Bulls n Bears Daily Market Commentary : 10 December 2019

Wed Dec 11 01:51:32 CAT 2019

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Bulls n Bears Daily Market Commentary : 10 December 2019

Zimbabwe Stock Exchange Update

Market Turnover ZWL$12,562,003.32 with foreign buys at ZWL$467,226.92 and
foreign sales were ZWL$233,304.30 Total trades were 174

The All Share index further dropped by 1.15 points  to close at 231.33
points. BRITISH AMERICAN TOBBACCO lost $2.4500 to close at $45.0000,
POWERSPEED   eased $0.0600 to end at $0.3100 and INNSCOR AFRICA lost $0.0590
to end at $3.7007. PADENGA HOLDINGD  traded $0.0444 lower to settle at
$2.5332 while DELTA CORPORATION  dropped $0.0423 to close at $3.4340.

Losses were offset by gains in OLD MUTUAL LIMITED  which added $1.3074 to
close at $35.3807 , CASSAVA SMARTECH  gained $0.0531 to end at $1.4758 and
SIMBISA BRANDS   rose by $0.0109 to $1.2825. Other counters to advance were
MEIKLES LIMITED  which traded $0.0050 stronger at $2.2478 and PROPLASTICS
which advanced by $0.0018 to close at $0.8350.

  Global Currencies & Equity Markets

South Africa

South African rand tumbles on blackouts shock, platinum and gold shares
shine

(Reuters) - South Africa’s rand tumbled to a two-week low on Tuesday, along
with bonds and stocks, as a deepening power crisis and the spreading impact
on business operations rattled investor sentiment.

At 1500 GMT the rand was 1% weaker at 14.8150, its worst level since Nov.
26, bringing losses since the beginning of the month to more than 2% as the
growth prospects of Africa’s most developed economy dimmed significantly.

Mines across the country shut down as flash flooding strained power utility
Eskom’s already creaking coal plants, triggering the largest blackouts in
more than a decade, threatening a key export sector and source of state
revenues.

Harmony Gold, Impala Platinum, and Sibanye-Stillwater all said they had been
forced to cut production since Monday owing to power shortages.

Eskom’s bonds also suffered, with its 2023 dollar bond down 1.4 cents, its
biggest daily drop in 16 months, to 99.9 cents on the dollar, while the 2025
issue matched those falls, Tradeweb data showed.

Traders also noted that fresh U.S. tariffs on Chinese goods due to kick in
on the weekend would further hurt the rand.

In fixed income, the yield on the benchmark instrument due in 2026 added 5.5
basis points to 8.425%.

On the bourse, stocks were largely flat. The benchmark JSE Top-40 Index was
up 0.42% to 49,225.73 points while the broader All-Share Index ticked up
0.01% to 55,276.71 points.

Miners topped the blue-chip index despite some big hitters winding down
operations due to the blackouts, as the threat of lower production from
South Africa, the world’s largest supplier, pushed up prices.

Spot palladium surpassed $1,900 for the first time ever, while platinum
jumped 2.5% and gold was 0.2% firmer.

Impala saw its share soar 3.5% to 131 rand, Northam’s price climbed 4.6% to
118 rand, and Anglo’s platinum operation gained 2.32% to 1,239 rand.

AngloGold Ashanti was up 4.29% while Sibanye climbed 3.5%. Rival Gold Fields
climbed 2.6%.

Nigeria

Nigerian stocks fall for seventh session to one-month low

(Reuters) - Nigerian stocks fell to their lowest level in a month on Tuesday
after shedding 1.11% as shares of the two most capitalised companies Dangote
Cement and MTN Nigeria declined.

The index, which is down 15% this year, fell for the seventh straight
session to a level last seen in November 2019, as consumer goods firms lost
2%.

The bourse’s losing streak worsened after ratings agency Moody’s late on
Friday changed the outlook of some Nigeria’s top lenders and corporates,
including Dangote Cement, to negative from stable.

The ratings agency said the action was triggered by a downgrade of Nigeria’s
sovereign outlook from stable to negative as the country was yet to fully
recover from a 2015 oil price shock and a subsequent recession in 2016.

Dangote Cement, which accounts for about a third of market capitalisation,
fell 1.41% while the local unit of South African telecoms giant MTN, the
second most capitalised company on Nigeria’s bourse, shed 1.69%.

Moody’s expects annual GDP growth of just over 2% in Nigeria over the next
few years, which it says is insufficient to create big lending opportunities
for banks and strong corporate earnings. 

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GLOBAL MARKETS

Stocks, dollar slip as U.S.-China trade deadline looms

(Reuters) - The dollar eased and global stock markets slipped on Tuesday as
uncertainty kept risk appetite in check days ahead of the Dec. 15 deadline
for a new round of U.S. tariffs on Chinese imports.

Investors were again torn between remarks that suggested a positive outcome
to the 17-month U.S.-Sino trade war but also indicated a deal might not come
until after U.S. presidential elections in November 2020.

Prospects for an initial “phase one” trade deal look good, acting White
House Chief of Staff Mick Mulvaney said at a Wall Street Journal event.

But Mulvaney also repeated U.S. President Donald Trump’s assertion that he
did not feel pressure to get a trade agreement signed with Beijing before
the election.

Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey,
said the mixed signals were typical, but he also sounded a note of caution.

Stocks meandered near breakeven. MSCI’s gauge of stock performance in 49
countries shed 0.11%.

Shares in Europe closed lower while stocks on Wall Street edged higher after
Canada, Mexico and the United States agreed to a fresh overhaul of their
quarter-century-old regional trade pact known as NAFTA.

The Dow Jones Industrial Average fell 27.88 points, or 0.1%, to 27,881.72,
the S&P 500 lost 3.44 points, or 0.11%, to 3,132.52 and the Nasdaq Composite
dropped 5.64 points, or 0.07%, to 8,616.18.

Emerging market stocks lost 0.12%.

Investors were also awaiting the outcome of this week’s U.S. and European
central bank meetings. The Federal Reserve is widely expected to hold
interest rates steady after cutting them three times this year.

U.S. Treasury yields rose after The Wall Street Journal reported that
American and Chinese trade negotiators were planning to delay $156 billion
in U.S. tariffs on Chinese imports scheduled to take effect on Dec. 15.

Benchmark 10-year notes fell 3/32 in price to yield 1.8416%.

Germany’s benchmark Bund yield inched up to -0.29% after the ZEW research
institute said its monthly index on economic morale among investors rose to
10.7 from -2.1 a month earlier, much higher than forecasts.

The dollar slipped against the euro on the better-than-expected German
economic sentiment survey.

The dollar index fell 0.2%, with the euro up 0.28% to $1.1093.

The Japanese yen weakened 0.18% versus the greenback at 108.77 per dollar.

Oil prices inched up as the Organization of the Petroleum Exporting
Countries’ deal with associated producers last week to deepen output cuts in
2020 provided a floor for prices, but the U.S.-China trade tensions clouded
the outlook for demand.

Brent crude settled up 9 cents at $64.34 a barrel and West Texas
Intermediate oil gained 22 cents to settle at $59.24 a barrel.

Gold got a further lift from dollar weakness and the uncertainties
surrounding trade talks.

U.S. gold futures settled up 0.2% at $1,468.10 an ounce. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

ISTIM's Malaysia warehouses held 35% of LME aluminium in Nov

(Reuters) - Warehousing firm ISTIM UK held 35% of total aluminium stocks in
London Metal Exchange-registered warehouses in its Malaysian facilities by
the end of November, data from the LME showed on Tuesday.

Aluminium stocks in ISTIM’s Port Klang and Johor warehouses rose 213,275
tonnes in November from the previous month to 476,846 tonnes, according to
the data. Total aluminium stocks in LME warehouses stood at 1.27 million
tonnes at the end of November.

The business model of ISTIM, controlled by the Whelan family who founded
major warehousing company Metro, is based on queues to take material out of
warehouses and earning rent from storage. It does not offer logistical
services.

The LME reformed its storage rules after queues to take aluminium out of
warehouses in Detroit soared to near two-year highs in 2014, sparking
complaints from consumers in transport and packaging about artificially high
aluminium prices.

Much of the metal held by ISTIM in Malaysia will have come in under deals
where the warehouse shares the rent for storing metal with the firm that put
it into the warehouse, aluminium industry sources said.

ISTIM declined to comment.

Sources say the LME’s plans to allow longer queues from next year will
encourage greater use of rent deals to attract metal as it lifts the floor
for incentives that warehouses can pay to get the metal in.

Current queue-based rent capping (QBRC) rules stipulate full rent is payable
for 30 days, half rent for 20 days and no rent after 50 days. The LME is
proposing to change that to full rent payable for 80 days by next November
and no rent thereafter.

Metal entering the LME’s global storage network, made up of 500 warehouses
in 34 locations, is issued with a title document. That metal is then “on LME
warrant”.

Costs of storing aluminium generally in Malaysia are about 8 U.S. cents a
tonne compared with the 56 cents a tonne ISTIM charges to store metal under
LME warrant.

ISTIM’s LME warehouse metal stocks in Johor rose to 186,196 tonnes in
November from 103,796 tonnes in October, while those in Port Klang climbed
to 290,650 tonnes from 183,975 tonnes.

The data also showed an 11-day queue for taking out metal from ISTIM
warehouses in Port Klang.

The market had been expecting large deliveries of aluminium to LME-approved
warehouses because of a premium for nearby against metal for delivery at a
future date, which appeared at the start of November.

Premiums or backwardations typically appear when metal sellers offer higher
prices because they need to deliver against maturing contracts.

The premium for the cash over the three-month contract rose to $22 a tonne
last week, its highest since July 2018, while the premium for the December
contract against the January contract climbed above $17 in early November.

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

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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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