 4 percent to a 3-1/2-month peak on
Tuesday, as production cuts at Chinese smelters dragged down stockpiles to
the lowest in more than a decade.

Aluminium in London weakened further after Norsk Hydro said it expects to
resume production at the world’s largest alumina refinery in Brazil at half
capacity within two weeks.

The most-traded November zinc on the Shanghai Futures Exchange rose as much
as 3.6 percent to 22,745 yuan ($3,289) a tonne, its loftiest since June 21.
It was up 3.2 percent at 22,675 yuan by 0252 GMT.

Stocks of the metal used to galvanise steel reached 29,204 tonnes at
Shanghai Futures Exchange warehouses at the end of September, the smallest
since 2007. ZN-STX-SGH

Production cutbacks at China’s zinc smelters due to tighter environmental
checks and weaker profits had tightened supply, said Dina Yu, analyst at CRU
consultancy in Beijing.

Three-month zinc on the London Metal Exchange rose 0.6 percent to $2,629.50
a tonne.

* ALUMINIUM: LME aluminium slipped 0.4 percent to $2,058 a tonne, falling 9
percent since touching a 3-1/2-month peak of $2,267 on Thursday. Norsk Hydro
said its Alunorte alumina refinery in Brazil has agreed with a Brazilian
environmental agency to resume production under its supervision.

* Norsk Hydro said on Saturday that it had been granted a permit in Brazil
to use new technology to extend the life of a disposal area for its
refinery, days after it said it would halt production and lay off 4,700
people.

* CHINA TAX REBATES: China will increase export tax rebates from Nov. 1 and
quicken export tax rebate payments to support foreign trade, as a trade war
with the United States escalates.

* VALE COPPER EXPANSION: Vale is close to approving a $1 billion expansion
of its Salobo copper mine, two people familiar with the matter said, as the
world’s top iron ore miner seeks to diversify and take advantage of growing
international demand for the metal.

* CODELCO SALES: Codelco is in talks to sell up to 60,000 tonnes of copper a
year to China Minmetals from 2019 to 2021, marking a change in the sales
strategy at Chile’s state-owned miner which typically made deals on an
annual basis, industry sources said.

* OTHER METALS: LME copper rose 0.7 percent to $6,220 a tonne and lead
gained 0.6 percent to $1,983. In Shanghai, copper rose 0.7 percent to 50,370
yuan and aluminium climbed 1.2 percent to 14,540 yuan. ARBS ($1 = 6.9165
Chinese yuan)

India's aluminium makers win Japan sales in market shake-up

(Reuters) - Indian aluminium makers including Hindalco Industries and
Vedanta Ltd are boosting sales to Japan as U.S. sanctions against Russia’s
Rusal and import tariffs shake up traditional supply routes.

India’s product has generally not been regarded as high enough quality by
Japan’s demanding buyers, who have preferred top-tier producers like Rio
Tinto , Alcoa and South32 as well as United Company Rusal.

However, imports of aluminium ingot from India doubled in the first eight
months of 2018 from a year ago, Japanese trade data shows, while imports of
alloy - which include higher-value products - surged 11-fold off a tiny
base.

The increased trade is a blow to Rusal, the world’s second-biggest aluminium
maker, which accounted for about 20 percent of Japan’s imports of both
aluminium ingot and alloy in 2017, but which has been hit by U.S. sanctions.

Customers globally have had to scramble to find alternative sources of metal
even after the United States eased sanctions restrictions for some
customers, and they were likely to permanently diversify supply chains, said
a source at a Japanese trading house.

Japanese trading houses such as Mitsubishi Corp have been aggressively
importing supplies from India as well as other countries to help customers
diversify supply, trading sources said. Mitsubishi declined to comment.

Products from India are mainly refined ingots rather than value-added
products such as billets and slabs, said a second trading house source.
Substitute material for Rusal’s higher quality products has come from the
Middle East and Malaysia.

However, Indian metal was winning growing acceptance and was also being sold
at a discount to traditional suppliers.

IMPORTS SWELL

Japan took 59,545 tonnes of aluminium ingot in the eight months to March,
double a year ago, while material from Russia fell 21 pct to 175,694 tonnes,
Japanese trade data showed.

Imports of aluminium alloy from India jumped to 3,008 tonnes over the same
period, while Russian imports fell 10 percent to 185,685 tonnes.

The U.S. trade actions - 10 percent import tariffs on the light metal from
March and sanctions against Rusal from April - sent shockwaves through the
market, boosting aluminium prices to seven-year highs and pushing up costs
to obtain physical metal in the U.S. domestic market.

Vedanta, India’s largest producer of aluminium, sees a big opportunity in
Asia including Japan and Korea.

Cairae said the company is focusing on ramping up exports of its value-added
products such as billets, which can be used in the transport, construction
and packaging industries, and wire rods.

Hindalco did not immediately respond to a request for comment.

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

 <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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