Bulls n Bears Daily Market Commentary : 12 December 2019

Fri Dec 13 02:39:33 CAT 2019

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Bulls n Bears Daily Market Commentary : 12 December 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$9,288,882.24 with foreign buys at ZWL$6,234,382.35 and
foreign sales were ZWL$747,166.50 Total trades were 127.

The All Share index advanced by 0.3 points to close at 232.29 points.
ZIMPLOW HOLDINGS LIMITED  gained $0.0900 to close at $0.6000, AFRICAN
DISTILLERS LIMITED  added $0.0900 to close at $3.1900 and OLD MUTUAL LIMITED
gained $0.0650 to close at $35.5644. FIRST MUTUAL LIMITED   advanced by
$0.0540 to close at $0.3240 while DAIRIBOARD ZIMBABWE LIMITED  increased by
$0.0245 to close at $0.3650.

Negative end were in PRETORIA PORTLAND CEMENT COMPANY LIMITED  which eased
$0.1000 to close at $4.1000, AFRICAN SUN LIMITED which traded $0.0300 lower
to end at $0.2300 and PADENGA HOLDINGS LIMITED lost $0.0225 to close at
$2.4775. INNSCOR AFRICA  slumped by $0.0177 to close at $3.7000 while
MASHONALAND HOLDINGS LIMITED  dropped by $0.0096 to end at $0.0904.

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  Global Currencies & Equity Markets

South Africa

S.African rand climbs to 6-week best as flat Fed overshadows local data

(Reuters) - South Africa’s rand raced to a six-week best on Thursday as
another batch of data showing poor economic activity was offset by the
benign monetary policy outlook in the United States after the Federal
Reserve kept lending rates flat.

At 1515 GMT the rand was 1% stronger at 14.5230 per dollar, its firmest
level since Oct. 28, bringing gains since the previous session to 1.7% in a
relief rally sparked on Wednesday by the easing of nationwide blackouts.

On Wednesday, President Cyril Ramaphosa said state utility Eskom would
stabilise the national power grid by the end of March, and despite the
utility entering an eighth straight day of power cuts on Thursday, sentiment
was soothed by the shorter duration of cuts.

Economic data out on Thursday did not help. Mining output fell 2.9%
year-on-year in October, while producer price inflation slowed to a 2.3%
year-on-year increase in November from 3%, indicating depressed levels of
activity and buying.

A poll of analysts by Reuters now puts 2019 GDP at 0.4%, with a 40% chance
the country has sunk into recession.

But the U.S. central bank’s decision on Wednesday to keep rates steady, with
chair Jerome Powell saying a significant, persistent inflation rise would be
needed to hike rates, buoyed risk assets and the rand as the carry trade
remained attractive.

On the bourse, stocks ticked up alongside emerging market shares as the
prospect of an accommodating U.S Federal Reserve policy pushed money into
equities and undercut the dollar.

Shares traded flat in the afternoon session, with the benchmark JSE Top-40
Index up 0.13% to 49,603.06 points while the broader All-Share Index rose
0.1% to 55,824.08 points.

Gold miners topped the bourse despite data indicating that mining output had
fallen 2.9% year-on-year. Gold Fields was up 2.09% to 89.71 rand while
Sibanye-Stillwater was up 1.15% to 34.39 rand.

In fixed income, the yield on the benchmark government bond due in 2026 was
down 1.5 basis points to 8.375%. 

Ethiopia

IMF deal lifts Ethiopia bonds as currency slides to record low

(Reuters) - Ethiopia’s dollar-denominated sovereign bonds jumped on Thursday
to the highest since January 2018 while the currency eased to a fresh record
low after Addis Ababa reached a staff-level agreement with the International
Monetary Fund (IMF).

The bond maturing in 2024 gained as much as 1.1 cents to 106.34 cents in the
dollar, according to Tradeweb data. The birr currency extended its slide to
31.5088 to the dollar, having depreciated sharply in the past four weeks.

The fund and the government reached a $2.9 billion preliminary agreement on
Wednesday for a three-year financing package to support Ethiopia’s economic
reforms.

In its statement, the IMF outlined five pillars to its programme with a
“transition to a more flexible exchange rate regime” topping the list. Other
items were more oversight of state enterprises, domestic revenue
mobilization, financial sector and monetary policy reform, and improving
supervision.

Africa’s biggest coffee exporter has operated a carefully managed floating
exchange rate regime since 1992.

It last devalued the currency by 15% in October 2017.

The IMF agreement marked a big shift for Ethiopia, said Charles Robertson at
Renaissance Capital, who calculates the currency is over-valued by 20-25%.

On the black market, the birr traded at 39 to the dollar.

A number of countries including Angola have recently let their currency
weaken to help their economic adjustments.

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GLOBAL MARKETS

Hopes for U.S.-China trade progress push global stock index to record high

(Reuters) - MSCI’s global stock index hit a record high on Thursday and the
U.S. dollar gained along with U.S. Treasury yields after reports the United
States has reached in principle a “phase one” trade deal with China.

Citing two people familiar with the trade negotiations, Reuters reported
that the United States had offered to cut existing tariffs on Chinese goods
by as much as 50%, and to suspend new tariffs due to kick in Sunday with an
aim to securing a deal.

While the U.S. stock trading session ended without official confirmation of
a deal, President Donald Trump had encouraged investor appetites for risk
early in the day after he said the countries were “very close.” This also
pushed safe-haven gold prices lower while oil futures gained.

The Dow Jones Industrial Average rose 220.75 points, or 0.79%, to 28,132.05,
the S&P 500 gained 26.94 points, or 0.86%, to 3,168.57 and the Nasdaq
Composite added 63.27 points, or 0.73%, to 8,717.32.

The pan-European STOXX 600 index rose 0.33% and MSCI’s gauge of stocks
across the globe gained 0.69%, surpassing the previous record reached in
January 2018.

Earlier, European Central Bank head Christine Lagarde had promised a
strategic review of the bank’s workings and left its easy money stance
unchanged, as expected.

On Wednesday, the U.S. Federal Reserve held interest rates steady and
signaled borrowing costs will not change anytime soon, with moderate
economic growth and historically low unemployment expected to persist
through the 2020 presidential election.

But U.S. investors appeared to be laser focused on U.S.-China trade
relations headlines, which have long been a major driver of volatility.

In currencies, the dollar jumped to a near two-week high against the
safe-haven Japanese yen.

The dollar index, which measures the greenback against a group of major
currencies, rose 0.23%, with the euro down 0.04% to $1.1124. The Japanese
yen weakened 0.69% versus the greenback at 109.32 per dollar.

Sterling had a volatile day, falling below its eight-month high against the
dollar with voting underway in a UK election which could decide whether
Britain exits the European Union or holds a referendum that could reverse
the country’s Brexit vote.

Sterling was last trading at $1.3163, down 0.23% on the day.

If UK Conservatives led by Boris Johnson, gain a majority, that would allow
the stalled Brexit deal to be passed. The latest polls have shown his lead
shrinking.

Exit polls will begin around 2200 GMT, after voting closes. Whether there
will be a clear winner or another hung parliament is likely to emerge
between 0400 GMT and 0600 GMT.

U.S. Treasury yields spiked with most maturities hitting four-week highs
after the reports on trade deal progress.

Benchmark 10-year notes last fell 31/32 in price to yield 1.8974%, from
1.79% late on Wednesday.

The 30-year bond last fell 67/32 in price to yield 2.3154%, from 2.22% late
on Wednesday.

Oil prices were also boosted by trade optimism as the U.S.-China tensions
had raised concerns about global demand for crude.

U.S. crude rose 0.83% to $59.25 per barrel and Brent was last at $64.33, up
0.96% on the day.

In commodities, spot gold dropped 0.4% to $1,469.49 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper rally falters after 7-month high as producers hedge

(Reuters) - Copper prices pulled back from fresh highs on Thursday as miners
hedged to take advantage of the strongest levels in seven months. 

Benchmark copper on the London Metal Exchange         clawed higher to
$6,174 a tonne, the highest since May 10, before reversing and ending floor
trading at $6,155, down $1.

U.S. President Donald Trump said on Thursday the United States was "very
close" to nailing down a trade deal with China.

* SHANDONG: Also weighing on copper was news that Shandong  Fangyuan
Nonferrous Metals Group, one of China's biggest private copper smelters,
denied online speculation that it had filed for bankruptcy and said
operations were running normally.

Traders said the rumours had helped to support prices this week because some
investors expected shortfalls if Shandong closed.

* NICKEL STOCKS: London Metal Exchange nickel on-warrant inventories
MNISTX-TOTAL - material not earmarked for delivery - soared by 52% in one
day to 102,036 tonnes, the highest since Aug. 29, LME data showed.

Sucden's Montefusco said that recent inflows of nickel stocks could be
linked to Chinese arbitrage activity and more deliveries are expected in the
coming days.

LME nickel prices         closed 1.8% higher at a two-week high of $14,100 a
tonne.

* ALUMINIUM INVENTORIES: LME on-warrant aluminium stocks MALSTX-TOTAL
climbed by 23,075 tonnes to 1,218,125 tonnes, the highest since March 2017,
data showed.

LME three-month aluminium         shrugged off the inventory gains to firm
by 0.9% to $1,775 a tonne in final open-outcry trading.

* ALUMINIUM SPREAD: LME cash aluminium moved to a discount of $8.75 a tonne
to the three-month contract CMAL0-3 this week after holding at a premium for
nearly a month, indicating healthier supplies in the LME system.

* LEAD POSITIONING: Lead has the largest net speculative short position on
the LME at 25% of open interest, according to estimates from broker Marex
Spectron.

* PRICES: LME zinc         advanced 1.9% to $2,263 a tonne in closing rings,
while lead         added 0.1% to $1,938 and tin         dropped 0.2% to
$17,250.

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
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
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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.

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