Bulls n Bears Daily Market Commentary : 14 August 2019

Thu Aug 15 01:38:57 CAT 2019

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Bulls n Bears Daily Market Commentary : 14 August 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 6,915,587.89 with foreign buys at ZWL$ 5,215,000.00 and
foreign sales were ZWL$ 5,295,725.00 Total trades were 155.

The All Share index gained 0.52 points ending the day at 180.57 points as
OLD MUTUAL LIMITED continues on the upward trend with a $0.1411 gain to
close at $21.5000. HIPPO VALLEY  also added $0.0500 to end at $1.9500 and
CASSAVA SMARTECH  traded $0.0313 higher at $1.3338. Other counters to
advance were DELTA   which added $0.0100 to end at $0.3100 and PADENGA which
closed the day at $1.8070 after gaining $0.0070.

Gains were partially offset by losses in MEIKLES  which lost $0.0400 to
$1.2300, ECONET WIRELESS  eased $0.0217 to settle at $1.3283 and OK ZIMBABWE
traded $0.0017 lower at $0.3883.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand firms on easing trade tensions, stocks down

(Reuters) - South Africa’s rand firmed on Tuesday, helped by improved risk
appetite on signs of easing trade friction after the United States said it
would delay tariffs on some Chinese products and both sides agreed to
continue talks.

Stocks closed slightly weaker, weighed down by the gold sector.

At 1535 GMT the rand was 1.0% firmer at 15.1525 per dollar.

The Office of the U.S. Trade Representative said President Donald Trump’s
administration will delay 10% tariffs on certain Chinese products, including
laptops and cell phones, that had been scheduled to start next month.

Riskier assets gained on the news, which was viewed as a significant
concession in the trade conflict between Washington and Beijing.

Despite the improved global risk appetite, a souring local economic and
political atmosphere remained a risk to the rand.

Worries about the impact on the economy of heavily-indebted state-owned
energy firm Eskom and negative commentary from credit rating agencies, and
an ongoing legal wrangle between President Cyril Ramaphosa and the
anti-corruption ombudsman, have seen the rand shed nearly 7% in two weeks.

On Monday, Ramaphosa won the latest round of a legal battle with South
Africa’s anti-corruption watchdog, as a judge delayed implementation of
findings linked to its claim that he misled parliament about a leadership
campaign donation.

But the lingering charges have raised fears Ramaphosa may distracted from
his pledge to revive stalling economic growth.

On the bourse, the Johannesburg All-Share index closed 0.32% weaker at
55,192 points, while the Top-40 index ended the day down 0.13% to 49,448
points.

Bullion stocks fell 8.98% as spot gold slipped on the trade news.

Among the fallers, Gold Fields was down 10.10% at 84.28 rand, Harmony Gold
weakened 7.96% to 43.00 rand and AngloGold Ashanti dropped 7.89% to 292.54
rand.

Bonds firmed, with the yield on benchmark government paper due in 2026 down
7.5 basis points to 8.41%. 

Nigeria

Nigeria sells treasuries to lure foreign investors after FX ban for food
imports

(Reuters) - The Nigerian central bank auctioned treasury bills on Wednesday
at higher rates to try to lure foreign investors, hours after it was
announced that the president told the bank to ban access to dollars for food
imports.

Pressure has been building on the naira currency as oil prices drop and
foreign investors book profits on local bonds in response to falling yields.
Crude sales account for 90% of foreign exchange earnings and two-thirds of
government revenues in Nigeria, Africa’s top oil producer.

The bank auctioned 34.4 billion naira worth of bills, paying 12% for the
longest tenor one-year paper, up from 11.2% it paid at its last sale, on
ample demand for the bills, traders said.

Banking stocks fell 1.26% on Wednesday, to help drag the main share index to
a more than two-year low as negative sentiment persisted on the stock
market.

Traders said the bank told them to increase their rates at the bills auction
from last auction rates as the central bank tries to lure foreign inflows.

The central bank last month shifted policy to try to force banks to lend to
help revive an economy stuck with low growth after a recent recession. But
with falling oil prices and foreign investors taking profits, the naira is
regaining focus.

On Friday, the naira eased to 364 per dollar, from a quote of 363.50 as
falling oil prices tightened liquidity on the currency market. The currency
was quoted at 364 on Wednesday on thin liquidity, traders said.

A dollar shortage was initially caused by a slowdown of foreign inflows
after local debt market yields declined.

UNCERTAINTY

Nigerian President Muhammadu Buhari on Tuesday told the central bank to stop
providing funding for food imports, his spokesman said, in a further sign of
pressure on the currency.

A spokesman for the central bank, which is an independent body, has not
responded to text messages and phone calls seeking a comment on whether or
not the request will be heeded.

Traders said the market was waiting for more information on how such a ban
would be implemented, especially for importers with existing lines of
credit.

In 2015 the central bank banned access to foreign exchange for 43 items in a
bid to curb dollar demand, though it continued to sell dollars to offshore
investors to boost confidence.

Nigeria, which has Africa’s biggest economy, 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 364 is widely quoted by foreign investors and exporters.

       <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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