Bulls n Bears Daily Market Commentary : 18 October 2018

Fri Oct 19 07:29:35 CAT 2018

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Bulls n Bears Daily Market Commentary : 18 October 2018

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Zimbabwe Stock Exchange Update

Market Turnover $21,472,080.16 with foreign buys at $15,950,527.31 and
foreign sales were $16,093,864.03. Total trades were 220.

The All Share index added another 4.12 points  to close at 178.56 points.
DELTA  was up by $0.3137 to trade at $3.5618, PPC  increased by $0.1994 to
end at $1.4994 and INNSCOR   traded $0.0983 higher at $1.8000. DAIRIBORD
also traded $0.0298 stronger at $0.2098 and OK ZIMBABWE  added $0.0195 to
settle at $0.3305.

Gains were partially offset by losses in which ECONET  which retreated by
$0.0678 to trade at $2.5000, MEIKLES  traded $0.0303 lower at $0.7001 and
CBZ  was $0.0176 down at $0.1550. AMALGAMATED REGIONAL TRADING  also lost
$0.0170 to $0.0750 and SIMBISA  decreased by $0.0065 to $0.8398.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabwe

Afreximbank loans Zimbabwe $500 million as dollar crisis worsens

(Reuters) - The African Export Import Bank (Afreximbank) says it is
finalising a $500 million loan facility for Zimbabwe, to help secure the
foreign-currency starved southern African country’s imports.

Zimbabwe is experiencing a shortage of foreign currency, blamed mainly on a
huge trade deficit caused by the collapse of its key agriculture and
manufacturing sectors.

The country, which adopted the use of multiple foreign currencies — chiefly
the United States dollar and South Africa’s rand — in 2009 to tame
hyperinflation, is gripped by acute shortages of cash dollars. Prices of
basic goods, public taxis and medicines have risen in the last few weeks.

The Afreximbank said it had held discussions on the loan with Finance
Minister Mthuli Ncube at last week’s International Monetary Fund and World
Bank Group meetings in Bali, Indonesia.

According to Zimbabwe’s central bank governor John Mangudya, the facility
will also act as a guarantee that individual depositors of foreign currency
and those receiving remittances from abroad, will be able to access their
funds.

Afreximbank has extended several loans to Zimbabwe in the past and remains
one of the few international institutions still lending to the country,
which is struggling to service nearly $6 billion arrears with the World
Bank, African Development Bank (AfDB), the European Investment Bank (EIB)
and the Paris Club.

Ncube has said he had won approval from the IMF and World Bank for
Zimbabwe’s plan to clear $2.2 billion arrears owed to the World Bank, AfDB
and EIB. Ncube’s plan will see cuts in government spending and its wage
bill, and privatisation of loss-making state-owned firms. 

Ghana

Ghana sells 988.7 mln cedis ($203.6 mln) domestic bonds at 19.5 pct yield

(Reuters) - Ghana accepted all 988.7 million cedis ($203.6 mln) worth of
bids tendered for a three-year domestic bond issued on Thursday and will pay
a slightly higher yield of 19.5 percent compared to the last sale, joint
transaction leads said.

An initial guide price for the 2021 paper, which was open to non-resident
investors, was set at between 18.75 percent and 19.5 percent. Settlement is
due on Oct. 22, co-arranger Barclays said.

The West African major commodity exporter is seeking funds to finance its
2018 budget and restructure debt.

       <mailto:info at bulls.co.zw> 

Asia

Asia shares slide further as weak China growth adds to woes

(Reuters) - Asian stocks slipped further on Friday as China posted its
weakest economic growth since the global financial crisis, adding to market
concerns about trade disputes, rising U.S. interest rates and Italy’s
free-spending budget.

The MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.2
percent weaker following China’s latest GDP reading. Australian shares fell
0.3 percent and Japan’s Nikkei average was 1.1 percent lower.

A weak Wall Street on Thursday set the tone for Asian trade. The Dow Jones
Industrial Average fell 1.27 percent, the S&P 500 lost 1.44 percent and the
Nasdaq Composite dropped 2.06 percent.

On Thursday, the flight to safe-haven assets partly dampened rising U.S.
Treasury yields. Still, early in Asia on Friday, the 10-year yield rose to
3.1767 percent from the U.S. close on Thursday of 3.175 percent.

The two-year yield, sensitive to expectations of higher Fed fund rates,
edged up to 2.8741 percent.

China’s economic growth in the third quarter slowed to 6.5 percent, its
weakest pace since 2009 and below expectations, as a campaign to tackle debt
risks and the trade war with the United States weighed on the economy.

Shares in China, which initially extended losses after the figures were
released, rallied as investors digested statements from senior regulators
pledging support for private firms and companies facing liquidity problems.

The benchmark Shanghai Composite index was 0.5 percent higher at around 0300
GMT, after hitting near four-year lows on Thursday, in part hurt by
widespread concern that plunging share prices could lead to a spike in
margin calls.

Analysts cautioned that China’s economy would continue to face difficulties.

China’s premier said this week that the economy faces increased downward
pressure, but that government will take measures to stabilise growth.

In the latest trade war volley, the U.S. is requesting that a World Trade
Organization dispute resolution panel look into tariffs imposed by China,
the European Union, Canada and Mexico in retaliation to U.S. tariffs on
steel and aluminium.

Further fraying market nerves, the European Commission on Thursday said a
draft 2019 budget from Italy was in “particularly serious non-compliance”
with EU rules, setting the stage for a possible unprecedented rejection of
the country’s fiscal plan.

The euro was up 0.06 percent at $1.1459, having lost 1.3 percent in a month,
while the dollar index, which tracks the greenback against a basket of six
major rivals, was a touch higher at 95.943.

The dollar was up 0.18 percent against the yen at 112.38 .

Oil prices ticked higher after falling on Thursday. U.S. crude was up 0.3
percent at $68.88 a barrel and Brent crude was trading at $79.47 per barrel,
0.2 percent higher.

Gold also rose, with spot gold rising 0.2 percent to$1,227.94 per ounce. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

Souring sentiment drags stocks lower; oil falls

(Reuters) - Stocks fell on Thursday while German and U.S. bond prices rose
in a move toward safety assets, with traders citing the Sino-U.S. trade war,
Italy’s budget concerns and a widening gap between the United States and
Saudi Arabia.

European stocks tumbled and Wall Street slid after the European Commission
said Italy’s 2019 budget draft is in “particularly serious” breach of EU
budget rules, a step that prepares the ground for what would be an
unprecedented rejection of a member state’s fiscal plan.

Italy’s 5-year yield touched a 5-year high. The safe-haven yen rose for the
eighth session in the last 11.

Also weighing on market sentiment, U.S. Treasury Secretary Steven Mnuchin
said he would not attend next week’s investment conference in Saudi Arabia
even as the United States gave Saudi more time to investigate journalist
Jamal Khashoggi’s disappearance.

The geopolitical issues added to worries over rising U.S. rates and a
stronger dollar, as well as the effect of a trade war between Washington and
Beijing. Shanghai’s benchmark stock index closed at a near four-year low and
China’s premier warned of risks to the economy.

In mid-afternoon trading, the Dow Jones Industrial Average fell 457.45
points, or 1.78 percent, to 25,249.23, the S&P 500 lost 47.24 points, or
1.68 percent, to 2,761.97 and the Nasdaq Composite dropped 171.27 points, or
2.24 percent, to 7,471.43.

The pan-European STOXX 600 index lost 0.51 percent and MSCI’s gauge of
stocks across the globe shed 0.08 percent.

Emerging market assets were weighed down by the rising dollar and concerns
about higher U.S. interest rates.

Emerging market stocks lost 0.10 percent, while MSCI’s broadest index of
Asia-Pacific shares outside Japan closed 0.26 percent higher.

DOLLAR REMAINS STRONG

The dollar rose as minutes of the Federal Reserve’s latest meeting showed
that every Fed policymaker backed raising interest rates last month and also
generally agreed that borrowing costs were set to rise further.

That reinforced expectations that U.S. yields will rise further despite
President Donald Trump’s view that the Fed is tightening too much. The
greenback extended Wednesday’s gains against a basket of its rivals on the
Fed’s perceived hawkish stance.

The dollar index rose 0.35 percent, with the euro down 0.37 percent to
$1.1457.

The safe-haven Japanese yen strengthened 0.55 percent versus the greenback
at 112.03 per dollar.

Sterling was last trading at $1.3022, down 0.69 percent on the day.

In its semi-annual currency report, the U.S. Treasury Department said a
recent depreciation of China’s yuan currency will likely exacerbate the U.S.
trade deficit, and U.S. officials found Beijing appeared to be doing little
to directly intervene in the currency’s value.

The yuan fell 0.16 percent to 6.9367 per dollar after touching 6.9420, its
weakest level since January 2017.

Oil prices fell as the fourth weekly increase in U.S. crude inventories
suggested ample supply, while Saudi-U.S. tension and falling Iranian exports
kept the decline in check.

U.S. crude fell 1.41 percent to $68.77 per barrel and Brent was last at
$79.53, down 0.65 percent on the day.

In the Treasuries market, the 10-year yield dipped after hitting a one-week
high as the equities sell-off offset worries about the number of interest
rate increases from the Fed.

Benchmark 10-year notes last rose 5/32 in price to yield 3.1616 percent,
from 3.179 percent late on Wednesday.

China Sept aluminium output falls on higher costs

(Reuters) - China’s primary aluminium production fell for a second straight
month in September and slid to its lowest level since May, as weaker
aluminium prices and higher input costs led smelters to cut back output.

The world’s top aluminium producer churned out 2.79 million tonnes of the
metal last month, according to data from the National Bureau of Statistics
released on Friday.

That was down 1.8 percent from 2.84 million tonnes in August, but up 7.1 pct
from a year ago.

On a daily basis, China produced around 93,000 tonnes of primary aluminium
last month, according to Reuters calculations based on the data. September
had one day fewer than August.

Aluminium prices on the Shanghai Futures Exchange fell by 4.2 percent in
September, whereas spot prices for alumina, the substance used to make the
metal, in the smelting heartland of east China region SMM-ALM-ECHN nudged up
another 0.8 percent after climbing by 10.8 percent in August.

Furthermore, east China’s Shandong province last month said it had started
charging owners of captive power plants, which include major aluminium
smelters, fees for electricity generated using the plants, raising their
production costs.

Key aluminium centres in Shandong have avoided a repeat of last year’s 30
percent blanket cuts to production in the coming winter, but are still
waiting to hear what restrictions are to be set by their city governments.

In the first nine months of the year, China produced 25.0 million tonnes of
aluminium, a rise of 4.2 percent from the same period last year, the data
showed.

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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