Bulls n Bears Daily Market Commentary : 09 August 2019

Wed Aug 14 03:58:00 CAT 2019

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Bulls n Bears Daily Market Commentary : 09 August 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 3,002,098.08 with foreign buys at ZWL$1,029,925.0 and
foreign sales were ZWL$ 69,339.00 Total trades were 79.

The All Share index recovered 0.24 points  to close at 180.05 points as OLD
MUTUAL LIMITED  continues on the upward trend with a $0.6266 gain to close
at $21.3589. CASSAVA SMARTECH   also added $0.0006 to end at $1.3025 and
DELTA  traded unchanged at $3.4600.

Gains were partially offset by losses in WILLDALE which eased $0.0041 to
$0.0172, POWESPEED lost $0.0025 to settle at $0.3575 and ECONET   was
$0.0019 lower at $1.3500

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  Global Currencies & Equity Markets

South Africa

South Africa's rand hits new 11-month low, stocks firm

(Reuters) - South Africa’s rand steadied in late trade on Thursday, after
slipping to a new 11-month low in the session as concerns about the outlook
for domestic growth and fears over a sovereign credit rating downgrade
weighed on sentiment.

At 1515 GMT, the rand traded flat at 15.0500 per dollar, after hitting
15.2000 earlier, its weakest level since September 2018.

Poor economic data, worries about financial troubles at state-owned power
firm Eskom and negative commentary from credit rating agencies have all
contributed to recent rand weakness, exacerbating broader concerns about
emerging markets and trade tensions between the United States and China.

President Cyril Ramaphosa, who has staked his reputation on reviving
Africa’s most developed economy, has struggled to do so. Data showed on
Thursday that mining and manufacturing output contracted on a year-on-year
basis in June.

The uncertain growth outlook has triggered fears of a rating downgrade by
Moody’s, the last of the three big international ratings agencies to have
South African debt at investment grade.

On the bourse, stocks ended a terrible week, marked by risk aversion on
trade tensions, on a high note as the All-share index gained 0.56% to 55,535
points, while the Top-40 index rose 0.74% to 49,619 points.

After reeling from worries in the past week about an escalating U.S.-China
trade war denting global growth, emerging markets and other risk assets
breathed a sigh of relief as surprisingly upbeat trade data from China and
hints that Beijing officials will limit losses in the yuan eased growth
worries for now.

Local stocks had slipped over 2% to two-month lows.

Among the gainers BHP climbed 2.91% to 331.83 rand, while Anglo American
rose 2.9% to 339.05 rand.

South African e-commerce giant Naspers rose 2.37% to 3,449.99 rand.

The Gold index ended a week’s rally as equities markets recovered, falling
4.14%.

In fixed income, the yield on the benchmark government bond due in 2026 rose
by 2 basis points to 8.395%. 

AFRICA-FX-Zambian currency seen bearish, Nigeria, Kenya, Uganda's stable

(Reuters) - Zambia’s currency is likely to come under pressure next week as
those of Nigeria, Kenya and Uganda hold steady.

ZAMBIA

The kwacha is expected to remain under pressure in the coming week due to
limited supply of hard currency.

On Thursday, commercial banks quoted the currency of Africa’s second-largest
copper producer at 13.0000 per dollar from a close of 12.8700 a week ago.

NIGERIA

Nigeria’s naira is seen stable next week after the currency hit a new
resistance level amidst scarce dollar liquidity as importers are unwilling
to bid at weaker levels, traders said.

The naira was quoted at 363.50 per dollar on Thursday, a level it has traded
at since this week on thin volumes. The currency was quoted at 360 on
exchange bureaus and at 306.90 on the official market, backed by the central
bank.

Nigeria operates a multiple currency regime.

Foreign inflows have dried up in the wake of declining bond yields and the
central bank’s new focus to boost lending to help an economy stuck in low
gear. The bank launched an unscheduled open market (OMO) auction on
Wednesday to target investors.

KENYA

The Kenyan shilling is seen steady against the dollar in the coming week
with inflows from offshore investors buying government debt helping ease
excess liquidity in the local money market, traders said.

Commercial banks quoted the shilling at 103.20/40 per dollar, the same as
last Thursday’s close.

UGANDA

The Ugandan shilling is seen trading in a stable range in coming days as
some firms reserve a part of their local cash holdings for pending tax
payments.

At 0918 GMT commercial banks quoted the shilling at 3,690/3,700, the same as
last Thursday’s close.

He said the shilling was likely to exchange hands at between 3,685-3,700
over the next week. 

       <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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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
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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
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