Bulls n Bears Daily Market Commentary : 09 December 2019

Tue Dec 10 01:46:57 CAT 2019

 <http://www.bulls.co.zw/> Bulls.co.zw        <mailto:bulls at bulls.co.zw>
Views & Comments        <http://www.bulls.co.zw/blog> Bullish Thoughts
<http://www.twitter.com/BullsBears2010> Twitter
<https://www.facebook.com/BullsBearsZimbabwe> Facebook
<http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn
<mailto:info at bulls.co.zw?subject=Unsubscribe> Unsubscribe

Bulls n Bears Daily Market Commentary : 09 December 2019

Zimbabwe Stock Exchange Update

Market Turnover ZWL$9,795,150.22 with foreign buys at ZWL$2,912,671.32 and
foreign sales were ZWL$885,447.70 Total trades were 195

The All Share index started the week on a lower note after shedding 2.44
points to close at 232.48 points. OLD MUTUAL LIMITED  lost $1.8627 to close
at $34.0733, DELTA CORPORATION   eased $0.0509 to end at $3.4763 and BAT
lost $0.0500 to end at $47.4500. CASSAVA SMARTECH ZIMBABWE LIMITED  traded
$0.0451 lower to settle at $1.4227 while ECONET WIRELESS  slumped $0.0112 to
close at $1.4953.

Trading in the positive; AFRICAN DISTILLERS LIMITED  added $0.0500 to close
at $3.0500 , ZIMPLOW HOLDINGS LIMITED  gained $0.0400 to end at $0.5500 and
POWERSPEED ELECTRICAL  rose by $0.0220 to $0.3700. Other counters trading in
positive were DAIRIBOARD ZIMBABWE PRIVATE LIMITED  which traded $0.005
stronger at $0.3405 and FIRST MUTUAL PROPERTIES  which advanced $0.0045 to
close at $0.165.

  Global Currencies & Equity Markets

Kenya

Kenyan shilling firms against the dollar

(Reuters) - The Kenyan shilling firmed against the dollar on Monday
supported by tightening liquidity in the local money market and inflows from
diaspora remittances, traders said. 

At 0838 GMT, commercial banks quoted the shilling at 101.35/55 per dollar,
compared with 101.45/65 at Friday's close.

Egypt

Egypt sells $1 bln in dollar-denominated T-bills -central bank

(Reuters) - Egypt has sold $1 billion in one-year dollar-denominated T-bills
at an average yield of 3.589%, the central bank said on Monday.

The bank said the T-bills will mature on Dec. 8, 2020.

       <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Stocks, gold little changed as trade war spurs concerns

(Reuters) - Global equity markets traded flat on Monday on hopes officials
would delay more U.S. tariffs set to take effect on Chinese goods this
coming Sunday, while gold held firm as investors hedged against a possible
escalation in the trade war.

Crude oil prices fell and the dollar slipped against the safe-haven Swiss
franc after data showed Chinese exports in November shrank for the fourth
straight month, reviving concerns about damage to global demand caused by
the 17-month trade spat.

Investors braced for other political and economic news in a busy week. The
U.S. Federal Reserve’s two-day policy meeting begins Tuesday, a UK election
on Thursday could be decisive for Britain’s plans to leave the European
Union and a potential agreement related to a North American trade pact may
be reached.

The Dec. 15 deadline that will usher in $156 billion in U.S. tariffs on
Chinese goods stirred caution, leading MSCI’s all-country world index to
trade flat while shares on Wall Street slid and European equities closed
lower.

Investors have bid up stocks in recent weeks, pushing the three major Wall
Street indexes close to record highs and MSCI’s gauge of global equity
performance to less than three points from its all-time peak.

Buoyed by Friday’s blockbuster U.S. jobs report, traders and investors held
out hope for a delay in the U.S. tariff deadline, while expecting more
positive gestures from both sides.

Large-cap U.S. equities are trading at about 17.5 times forward earnings,
noted Michael Mullaney, director of global markets research at Boston
Partners in Boston. The S&P 500 could reach 3,250 or 3,300 next year if a
trade agreement is reached, he said.

China hopes it can reach a trade agreement with the United States that
satisfies both sides, Assistant Commerce Minister Ren Hongbin told reporters
overnight.

MSCI’s gauge of stocks across the globe shed 0.13%, while stocks on Wall
Street and in Europe closed lower. MSCI’s emerging markets index rose 0.21%.

The pan-European STOXX 600 index lost 0.24%.

On Wall Street, the Dow Jones Industrial Average fell 105.46 points, or
0.38%, to 27,909.6. The S&P 500 lost 9.95 points, or 0.32%, to 3,135.96 and
the Nasdaq Composite dropped 34.70 points, or 0.4%, to 8,621.83.

Against the Swiss franc, which tends to draw investors during times of
geopolitical or financial stress, the dollar was 0.23% lower.

The dollar index, a measure of the greenback against six other major trading
currencies, slipped 0.05%, with the euro up 0.05% to $1.1063. The Japanese
yen weakened 0.04% versus the greenback at 108.64 per dollar.

U.S. Treasury yields fell after rising three straight days as risk appetite
ebbed after the weak Chinese trade data.

Benchmark 10-year notes rose 5/32 in price to yield 1.8277%.

German exports rose unexpectedly in October, a morale boost for Europe’s
largest economy, but had little impact on European bonds.

Yields on Germany’s 10-year bund, a benchmark for the euro zone, fell to
-0.304%.

Oil prices fell on the Chinese export data.

Brent futures fell 14 cents to settle at $64.25 a barrel. West Texas
Intermediate oil futures slid 18 cents to settle down at $59.02 a barrel.

U.S. gold futures settled mostly unchanged at $1,464.90 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper scales 4-1/2-month peak on China demand optimism

(Reuters) - Copper prices climbed to 4-1/2-month highs on Monday as hopes of
stronger growth and demand in top consumer China were reinforced by numbers
showing surprisingly robust imports.

However, nervousness about the United States and China agreeing a so-called
“phase one” deal aimed at de-escalating their prolonged trade dispute
weighed on sentiment.

Benchmark copper on the London Metal Exchange ended up 1.4% at $6,075 a
tonne in official rings. Prices of the metal used by investors as a gauge of
economic health peaked at $6,076.50, the highest since July 22.

DATA: China’s overall imports unexpectedly rose 0.3% from a year earlier,
marking the first year-on-year growth since April and above the consensus
for a 1.8% decline.

China’s factory activity showed surprising signs of improvement in November,
with growth picking up to a near three-year high, a private sector survey
showed last week.

COPPER: China’s copper imports rose to 483,000 tonnes in November, up 12.1%
from the previous month to their highest in more than a year.

TRADE: China said on Monday that it hoped to agree a trade deal with the
United States as soon as possible, amid intense discussions before new U.S.
tariffs on Chinese imports are due to kick in on Dec. 15.

STOCKS: Also supporting copper prices are sliding stocks of the metal in LME
warehouses and cancelled warrants — metal earmarked for delivery — at more
than 40% of the total. Stocks stand at 190,825 tonnes MCUSTX-TOTAL.

TECHNICALS: Strong support for copper at $5,995, the 200-day moving average
breached on Friday.

SPREAD: The premium for the cash over the three-month aluminium contract was
at $7 a tonne, down from $22 at the start of December, the highest since
July last year.

It appeared last month MALSTX-TOTAL and has attracted large amounts of
aluminium to LME warehouses. Stocks at more than 1.28 million tonnes are at
their highest since February and up more than 30% since early November.

Three-month aluminium closed down 0.5% at $1,757.

PRICES: Zinc and lead were little changed at $2,239 and $1,893 respectively,
tin gained 0.3% to $17,120 and nickel lost 1% to $13,340 a tonne.

Aluminium producers prepare for troubled times ahead: Andy Home

(Reuters) - The aluminium market is in trouble again.

The London Metal Exchange (LME) price touched a three-year low of $1,705 per
tonne in October and has failed to stage any significant bounce over the
intervening period. It is currently trading around the $1,760 level.

Earlier this year there was a lot of excited talk in the market about
growing supply deficits and falling stocks.

Fast forward to today and LME stocks are surging again and no-one is talking
about deficits any more.

LME stocks are a poor lens through which to understand aluminium’s dynamics
but the rapid increase in visible tonnage has reinforced concerns about a
deteriorating demand outlook.

Aluminium producers have been here before and know trouble when they see it
with Hydro announcing output cuts and both Alcoa and Rio Tinto reviewing
their smelter portfolios.

STOCKS SURGE AS SPREADS TIGHTEN

Almost 394,000 tonnes of aluminium have been warranted in the LME warehouse
system over the last four weeks, and the headline total has jumped from
940,500 tonnes to 1,288,150.

Most of the inflow has been split across just three locations — Port Klang
and Johor in Malaysia, and Singapore.

This appears to be the emerging stocks liquidity hub for the global
aluminium market with new CME warehouses in the region also attracting
metal. The same three locations account for around 65% of the 20,237 tonnes
in the CME system.

There’s a natural analytical instinct to interpret LME stock movements as a
sign of underlying production-usage dynamics.

But as ever with the LME aluminium contract, surging stocks say far more
about LME timespreads and the storage market than about the fundamentals of
the aluminium market.

The driver of the recent stocks deluge was a tightening in the front part of
the LME forward curve. The cash-to-three-months timespread CMAL0-3 flared
out to a backwardation of $22.75 per tonne early last week. It was the
highest premium for cash metal since December of last year.

LME spreads are key to the profitability of storing metal under financing
deals. When spreads are relaxed, as was the case for the first nine months
of this year, financing metal in cheaper storage outside of the LME
warehouse system was profitable, which is why LME stocks fell to a decade
low of 895,625 tonnes in early September.

Spreads tightness, by contrast, deters demand from both off-market
financiers and physical users while simultaneously encouraging short
position holders to deliver metal into the LME system.

The resulting ebb and flow of metal between exchange and off-exchange
storage has been a defining feature of the LME marketplace for much of the
last decade.

The current spreads tightness has yet fully to play out despite the high
level of metal deliveries into LME warehouses. The benchmark
cash-to-three-months period was still valued at a $7.25 per tonne
backwardation at Friday’s close.

DEMAND SHOCK

LME stocks movements do not provide a linear read-through to the underlying
state of the physical market but they do carry psychological weight.

Just as the steady draws in the first part of the year dovetailed neatly
with a narrative of a tightening market balance, so the most recent
increases reinforce negative sentiment about aluminium’s deteriorating
outlook.

The real stocks story, however, continues to play out in the non-LME storage
market, where up to 10 million tonnes of metal are sitting in the
statistical shadows.

There were strong indications that such shadow stocks were falling earlier
this year but the trend is believed to have gone into reverse as demand has
weakened.

Global aluminium demand is widely expected to contract this year for the
first time since the Global Financial Crisis.

The demand hit relative to some of the other base metals will be mild but
this is still a shock for a market that has long enjoyed a stellar usage
growth profile.

The transport sector has powered aluminium usage in recent years but it has
turned negative this year.

Automotive sales are falling just about everywhere as the industry struggles
with the combination of cyclical downturn and structural shift to electric
vehicles.

In other sectors a more positive story is outweighed by a surge in aluminium
scrap availability occasioned by China’s steady clampdown on imports of what
it terms “waste”.

SUPPLY CUTS

You can understand why producers are once again running the ruler over their
operations.

Norsk Hydro has announced a 20% cut at its Slovak smelter in the fact of
what it termed “a demanding market”.

Alcoa has an ongoing review of 1.5 million tonnes of smelter capacity, while
Rio Tinto has flagged a potential output cut at its Tiwai Point plant in New
Zealand.

The last time producers were forced collectively to curtail capacity was
during the price trough of 2015-2016, when LME aluminium touched a
multi-year low of $1,432.50.

The irony is that global production hasn’t been rising at all this year, not
even in China, the world’s largest producer.

Production outside China was flat year-on-year in the first 10 months of
2019, while run-rates in China fell by 1.5% on the back of a number of
unforeseen outages.

That’s one of the reasons China’s exports of semi-fabricated products have
also been running flat relative to 2018 levels.

The problem is that production is expected to accelerate again next year
with analysts at CRU forecasting Chinese output to rise by 7% in 2020.

Unless there is a sudden turnaround in demand, that production surge is
going to come at just the wrong time for an aluminium market that is
struggling to hold even these low price levels.

Nor is there much in the way of support from the production cost curve since
the price of alumina, the key metallic input into the aluminium smelting
process, is also falling.

The CME’s alumina contract is currently trading around $279 per tonne, down
from $418 in April.

Aluminium is currently experiencing something of a perfect bear storm -
demand weakness, falling raw material prices, rising visible stocks and a
sense that the downtrend in shadow stocks has ended. Relatively weak
production in China is the one positive and that doesn’t look likely to
last.

Supply cuts are back on the agenda as producers look to their operating
margins.

And if all that sounds familiar, it’s because aluminium’s future is looking
a lot like its past.

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

 <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.

(c) 2019 Web: <http:// www.bulls.co.zw >  www.bulls.co.zw Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
344 1674

Invest Wisely!

Bulls n Bears

Telephone:    <tel:%2B263%204%202927658> +263 4 2927658

Cellphone:      <tel:%2B263%2077%20344%201674> +263 719 441 674

Alt. Email:              <mailto:info at bulls.co.zw> info at bulls.co.zw 

Website:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw&sa=D&sntz=1&usg=AF
QjCNH8LYgdY55h-XKseuM8Kpr-JKdfhQ> www.bulls.co.zw

Blog:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1
&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bulls.co.zw/blog

Twitter:                 @bullsbears2010

LinkedIn:              Bulls n Bears Zimbabwe

Facebook:
<http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimba
bwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA>
www.facebook.com/BullsBearsZimbabwe

Skype:                  Bulls.Bears 

Whatsapp Group:   <https://chat.whatsapp.com/CF6wllAfScU9Wr6dXxoQnO> Click
Here to Join

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.jpg
Type: image/jpeg
Size: 3653 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0005.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.png
Type: image/png
Size: 44149 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0001.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 34958 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0006.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0007.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image005.jpg
Type: image/jpeg
Size: 29478 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0008.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image006.jpg
Type: image/jpeg
Size: 3256 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20191210/8d9f9aeb/attachment-0009.jpg>