Bulls n Bears Daily Market Commentary : 14 February 2019

Fri Feb 15 07:19:36 CAT 2019

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Bulls n Bears Daily Market Commentary : 14 February 2019

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Zimbabwe Stock Exchange Update

Market Turnover $5,723,171.10 with foreign buys at $1,812,295 and foreign
sales were $1,766,180. Total trades were 93.

The All Share index gained another 0.34 points  to close at 153.24 points.
TSL  added $0.1400 to settle at $0.8400, CASSAVA SMARTECH   moved up by
$0.0119 to close at $1.4689 and  OK ZIMBABWE  traded $0.0116 stronger at
$0.2816. FIRST MUTUAL PROPERTIES  gained up by $0.0110 to settle at $0.0750.

Trading in the negative was DELTA which dropped $0.0262 to $2.7982, OLD
MUTUAL LIMITED  lost $0.0257 to end at $9.1736 and EDGARS  traded $0.0222
lower at $0.1265. INNSCOR   also decreased by $0.0099 to $2.0000 and ECONET
put off $0.0076 to close at $1.4779.

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  Global Currencies & Equity Markets

Egypt

Egypt c.bank cuts key interest rates after inflation eases

(Reuters) - Egypt’s central bank made a surprise cut to its overnight
interest rates on Thursday, citing a strong drop in inflation and an
improvement in other macroeconomic indicators.

The bank lowered its deposit rate to 15.75 percent from 16.75 and its
lending rate to 16.75 percent from 17.75, it said in a statement, its first
rate cuts since March 2018.

Ten out of 14 economists polled by Reuters said the bank’s Monetary Policy
Committee (MPC) was unlikely to change its overnight rates, while only four
expected it to cut them.

The MPC said data “continued to confirm the moderation of underlying
inflationary pressures”, leading it to lower rates by 100 basis points.

Consumer inflation fell to 12.0 percent in December and 12.7 percent in
January from 15.7 percent in November, while core inflation edged up to 8.6
percent year in January from 8.3 percent in December.

The MPC said GDP growth had risen slightly to an annual 5.5 percent in last
quarter of 2018 and unemployment, at 8.9 percent, had fallen to its lowest
since 2010.

He said net foreign assets picked up in January and foreign inflows into the
treasuries market had increased, accompanied by a 1.5 percentage point fall
in yields over the last month.

The MPC last cut interest rates by 100 basis points in March and another 100
bps in February 2018.

South Africa

South African rand tumbles as Eskom sours outlook, stocks flat

(Reuters) - South Africa’s rand weakened past 14 per dollar on Thursday as
state-owned power utility Eskom imposed a fifth day of electricity blackouts
that have discouraged investors over the economy, days before the annual
budget.

At 1510 GMT, the rand was 1.07 percent weaker at 14.2200 per dollar, as it
breached 14.00 for the first time in five weeks. The currency has tumbled 4
percent this week.

Eskom said on Thursday it would cut 2,000 megawatts of power from the
national grid from 0600 GMT. The cash-strapped utility started implementing
controlled power cuts on Sunday as it struggles with coal shortages and
breakdowns at some of its plants.

Investors are awaiting for more details on how the government plans to shore
up Eskom’s balance sheet, details of which will be provided by finance
minister Tito Mboweni when he presents the 2019 budget to parliament on Feb.
20.

Eskom poses a threat to the country’s credit rating, which is hanging by a
thread with Moody’s, the last of the top three agencies to rate it
investment grade.

Bonds have also suffered, with the yield on the benchmark 10-year government
issue adding 5 basis points to close at 8.945 percent.

Stocks were flat, with the Johannesburg Stock Exchange’s top-40 index down
0.08 percent to 48,349 points and the broader all-share index down 0.03
percent to 54,527 points.

Technology company EOH Holdings closed down 12.5 percent, falling for the
third consecutive day following the announcement that technology giant
Microsoft had terminated an agreement with the company. Neither EOH nor
Microsoft have yet to give a reason.

Poultry producer RCL Foods also saw its share price fall more than 12
percent after it reported an expected decline in earnings for the past six
months.

Meanwhile, consumer-facing firms in the retail and financial sectors,
including pharmacist Clicks, insurer Discovery , retailer Truworths and
lender Absa led the top-40 index lower. 

       <mailto:info at bulls.co.zw> 

Asia

Asian stocks fall after weak U.S. data, crude oil buoyant

(Reuters) - Asian stocks fell on Friday after weak U.S. retail sales figures
raised fresh doubts about the strength of the world’s largest economy,
offsetting optimism towards trade talks between the United States and China.

Also casting a shadow, the White House said U.S. President Donald Trump will
declare a national emergency to try to obtain funds for his promised
U.S.-Mexico border wall, drawing immediate criticism from Democrats.

A wait-and see mood ensued for markets ahead of the results of a meeting on
Friday between the Trump administration’s top two negotiators and Chinese
President Xi Jinping in Beijing.

There has been no decision to extend a March 1 deadline for a deal, White
House economic adviser Larry Kudlow said on Thursday.

MSCI’s broadest index of Asia-Pacific shares outside Japan , which had
scaled a four-month high midweek on factors including expectations for
reduced U.S.-China trade tensions, was down 0.8 percent.

The Shanghai Composite Index lost 0.6 percent. Japan’s Nikkei dropped 1.2
percent and South Korea’s KOSPI shed 1.5 percent.

In the United States, the S&P 500 lost about 0.3 percent on Thursday, a day
after it hit a 10-week high on rising hopes that Washington and Beijing
could reach a trade deal.

U.S. retail sales tumbled 1.2 percent in December, recording their biggest
drop since September 2009 as receipts fell across the board.

The shockingly weak report led to economic growth estimates for the
fourth-quarter being cut to below a 2.0 percent annualised rate, with the
Atlanta Fed forecasting a 1.5 percent growth, much below its previous
forecast of 2.7 percent about a week ago.

Kazushige Kaida, head of foreign exchange at State Street in Tokyo, said he
was “very surprised” by the U.S. retail sales data.

The collapse in retail sales came along with data showing an unexpected
increase in the number of Americans filing claims for unemployment benefits
last week.

The closely-watched four-week average of the volatile data rose to the
highest level in more than a year.

That prompted Fed fund futures to price in a small chance, about 15 percent,
of a rate cut this year.

U.S. Federal Reserve Governor Lael Brainard said the central bank should
stop paring its balance sheet by the end of this year.

Daisuke Uno, chief strategist at Sumitomo Mitsui Bank, said the Fed “appears
to be laying the ground work to end its balance sheet reduction early”.

The 10-year U.S. Treasuries yield fell to 2.653 percent , wiping out most of
their rise this week.

In the currency market, the weak U.S. data dented the dollar.

The U.S. currency fetched 110.32 yen, stepping back from Thursday’s
seven-week peak of 111.13.

The dollar’s weakness saved the euro from testing its 2018 low of $1.1216.
The common currency stood at $1.1289 after having fallen to $1.1248 on
Thursday following economic data showing Germany’s economy stalled in the
fourth quarter.

The British pound traded a shade lower at $1.2794 following a descent to a
near one-month low of $1.2773 overnight after Prime Minister Theresa May
lost a symbolic Brexit vote in parliament, weakening her hand as she seeks
to renegotiate her withdrawal agreement with Brussels.

Oil prices soared as top exporter Saudi Arabia said it would cut crude
exports and deliver an even deeper output cut.

Brent crude futures stretched an overnight rally rose to as high as $65.10
per barrel, their highest level in nearly three months. The contracts have
gained nearly 5 percent this week.

Oil exports from Venezuela and Iran have been the target of U.S. sanctions.

U.S. crude futures rose 0.5 percent to $54.68 per barrel and were headed for
a weekly gain of roughly 4 percent.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper dips on China factory prices, set for 1st weekly drop in six

(Reuters) - London copper prices slipped on  Friday after China's
factory-gate price growth missed expectations and as investors awaited the
outcome of Sino-U.S. trade talks in Beijing.

China's producer price inflation slowed for a seventh straight month in
January to its weakest pace since September 2016, raising concerns the
world's top copper consumer may see

the return of deflation as domestic demand cools.

Copper is on course for a 1.5 percent drop this week, which would be its
steepest weekly fall since the week ended Dec. 22. 

Key catalysts for a price rebound would be progress in the trade talks and
signs of economic recovery in China, Helen Lau, an analyst at Argonaut
Securities in Hong Kong, said in a note.

China's January copper import numbers, released on Thursday, reflected a
"rather encouraging outlook in copper demand, especially as inventory in the
domestic market is winding down,"

she added.  

    FUNDAMENTALS

* LME COPPER: Three-month copper on the London Metal Exchange fell 0.3
percent to $6,118.50 a tonne, as of 0355 GMT, having climbed in the previous
two sessions. The most-traded April copper contract on the Shanghai Futures
Exchange was flat at 48,330 yuan ($7,132.42) a tonne.

* TRADE: The top two U.S. negotiators in trade talks with China will meet on
Friday with Chinese President Xi Jinping, but there has been no decision to
extend a March 1 U.S. deadline for a deal, White House economic adviser
Larry Kudlow said. 

* VIBE: "The vibe in Beijing is good," Kudlow told Fox News Channel but his
upbeat assessment contrasted with reports from two people familiar with the
talks, who said progress has been

difficult on the thorniest issues.

* NICKEL: The metal used to make stainless steel fell 0.6 percent in London
and was on course to shed 3.5 percent over the week, the most since
November, as a rally driven by

fears Vale's tailings dam disaster in Brazil would affect its nickel
production faded. ShFE nickel lost 1.8 percent. 

* NICKEL: Further easing supply fears, Australian ferronickel miner South32
has agreed a four-year contract with two unions at its Cerro Matoso mine in
Colombia, avoiding a strike over pay and other benefits.

Gold prices firm as dollar eases on grim U.S. retail sales

(Reuters) - Gold prices firmed on Friday as the dollar weakened slightly
after disappointing U.S. data indicated slowing economic momentum,
supporting the U.S. Federal Reserve’s “patient” monetary policy approach.

FUNDAMENTALS

* Spot gold was little changed at $1,312.82 per ounce at 0009 GMT. It rose
0.5 percent in the previous session in its biggest intraday gain since Jan.
30.

* U.S. gold futures were up 0.1 percent at $1,315 an ounce.

* The dollar index, a gauge of its strength versus six major peers was
marginally lower at 97.01.

* U.S. retail sales recorded their biggest drop in more than nine years in
December as receipts fell across the board, suggesting a sharp slowdown in
economic activity at the end of 2018.

* Further dimming investor sentiment was other data showing an unexpected
increase in the number of Americans filing claims for unemployment benefits
last week and a second straight monthly decline in producer prices in
January.

* Thursday’s data could bolster the Fed’s stance of being “patient” on
potential interest rate hikes.

* Two White House negotiators in trade talks with China will meet on Friday
with Chinese President Xi Jinping, but there has been no decision to extend
a March 1 U.S. deadline for a deal, White House economic adviser Larry
Kudlow said on Thursday.

* President Donald Trump vowed on Thursday to declare a national emergency
in an attempt to fund his U.S.-Mexico border wall without congressional
approval, a step likely to plunge him into a court battle with Congress over
constitutional powers.

* Outside the United States, British Prime Minister Theresa May suffered a
defeat on her Brexit strategy on Thursday that undermined her pledge to
European Union leaders to get her divorce deal approved if they grant her
concessions.

* Germany’s economy stalled in the final quarter of last year, just skirting
recession as fallout from global trade disputes and Brexit put the brakes on
a decade of expansion amid signs that exports will stay subdued for the time
being.

* Precious metal miner Sibanye-Stillwater could cut nearly 6,000 jobs in a
potential restructuring of the company’s gold mining operations following
losses at some of its mines last year.

* At least 23 illegal gold miners are trapped and feared dead in Zimbabwe
after shafts and underground tunnels they were working in were flooded by
water from a burst dam, a state-owned daily newspaper reported on Thursday. 

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

Ariston

AGM

Royal Harare Golf Club

19 Feb 2019 - 2:30pm

Zimbabwe

Robert Mugabe National Youth Day

Zimbabwe

21 Feb 2019

Powerspeed

AGM

Boardroom, Gate 1, Powerspeed Complex, Graniteside

28 Feb 2019 - 11am

Zimbabwe 

Independence Day

Zimbabwe

18 Apr 2019 

Good Friday

19 Apr 2019

Easter Saturday

20 Apr 2019

Easter Sunday

21 Apr 2019

Easter Monday

22 Apr 2019

Workers Day

01 May  2019

Africa Day

25 May 2019

 <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.

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