Bulls n Bears Daily Market Commentary : 07 August 2019

Thu Aug 8 02:04:45 CAT 2019

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Bulls n Bears Daily Market Commentary : 07 August 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 6,008,270.33 with foreign buys at ZWL$ 497,618.80 and
foreign sales were ZWL$ 28,210.00 Total trades were 120.

The All Share index lost 1.79 points ending at 181.72 points. ECONET
WIRELESS decreased by $0.1358 to $1.4000, INNSCOR AFRICA LIMITED shed
$0.0596 to end at $2.1256 and MEIKLES was $0.0480 weaker at $1.2520. CASSAVA
SMARTECH (CSZL.zw) also eased $0.0385 to settle at $1.3899 and OK ZIMBABWE
was $0.0087 lower at $0.3900.

Trading in the positive; OLD MUTUAL LIMITED gained $2.1412 to $19.9450, NMB
added $0.0150 to end at $0.2800 and ZIMBABWE NEWSPAPERS was $0.0100 stronger
at $0.0800. DELTA also rose by $0.0076 to $3.4500 and ZIMPLOW traded $0.0025
firmer at $0.5025.

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  Global Currencies & Equity Markets

South Africa

South Africa's rand drops to 11-month low as growth outlook darkens

(Reuters) - South Africa’s rand fell to touch an 11-month low on Wednesday,
rocked by deepening concerns about the outlook for domestic growth against a
backdrop of uncertainty for emerging markets more broadly.

The rand dropped to 15.1825 per dollar, its lowest since September 2018. By
1507 GMT it had recovered ground to trade at 15.0875.

The rand dropped for a seventh straight day, suffering in the light of more
poor data for Africa’s most industrialised economy, as South African
business confidence fell.

Unemployment is at its highest in over a decade, data last week showed,
while an earlier release showed the economy shrank in the first quarter.

In comments made shortly before the rand hit its new low, South Africa
Reserve Bank Governor Lesetja Kganyago said on Wednesday that despite South
Africa’s problems, it did not need aid from the IMF.

The rand has also come under pressure from credit rating agencies. Moody’s
on Tuesday said struggling state power utility Eskom, regularly cited as a
major risk for South Africa’s outlook, urgently needs a turnaround plan as
its capital structure is unsustainable.

Moody’s, scheduled to review South Africa’s rating in November, is the last
of the three big international ratings agencies to have South African debt
at investment grade.

South Africa’s rating with S&P Global Ratings and Fitch has been
non-investment grade since 2017.

In fixed income, the yield on the benchmark government due in 2026 dipped
5.5 basis points to 8.375%.

Emerging market currencies are down 1% this week and some analysts also
pointed to comments by U.S President Donald Trump that the Federal Reserve
must cut rates “bigger and faster” as fuelling safe haven trades.

On the bourse, stocks closed stronger but relatively flat with the
Johannesburg Stock Exchange’s All-Share index up 0.3% to 55,225 points,
while the Top-40 index gained 0.29% to 49,253 points.

One of the biggest winners among blue chip firms was Amplats which gained
5.9% to 882.62 rand, while AngloGold rose 4.78% to 320.01 rand - its highest
in two years. Gold Fields, nother also increased 4.29% to 90.85 rand.

The Johannesburg Gold index also climbed to a two-year high as it increased
4.45% to 2502.35 points.

Nigeria

Nigeria central bank springs unscheduled T-bill auction as naira weakens

(Reuters) - Nigeria’s central bank sold a total of 114.6 billion naira ($375
mln) worth of treasury bills on Wednesday, in its first such auction since
mid-July as it seeks to boost dollar liquidity in the currency market after
the naira fell, traders said.

The bank offered to sell 100 billion naira of bills in maturities of three,
six and 12 months but got bids of 454.9 billion naira, with the one-year
paper winning around 80% of the demand.

Pressure has been building on the naira as oil prices drop and foreign
investors book profits on local bonds in response to falling yields.

The bank sold the most-liquid one-year bill at 12% on Wednesday, lower than
the 12.25% it paid at its last auction in July and compared with as high as
18% it fetched a year ago.

Forex trading was thin on Wednesday. The naira was quoted at 363.50 per
dollar on Monday and Tuesday compared with 362.50 at the end of last week as
foreign investors repatriated funds, they said.

The bank was conducting regular weekly OMO auctions until July, when it
switched focus to trying to boost economic output following recession by
telling banks to lend more or face a rise in minimum reserve requirements.

Nigeria operates a multiple exchange rate regime which it has used to manage
pressure on the currency. The official rate of 306.90 is supported by the
central bank but the traded rate of 363.50 is the one widely quoted by
foreign investors and exporters. ($1 = 306.90 naira) 

       <mailto:info at bulls.co.zw> 

Equities break losing streak while FX steadies as China fears ease

(Reuters) - Emerging market shares rose marginally to end a 10-day losing
streak on Wednesday and most currencies recovered as investors found solace
in Washington’s assertion that it wants to continue trade talks with
Beijing.

Signs that Chinese officials will step in to stabilise the yuan helped to
inject some calm, having previously let it fall beyond the psychologically
important level of 7 yuan to the dollar for the first time in 11 years.

Sources told Reuters that major state-owned banks have been active in the
yuan forwards markets this week, using swaps to curb dollar supply as
authorities sought to slow the currency’s decline.

However, in a sign of generally shaky market confidence, the yuan slid 0.2%
after the People’s Bank of China (PBOC) set the midpoint rate at 6.996 per
dollar, its weakest since May 15, 2008.

Investors were sifting through this week’s events after Monday’s slump in
the yuan rattled financial markets on fears that the tit-for-tat trade war
between the United States and China could spread to a currency war.

U.S. President Donald Trump dismissed fears of a protracted trade war on
Tuesday despite a warning from Beijing that labelling it a currency
manipulator would have severe consequences for the global financial order.

That helped the MSCI index of emerging stocks to eke out a 0.2% gain, while
currencies steadied.

The Indian rupee firmed by 0.4%, breaking six straight days of losses, after
its central bank cut interest rates by 35 basis points to 5.4%.

Meanwhile, the Thai baht shed 0.3% after its central bank unexpectedly cut
its benchmark interest rate for the first time since 2015 in efforts to
support faltering growth and weaken Asia’s best-performing currency this
year.

Developing world markets have experienced large capital inflows this year as
major central banks adopt accommodative policies to offset slowing growth.

The Turkish lira climbed to its strongest against the dollar since April 2
and the Russian rouble edged higher for a second day running.

The South African rand rose 0.3% even as central bank data showed the
country’s net foreign reserves fell to $43.906 billion in July from $43.940
billion in June.

In eastern Europe, the Hungarian forint slipped 0.2% against the euro as
industrial output fell more than forecast in June.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold climbs back toward six-year peak on U.S.-China trade clash

(Reuters) - Gold prices strengthened on Tuesday, consolidating near the
highest in more than six years as an intensifying U.S.-China trade war
threatened global economic growth.

Spot gold rose 0.5% to $1,470.96 an ounce as of 2:08 p.m. EDT (1808 GMT),
after hitting $1,474.81, the highest since May 2013. The previous session,
gold jumped as much as 2%.

U.S. gold futures settled up 0.52% at $1,484.20.

A rout in global markets eased as China kept the yuan on a tight leash a day
after letting it weaken past 7 to the dollar. This led the United States to
label Beijing a currency manipulator, a decision that China’s central bank
said would “severely damage international financial order and cause chaos in
financial markets.”

Influential Wall Street bank Goldman Sachs said it no longer expects
Washington and Beijing to agree on a truce to end their prolonged trade
dispute before the November 2020 presidential election.

St. Louis Federal Reserve President James Bullard on Tuesday said Fed does
not need to “pile on” interest rate cuts at a time when the economy
continues to grow and is still adjusting to the looser monetary policy set
by the Fed this year.

The U.S. central bank last week cut interest rates for the first time since
the financial crisis in 2008. Lower rates reduce the opportunity cost of
holding bullion, which yields no interest.

Holdings of the largest gold-backed exchange-traded fund (ETF), SPDR Gold
Trust, rose to 835.16 tonnes on Monday, the highest level since June 6,
2018.

Meanwhile, gold denominated in sterling soared to an all time high of
1,213.54 pounds an ounce as investors worried about the possible
repercussions of Britain’s impending exit from the European Union.

Among other precious metals, silver inched up 0.2% to $16.42 an ounce and
palladium jumped 1.9% to $1,441.55.

Platinum fell 0.4% to $849.96. 

Copper pinned at two-year low by trade conflict

(Reuters) - Copper prices hovered around a two-year low on Tuesday as
further escalation in the U.S.-China trade conflict delayed resolution to a
dispute that has depressed economic growth and increased fears over metals
demand.

Three-month copper on the London Metal Exchange (LME) inched up 0.1% to
$5,690 a tonne in official trading rings, failing to achieve any real
distance from the $5,640 two-year low touched in the previous session.

China’s central bank on Tuesday said Washington’s decision to label Beijing
as a currency manipulator would “severely damage international financial
order and cause chaos in financial markets”.

ING commodities analyst Warren Patterson said prices would continue to be
dictated by macro events and that Tuesday’s prices were “a bit of a
correction” after the previous session’s plunge.

The escalation in tensions could cause a further rift between the world’s
two largest economies and hurt global growth, including in China, the
world’s biggest metals consumer.

TRADE WAR: The U.S.-China dispute has already spread beyond tariffs to areas
such as technology, with analysts warning that tit-for-tat measures could
widen in scope and severity, weighing further on business confidence and
global economic growth.

CHINESE CURRENCY: The offshore yuan pulled back from a record low after
Beijing appeared to take steps to prevent it from weakening further after
the sharp drop that prompted the U.S. government to accuse China of
manipulating its currency. A sharp weakening of the yuan has made metals
more expensive for buyers in China.

CHINESE PREMIUMS: Yangshan copper premiums SMM-CUYP-CN have climbed to their
highest since mid-February at $66.50 a tonne, suggesting stronger physical
demand in China, though ING said the demand outlook remained uncertain
because of the trade conflict.

NICKEL INDONESIA: A top Indonesian mining ministry official said on Monday
he would not speculate on whether the government might bring forward a
planned ban on mineral ore exports from 2022.

This helped propel benchmark nickel prices to a two-week high on Monday. In
official rings, the metal advanced 1% to $15,030 per tonne.

ALUMINIUM SMELTERS: Production costs for aluminium smelters in China, the
world’s top maker of the metal, fell 4% month-on-month to an average of
13,888 yuan ($1,974) a tonne in July as alumina prices slumped, Antaike
said.

PRICES: Aluminium rose from a seven-week low touched on Monday, gaining 0.2%
to $1,766 a tonne while zinc firmed 0.6% to $2,324.50 after touching an
11-month low in the previous session.

Lead traded 2.4% higher at $2,001 and tin rose 0.9% to $17,050.

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

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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
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for guideline purposes only and sourced from third parties.

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