Bulls n Bears Daily Market Commentary : 10 September 2018

Tue Sep 11 08:14:09 CAT 2018

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Bulls n Bears Daily Market Commentary : 10 September 2018

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Zimbabwe Stock Exchange Update

Market Turnover $2,435,970.94 with foreign buys at $1,477,330.91 and foreign
sales were $439,942.22. Total trades were 104.

The All Share index opened the week in the negative after a marginal loss of
0.05 points  to close at 120.45 points.  OLD MUTUAL  led the shakers with a
$0.0503 loss to close at $6.0141 , Seed maker SEEDCO  was $0.0300 lower at
$2.1500 and PADENGA dropped $0.0219 to end at $0.6331.OK ZIMBABWE  also came
off $0.0018 to $0.2400 and  DELTA  was marginally down by $0.0010 to settle
at $2.4990.  

On the upside CBZ  added $0.0148 to close at $0.1650 , DAIRIBORD  was
$0.0050 higher at $0.1500 and ECONET  increased by $0.0032 to close at
$1.2072. INNSCOR  put on $0.0030 to close at $1.4600 and AFRICANSUN  was
$0.0019 stronger at $0.0850.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Zimbabwe

New Zimbabwe finance minister wants to clear World Bank arrears

(Reuters) - Zimbabwe’s new finance minister said on Monday he would
accelerate plans to pay arrears to the World Bank and the African
Development Bank and would work on a three-year programme to cut government
spending.

Mthuli Ncube did not spell out how he would speed the clearance of $1.8
billion in arrears - but said it would be a vital step in rebuilding
investors’ confidence.

Economist have said the repayments would be a vital step towards Zimbabwe
qualifying for an International Monetary Fund (IMF) programme.

But such a programme could come with politically painful conditions,
including a reduction of the huge civil service and a cut in the budget
deficit from 16 percent to single-digit levels, say analysts.

Ncube said he would discuss the size of the civil service wage bill with new
President Emmerson Mnangagwa, but did not go into further detail.

Previous efforts to cut public sector wages - responsible for 93 percent of
the national budget - and civil service jobs were blocked by former
president Robert Mugabe.

Ncube confirmed media reports he would look into removing the quasi currency
bond note in a package of currency reforms due to be announced at the end of
September, and said he eventually wanted to bring back Zimbabwe’s own
currency.

The southern African nation dumped its currency in favour of the U.S. dollar
in 2009 following years of hyperinflation, and introduced bond notes in
November 2016 in a bid to ease acute shortages of cash.

The shortages have however worsened while a black market continues to
thrive.

The 55-year-old Cambridge University graduate is a former chief economist
and vice president at the African Development Bank and is a visiting
professor at Oxford University. 

South Africa

South Africa's rand recovering, stocks falter on local economic pressure

(Reuters) - South Africa’s rand stretched its recovery to a third straight
session on Monday, climbing further off two-year lows hit last week as
investors saw an opportunity to buy the currency cheaply while the dollar’s
rally paused.

At 1410 GMT the rand was 0.2 percent firmer at 15.2100 per dollar, having
opened slightly lower but firming throughout the session as a short-squeeze
continued in the wake of last week’s large drop on data showing the economy
contracting.

Technical indicators also suggested the rand, along with other emerging
currencies, was oversold and due a small correction with much of last week’s
panic over contagion from Argentina and Turkey easing.

The currency will however remain vulnerable to offshore events such as
higher interest rates in the United States and the simmering trade spat
between Washington and Beijing, which was stoked by President Donald Trump
saying on Friday he was ready to slap tariffs on virtually all Chinese
imports.

Bonds remained pressured by the overall weaker currency and elevated credit
downgrade risk, with the yield on the benchmark 2026 paper up 10 basis
points to 9.24 percent.

Stocks were weaker, with the Johannesburg Stock Exchange’s Top-40 index
sliding 0.52 percent to 50,570 points, and the broader All-Share index down
0.6 percent to 56,734 points.

Health group Netcare and fashion retailer Foschini led the decliners on the
Top-40, both down around 3.5 percent.

General retailers, banks and grocers - the so-called SA Inc. stocks for
their exposure to local economic conditions - were on the ropes.

South Africa’s economy has slipped into recession for the first time in
nearly a decade, with data last Tuesday showing gross domestic product
contracted for two quarters in a row, due mainly to a sharp fall in
agriculture.

The general retailers index was down 1.56 percent, while the banking index
was fell 0.64 percent on the day.

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Asia

Asia shares can't shake trade stress, pound up on Brexit talk

(Reuters) - Asian shares were struggling to avoid a ninth straight session
of losses on Tuesday as the spectre of a Sino-U.S. trade war haunted
investors, while the pound perched near a five-week top on hints a Brexit
deal might be nearer.

Japan’s Nikkei fared better on the back of a softer yen and rallied 1
percent.

Weighing on the yen was news Japanese chipmaker Renesas was buying U.S. peer
Integrated Device Technology for about $6.7 billion in cash.

Yet, MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.34
percent to hit its lowest since July last year.

Most bourses in the region nursed modest losses with Shanghai blue chips off
0.3 percent and South Korea 0.4 percent as investors awaited the next round
of trade hostilities.

Having warned last week that he was ready to levy additional taxes on
practically all Chinese imports, U.S. President Donald Trump was
uncharacteristically quiet on trade on Monday.

China has cautioned it will respond if the United States takes any new steps
on trade.

Canadian Foreign Minister Chrystia Freeland will meet the U.S. Trade
Representative in Washington on Tuesday for another round of talks to renew
the NAFTA trade pact.

On Wall Street, the Nasdaq eked out gains to end four sessions of losses but
stocks of insurers slipped as Hurricane Florence barrelled toward the U.S.
east coast.

The Dow fell 0.23 percent, while the S&P 500 gained 0.19 percent and the
Nasdaq 0.27 percent.

BETTING ON BREXIT

In currency markets, sterling stood out after the European Union’s top
negotiator said an agreement for Britain to leave the economic bloc might be
reached in the coming weeks.

The pound has been under pressure on anxiety that Britain would exit from
the EU without any formal trading arrangement.

Sterling clambered up to $1.3032, after firming 0.8 percent overnight.

The euro held at $1.1586, hemmed between support at $1.1524 and resistance
at $1.1659.

It had been aided by an easing in concerns over Italian debt which left the
gap between yields on Italian and more creditworthy German bonds at the
narrowest in a month.

Against a basket of major currencies the dollar was 0.1 percent firmer at
95.239. It gained on the yen to 111.40 , but remained within recent ranges.

Emerging market currencies were under pressure with a broad index down near
16-month lows and the Indian rupee near a record trough of 72.675 per
dollar,

In commodity markets, gold was stuck at $1,193.54 an ounce and continues to
move in the opposite direction to the dollar.

Oil prices found support from looming U.S. sanctions against Iran’s
petroleum industry.

Brent was 13 cents firmer at $77.50 a barrel, while U.S. crude inched up 4
cents to $67.58.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper dips for second day as trade war raises demand concerns

Reuters) - Copper dipped for a second session on Tuesday as an intensifying
trade war between Washington and Beijing raised concerns over demand for
industrial metals in top consumer China.

Three-month copper on the London Metal Exchange was down 0.1 percent at
$5,906 a tonne, as of 0419 GMT, while the most-traded copper contract on the
Shanghai Futures Exchange added 0.4 percent to 47,830 yuan ($6,966.72) a
tonne.

RESPONSE: China will respond if the United States takes any new steps on
trade, the foreign ministry said on Monday, after U.S. President Donald
Trump warned he was ready to slap tariffs on virtually all Chinese imports
into the United States.

SURPLUS: China’s trade surplus with the United States widened to a record in
August even as its export growth slowed slightly, an outcome that could push
Trump to turn up the heat on Beijing.

TARIFFS: “The chances of President Trump reacting (to surplus) were a 100
percent, and in an interview on Airforce One he raised the prospect of
triggering the additional $200 billion of tariffs with a further $267
billion in waiting,” Malcolm Freeman, director of Kingdom Futures, wrote in
a note.

IMPACT: Wood Mackenzie estimates the expansion of the tariff list could
raise the impact to around 1 percent of total Chinese copper demand, as many
copper intensive goods are included in the extended list.

COPPER: China is the world’s largest consumer of copper, accounting for
nearly half of global demand estimated at about 24 million tonnes this year.

IMPORTS: China’s copper imports fell 6.7 percent from a month ago to 420,000
tonnes in August, data showed.

HOUSING: Home prices and property investment in China are expected to rise
more this year than first thought, as tight controls in big cities continue
to push buyers into less-regulated smaller markets, a Reuters poll showed.

ECONOMY: The pick-up could offer much-needed support to China’s slowing
economy as the United States ratchets up tariffs on Chinese goods, though
policy makers are likely to remain keenly aware of the risk of property
bubbles.

China steel, coke futures sag amid plan for flexible output cuts

(Reuters) - Chinese rebar steel futures fell more than 2 percent and coke
prices dropped over 3 percent on Tuesday after a source, involved with the
plan, said the environment ministry is planning to allow provinces to set
rules on production cuts.

China’s environment ministry is mulling to drop a requirement for provinces
to set specific production curbs for heavy industry during the winter
heating season, allowing for a more flexible implementation of the anti-smog
policy, the source said.

Under a draft plan released last month, Beijing was considering to impose 50
percent cuts on steel production and 30 percent on primary aluminium
production in some regions.

The most actively traded rebar for January delivery on the Shanghai Futures
Exchange was down 2.2 percent at 4,161 yuan ($606) a tonne by midday break.

Hot rolled coil futures dropped 2.6 percent to 4,051 yuan a tonne, on track
for their steepest single-day fall since late March.

Market sentiment toward China’s production cuts, which had largely spurred
the rise in steel prices on account of tighter supply, is starting to get
mixed, said Kevin Bai, analyst at CRU consultancy in Beijing.

Coke on the Dalian Commodity Exchange slid 3.5 percent to 2,308.50 yuan a
tonne, having touched a five-week low of 2,290 yuan earlier in the session.
Coking coal was steady at 1,293.50 yuan.

Iron ore futures slipped 0.7 percent to 494.50 yuan per tonne.

Spot iron ore for delivery to China’s Qingdao port .IO62-CNO=MB dropped 1
percent to $67.81 a tonne on Monday, following a four-day rise, according to
Metal Bulletin.

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
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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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