Bulls n Bears Daily Market Commentary : 24 September 2018

Mon Sep 24 20:02:41 CAT 2018

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Bulls n Bears Daily Market Commentary : 24 September 2018

 <http://www.fidelitylife.co.zw/> 

Zimbabwe Stock Exchange Update

Market Turnover $958,384.31 with foreign buys at $217.01 and foreign sales
were $76,882.28. Total trades were 91.

The All Share index opened  the week in red after losing 0.46 points  to
close at 111.89 points. SEEDCO led the shakers with a $0.0363 loss to trade
at $1.9137, DELTA retreated by a further $0.0132 to $2.0127 and CBZ  was
$0.0098 lower at $0.1500. SIMBISA  also decreased by $0.0039 to end at
$0.4661 and AMALGAMATED REGIONAL TRADING  reversed Friday’s gains by
dropping $0.0037 to settle at $0.0813.  

Trading in the positive was UNIFREIGHT  which added $0.0050 to close at
$0.0302, FBC HOLDINGS  traded $0.0004 higher at $0.2504 and ZIMPAPERS
gained $0.0002 to settle at $0.0182. MEIKLES  and STAR AFRICA both inched up
by $0.0001 to close at $0.3601 and $0.0065 respectively.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabwe

Zimbabwe's new finance minister says 'fiscal shock' needed for reform

(Reuters) - Newly appointed Zimbabwean Finance Minister Mthuli Ncube would
like to employ a “big bang” economic reform program to the battered economy
where unemployment is running above 80 percent, but recognizes politics will
limit the speed for change.

Ncube joined the government of President Emmerson Mnangagwa earlier this
month. Mnangagwa won a disputed vote on July 30 in the first election in the
southern African nation since Robert Mugabe was removed by the army last
November after nearly four decades in power.

Lack of foreign investment, fiscal deficits and acute shortages of hard
currencies like the U.S. dollar are but some of the economic problems
Zimbabwe, once known as Africa’s breadbasket because of its agricultural
exports, is enduring.

The new government’s focus on getting the economy back on track requires
paying off the roughly $2 billion in arrears to international financial
institutions such as the World Bank, African Development Bank (ADB),
European Investment Bank (EIB) and the $4 billion it owes the Paris Club of
sovereign nations.

John Mangudya, who is both governor of the Reserve Bank of Zimbabwe and
chairman of the government’s arrears clearance committee, said the strategy
is to clear the debts to the World Bank and ADB first before approaching the
Paris Club.

Going to the International Monetary Fund cannot happen until the arrears are
cleared, however. In the meantime, Mangudya would like to engage in a
six-month IMF staff monitoring program through June 2019 as part of the
nation’s re-engagement with the global economy.

Mangudya gave an economic growth forecast of between 4.5 percent and 6
percent for 2018.

The creation of a Zimbabwean currency is not a priority, however. Zimbabwe
uses a mixture of other nation’s currencies to conduct daily economic
functions, which can be problematic if there are shortages.

Mangudya indicated it might be up to five years before reintroducing a local
currency again in Zimbabwe, which suffered from hyper inflation as the
economy collapsed.

Uganda

Uganda shilling a touch stronger on slower importer demand

(Reuters) - The Ugandan shilling was a touch stronger on Monday, underpinned
by waning appetite for dollars from importers.

At 1145 GMT, commercial banks quoted the shilling at 3,805/3,815, stronger
than Friday’s close of 3,810/3,820.

       <mailto:info at bulls.co.zw> 

Europe

Euro rises to more than 3-month high on Draghi's inflation comments

(Reuters) - The euro rose to more than a  three-month high against the
dollar on Monday after European Central Bank chief Mario Draghi said he sees
a vigorous pickup in euro zone inflation, backing moves toward unwinding an
ECB asset purchase program meant to stimulate the economy.

The single currency has been on an uptrend the last few  weeks, bolstered by
generally solid European economic data. Overthe last 10 days, the euro has
risen 2.5 percent versus the

greenback.

The dollar, meanwhile, was little changed against the yen as investors
searched for fresh clues to extend a multi-month rally in the greenback
before a widely-expected interest rate hike by the U.S. Federal Reserve this
week.

But with the Fed decision a few days away, markets were jolted by Draghi's
hawkish comments on inflation and wage growth even though he affirmed the
ECB's pledge to keep rates at their current, rock-bottom level "through the
summer" of next year.

John Doyle, director of markets at Tempus Consulting in  Washington, said
Draghi's remarks reinforced the view that othercentral banks are catching up
with the Fed in terms of

tightening monetary policy. 

In late morning trading, the euro rose 0.3 percent against the dollar to
$1.1783. It rose to as high as $1.1815, a  3-1/2-month peak.

The euro earlier was also boosted after German Chancellor Angela Merkel's
coalition government resolved a dispute over the country's scandal-tainted
spy chief on Sunday, ending a threat to the six-month-old administration.

Against the yen, the dollar was flat at 112.56 yen ahead of this week's Fed
meeting. 

With the market forecasting a rate hike this week, another  in December and
two more next year - roughly in line with Fed policymakers' projections -
analysts said only unexpectedly

strong data would change those bets.

Earlier the dollar snapped a two-week losing streak as the weekend brought
global trade tensions back into the spotlight after Beijing released a white
paper on its trade dispute with the United States, saying it would seek a
reasonable outcome, while also describing U.S. tactics as "bullying."

The dollar index was last down 0.2 percent at 94.027,  mainly weighed down
by the euro's gains.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Stock markets fall on trade war pessimism, oil rallies

(Reuters) - Stock markets around the world retreated on Monday amid concerns
over the potential wider impact of a trade spat between China and the United
States, while oil prices rallied to a four-year high after OPEC ignored U.S.
calls to raise supply.

Wall Street equities tumbled after the Axios news site reported that U.S.
Deputy Attorney General Rod Rosenstein had verbally resigned to White House
Chief of Staff John Kelly, in anticipation of being fired by President
Donald Trump. Other media sites had similar reports.

The Dow Jones Industrial Average fell 142.46 points, or 0.53 percent, to
26,601.04, the S&P 500 lost 9.7 points, or 0.33 percent, to 2,919.97 and the
Nasdaq Composite dropped 8.01 points, or 0.1 percent, to 7,978.95.

MSCI’s gauge of stocks across the globe shed 0.46 percent.

U.S. Treasury yields across maturities briefly fell by around two basis
points after the report about Rosenstein, who overseas the federal
investigation into Russia’s role in the 2016 U.S. election and had
reportedly suggested secretly recording Trump.

Yields ticked back up, however. The benchmark 10-year notes last fell 3/32
in price to yield 3.0796 percent, from 3.068 percent late on Friday.

The benchmark index for euro zone blue chip stocks retreated 0.62 percent,
while the pan-European STOXX 600, which also includes stocks in Britain and
outside the European Union, was down 0.6 percent.

Europe had followed Asia lower, with MSCI’s broadest index of Asia-Pacific
shares outside Japan closing 1.1 percent lower, while Japan’s Nikkei rose
0.82 percent.

China and the United States, the world’s two biggest economies, imposed
fresh tariffs on each other’s goods on Monday, showing no signs of backing
down from an increasingly bitter trade dispute that is expected to knock
back global economic growth.

A worsening trade environment is also likely to exacerbate diverging
economic performance and policy rates between different regions, Citi
analysts said in a note on Monday.

Brexit, or Britain’s exit from the European Union, weighed on sentiment. On
Friday, British Prime Minister Theresa May said talks with the EU had hit an
impasse.

British opposition leader Jeremy Corbyn said on Sunday he would support a
second Brexit referendum if his Labour Party backs the move, heaping more
pressure on May, amid speculation that she could opt to call a snap
parliamentary election.

European Central Bank chief Mario Draghi said he expected a vigorous pickup
in euro zone inflation, backing moves toward unwinding an ECB asset purchase
program meant to stimulate the economy. That drove the euro to more than a
three-month high against the dollar.

The dollar index, tracking it against a basket of other major currencies,
fell 0.18 percent.

Oil prices jumped more than 2 percent to a four-year high after Saudi Arabia
and Russia ruled out any immediate increase in production despite calls by
Trump for action to raise global supply.

U.S. crude rose 1.95 percent to $72.16 per barrel and Brent was last at
$80.77, up 2.5 percent on the day.

Copper steady near 10-week high, focus on U.S.-China trade dispute

(Reuters) - Copper prices slipped on Monday, but held near 10-week highs hit
last week as the market waited to see how the U.S.-China trade dispute would
develop after both countries imposed new tariffs on imports.

Benchmark copper on the London Metal Exchange traded down 0.7 percent at
$6,320 a tonne in official rings. The metal, seen as a gauge of economic
health, hit $6,382.5 on Friday, a gain of 4.62 percent, the largest one-day
rise since May 2013.

Friday’s rally was mainly due to tariff levels that were much lower than
expected.

“The market was fretting U.S. tariffs could be as high as 25 percent from
the start. It was a relief rally,” Societe Generale analyst Robin Bhar said.
“Fundamentals are pretty sound, demand is strong.”

TARIFFS: U.S. tariffs on $200 billion of Chinese goods and retaliatory
tariffs by Beijing on $60 billion of U.S. products took effect on Monday.

The United States will levy tariffs of 10 percent initially, rising to 25
percent at the end of 2018. Beijing has imposed rates of 5-10 percent and
warned it would respond to any rise in U.S. tariffs on Chinese products
accordingly.

STOCKS: Strong copper demand can be seen in stocks held by LME-registered
warehouses, which at 214,350 tonnes are down more than 40 percent since late
March and near their lowest since January.

Cancelled warrants - metal earmarked for delivery and no longer available -
stand at 32.5 percent. MCUSTX-TOTAL

HOLDINGS: Worries about nearby tightness on the LME market have been
reinforced by two large holdings - between 30 and 39 percent - of copper
warrants.

That has created a premium of $16 a tonne for the cash over the three-month
contract. MCU0-3

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

PREMIUMS: Premiums for metal on the physical market in China are at $122 a
tonne, up nearly 40 percent since August. CU-BMPBW-SHMET

RUSAL: The U.S. Treasury on Friday extended until Nov. 12 a deadline for
investors to divest holdings of debt, equity and other assets in
sanctions-hit Russian companies EN+ and Rusal.

ALUMINIUM: Expectations that sanctions on Rusal, a top aluminium producer,
will be lifted after the U.S. mid-term elections on Nov. 6 are weighing on
prices of the transport and packaging metal.

PRICES: Aluminium was down 1.2 percent at $2,066, zinc gained 1.2 percent to
$2,526, lead fell 0.3 percent to $2,033, tin fell 0.5 percent to $18,900 and
nickel slid 1.3 percent to $13,075.

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Hippo

AGM

Meikles

26/09/2018 12PM

Bindura

AGM

Chapman Golf Club, Eastlea

27/09/2018 9AM

CBZH

interim dividend of 0.5c per share record date

28/09/2018

Hippo

final dividend of 2c per share record date

28/09/2018

Star Africa

AGM

45 Douglas Road, Workington

28/09/2018 11AM

 <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
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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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