Bulls n Bears Daily Market Commentary : 26 September 2018

Wed Sep 26 20:16:44 CAT 2018

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Bulls n Bears Daily Market Commentary : 26 September 2018

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

Zimbabwe Stock Exchange Update

Market Turnover $2,714,271.37 with foreign buys at $159,503.60 and foreign
sales were$1,724,249. Total trades were 85.

The All Share index went up by a further 0.67 points  to close at 112.69
points. INNSCOR  recovered $0.0596 to trade at $1.3800, OLD MUTUAL added
$0.0373 to settle at $5.2999 and  DELTA moved up by $0.0110 to $2.1111.
PROPLASTICS also increased by $0.0080 to trade at $0.1200 and ECONET traded
$0.0049 higher at $1.1669.

Four counters traded in the negative including MASIMBA  which lost $0.0050
to $0.0650, FIRST MUTUAL LIMITED  dropped $0.0040 to settle at $0.1495 and
OK ZIMBABWE  was $0.0025 lower at $0.2350. ZIMPLOW  also traded $0.0001
weaker at $0.2024.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South  Africa

South Africa's rand rallies on EM breather ahead of Fed, stocks fall

(Reuters) - South Africa’s rand powered to its firmest since late August on
Wednesday as risk assets rallied despite expectations the Federal Reserve
would raise interest rates and draw a line under a decade of accommodative
monetary policy.

The bourse was led lower by bullion stocks as gold prices took a hit from
dollar gains against other currencies.

At 1500 GMT the rand was 0.92 percent firmer at 14.2125 per dollar, its
strongest level since August 29.

The rand has shaken off the lukewarm reception to President Cyril
Ramaphosa’s multi-billion-dollar stimulus plan announced on Friday, rallying
with other emerging currencies as global risk aversion subsided.

The small size of the stimulus programme means it is unlikely to have much
of an impact, Moody’s told Reuters in an interview a day after Fitch raised
similar opinion.

A climb to two-month highs for Chinese shares and talk of an IMF deal for
Argentina also helped steady sentiment towards emerging currencies.

In fixed income, the yield on the benchmark government bond due in 2026 fell
5 basis points to 9.065 percent.

In equities, the broad all-share index was down 0.55 percent at 56,570.15
points while the top 40 index was 0.59 percent softer at 50,361.86 points.

The gold index fell 3.25 percent with AngloGold Ashanti falling the most on
the blue chip index, down 2.95 percent to 124.35 rand.

Gold prices slipped as the greenback strengthened ahead of the results of
the Fed meeting.

Shares in Capitec Bank closed 1.87 percent firmer after the lender reported
a 20 percent rise in half-year profit, helped by strong client growth.

Kenya

Kenya central bank chief vows to keep fighting rate cap

(Reuters) - Kenya’s central bank governor said on Wednesday he would keep
engaging with lawmakers to seek a removal of a cap on commercial lending
rates which he said were “strangling” the economy.

The cap, at four percentage points above the central bank’s policy rate, was
imposed in September 2016. An attempt by Finance Minister Henry Rotich to
repeal the cap in June was blocked by lawmakers last month.

The rate cap was designed to help small traders access capital at affordable
rates, but has had the opposite effect, with banks saying they cannot price
risk to small and medium enterprises (SMEs) properly while the cap is in
place.

Lending to the private sector in East Africa’s richest economy per capita
fell to 2.4 percent last year from 9.3 percent in 2016. It has since partly
recovered to 4.3 percent in the year to last month, the central bank said,
adding it was likely to rise later in the year.

There were some concerns about the effect a new 8 percent value-added tax on
fuel will have on inflation, but Njoroge predicted it would remain within
the government’s preferred band of 2.5 to 7.5 percent.

Policymakers held the benchmark lending rate at 9.0 percent on Tuesday,
citing the potential impact of the tax on the costs of transport, goods and
services.

Kenya imposed VAT on fuel earlier this month. Year-on-year inflation stood
at 4.04 percent last month and the governor said the rate would go up this
month, but remain within the target band.

He said economic growth was expected to be stronger in the second quarter of
this year compared with the first, when output expanded by 5.7 percent.

He said growth was expected to be 6.1 percent in the second quarter. He said
in July the bank anticipated growth of 6.2 percent in 2018. 

       <mailto:info at bulls.co.zw> 

Britain

Britain's FTSE steadies near 3-week highs; Boohoo jumps

(Reuters) - Britain’s top stock index held near a three-week high on
Wednesday as investors took profits from a recent rally in oil majors after
crude prices hit a four-year peak, while retailer Boohoo jumped after a
strong set of earnings.

The FTSE 100 ended 0.1 percent up, as European markets edged higher ahead of
a widely expected rate hike from the U.S. Federal Reserve later on
Wednesday.

Boohoo shares jumped 11 percent after the fashion retailer raised its
full-year sales forecast and first half profit increased 22 percent.

Miners Randgold Resources and Fresnillo were among the leading FTSE losers,
both down 2.5 and 3.6 percent respectively, while oil majors Shell and BP
also lost ground.

Mid-cap Indivior declined 16 percent after the drugmaker revised its
full-year earnings guidance as it sharply lowered its revenue expectation
for opioid addiction drug Sublocade.

AA fell 13 percent after the roadside recovery and insurance group said
extreme weather had raised its costs and hit first-half core profit.

Concerns about the progress of Brexit negotiations dogged sentiment with
British carmakers triggering some contingency plans by certifying models in
Europe.

British stocks, however, remained supported among value-hunters because of
their relatively cheap valuations compared to other major equity markets.

At around 4 percent, Britain offers a higher dividend yield than markets
such as Europe and the United States.

On a valuation basis, the 12-month forward price-earnings multiple is 13
percent below global equities while the price-to-book ratio for the index is
about a fifth below its long term average, according to Thomson Reuters
data.

As few as 630 UK-based finance jobs have been shifted or created overseas
with just six months to go before Brexit, a far lower total than banks said
could move after Britain’s surprise 2016 vote to leave the European Union,
according to a Reuters survey. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

Trump's tariffs on metals costs Ford $1 billion, CEO says

(Reuters) - Steel and aluminum tariffs imposed by the Trump administration
has cost Ford Motor Co about $1 billion, its chief executive officer said on
Wednesday.

Despite buying the vast majority of steel and aluminum for U.S. production
domestically, the tariffs could result in higher domestic commodity prices,
according to Ford.

Ford shares were down 0.7 percent at $9.32.

The United States said in March it would impose a 25 percent tariff on
imported steel and a 10 percent tariff on imported aluminum. The tariffs on
the imports from most countries have allowed U.S. producers to raise their
prices.

U.S. President Donald Trump’s steel and aluminum tariffs will boost car
prices by hiking commodity costs for manufacturers, automakers have warnred.

During the presidential campaign, Trump lambasted U.S. trade deficits as
detrimental to American manufacturers and workers.

Since taking office, Trump has pursued a policy of escalating tariffs that
he says will reverse that trend, including waging an increasingly bitter
trade war with China.

The auto industry is bracing for a possible new round of tariffs. On May 23
Trump ordered a “Section 232” national security investigation into whether
to impose a 25 percent tariff on vehicle and auto parts imported from the
European Union and other trading partners.

The section, included in the U.S. Trade Expansion Act, allows the president
to adjust imports through tariffs if they threaten national security.

At a briefing in Detroit on Wednesday, officials from analytics data firm
IHS Markit said if the Trump administration imposed the Section 232 tariffs
globally, it would have far-reaching consequences for the U.S. auto industry
as well as the broader economy.

IHS Markit estimates that full implementation of the 232 tariffs would add
between $1,800 and $5,700 to a new vehicle’s price tag and cut new auto
sales by around 2.2 million units in 2020 as well as slice total sales to as
little as 14.5 million units from expectations of 17 million vehicles this
year.

The new tariffs would also cost around 300,000 in auto-related jobs in
factories and dealerships across the country, and slash U.S. economic growth
by 1.1 percentage points to 2.2 percent, IHS said.

In July Ford lowered its full-year earnings forecast due to slumping sales
and trade tariffs on China as well as its struggling business in Europe.

The automaker’s difficulties in boosting sales in China have showed no signs
of ending despite taking steps to bring new products to market. 

Copper slips for third day as Fed rate hike looms

(Reuters) - Copper fell for a third straight session on Wednesday as the
dollar firmed ahead of clues on the direction of U.S. interest rates later
in the day following an expected hike.

Benchmark copper on the London Metal Exchange edged down 0.7 percent to
$6,271 per tonne in official open outcry activity.

With the Federal Reserve widely expected to raise interest rates on
Wednesday, financial markets are focused on whether signs of an acceleration
in U.S. economic growth will prompt the central bank to ramp up the pace of
monetary policy tightening.

A stronger greenback makes dollar-denominated commodities more expensive for
non-U.S. firms, a relationship used by funds to generate buy and sell
signals.

But Patterson said that copper market fundamentals were “looking quite
constructive” as demand from top consumer China was robust and inventories
of the metal continued to fall this year.

DOLLAR: The dollar gained 0.2 percent against a basket of its peers before
an expected Federal Reserve interest rate hike priced in by investors, who
are still on edge about a trade row between the United States and China.

TRADE CONCERNS: Persistent concerns over tit-for-tat trade tariffs between
China and the United States are denting demand for risky assets, such as
metals.

CHINA PREMIUMS: Premiums for metal on the physical market in China are at
$117.50 a tonne, up nearly 40 percent since August. CU-BMPBW-SHMET

STOCKS: LME copper inventories MCUSTX-TOTAL inched slightly higher to
212,925 tonnes, but were still near the lowest since January.

CHINA DEMAND: China’s underlying demand for refined copper remained
resilient, driving global copper demand, Argonaut Securities analyst Helen
Lau said.

ALCOA UNION: The union at Alcoa’s aluminium operations in the state of
Western Australia said it was meeting the company again on Wednesday to try
to resolve a strike that has lasted more than six weeks, after the firm last
week revised an earlier offer.

ALUMINIUM STOCKS: Stocks in LME-monitored warehouses fell below a million
tonnes for the first time since March 2008 on Wednesday, at 999,925 tonnes.
MALSTX-TOTAL

OTHER METALS: LME aluminium was bid 0.4 percent higher at $2,080 per tonne,
zinc traded 0.7 percent higher at $2,525 a tonne, lead was bid up 0.2
percent at $2,013 a tonne, tin was bid at a steady $18,900 a tonne, while
nickel was bid up 0.2 percent to $12,975 a tonne.

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
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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