Bulls n Bears Daily Market Commentary : 25 February 2019

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Bulls n Bears Daily Market Commentary : 25 February 2019

 


 

 


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Zimbabwe Stock Exchange Update

 

Market Turnover $6,329,588.48 with foreign buys at $1,799,695.00 and foreign
sales were $3,211,104.00. Total trades were 130.

 

The All Share index retreated 0.76 points  to close at 152.18 points. OLD
MUTUAL LIMITED dropped $0.2049 to settle at $8.9900, SIMBISA lost $0.0417 to
$0.7077 and CASSAVA SMARTECH  was $0.0223 down to end at $1.4602. SEEDCO
also decreased by $0.0184 to close at $1.9600 and DELTA traded $0.0093 lower
at $2.8949.

 

Trading in the positive was PADENGA  which gained $0.0325 to $1.0925, RTG
added $0.0008 to close at $0.0250 and NAMPAK  was $0.0005 firmer at $0.3005.

 <mailto:info at bulls.co.zw> 

 

 

  Global Currencies & Equity Markets

 

 

 

Zimbabwe

 

Zimbabwe promises fiscal discipline as it launches new currency

(Reuters) - Zimbabwe’s new currency will be backed up with fiscal
discipline, Finance Minister Mthuli Ncube said on Monday, adding that the
government would allow the RTGS dollar to fluctuate but would manage
excessive volatility.

 

Ncube spoke to Reuters as the central bank drip-fed dollars to a handful of
commercial banks to allocate to large businesses, part of efforts to ease a
cash crunch that has starved the country of many basic goods.

 

He said investors should not worry about the government ramping up issuance
of Treasury bills, as it had done in the past. “That tap is closed for now,”
Ncube said.

 

Economists and business executives worry that if Zimbabwe does not curtail
its borrowing, it could fuel inflation and a black market for dollars,
making a foreign currency interbank market the central bank launched last
week redundant.

 

Zimbabwe ditched a discredited 1:1 dollar peg for its dollar-surrogate bond
notes and electronic dollars last week, merging them into a lower-value
transitional currency called the RTGS dollar.

 

The central bank has been selling dollars to banks at a rate of one U.S.
dollar to 2.5 RTGS, a level which bankers have criticised as too low but
which Ncube said was appropriate for now, calling it an “initial trigger
point”.

 

He declined to disclose where Zimbabwe got credit lines to launch the RTGS
currency, or the size of those credit lines.

 

Ncube added that the government was in talks with the International Monetary
Fund over securing a staff-monitored programme and that the government had
sufficient resources to meet civil servants’ demands for salary increases.

 

OVERDUE REFORM

Ordinary Zimbabweans are not yet able to use the RTGS dollars in their bank
accounts to buy dollars from banks, and the bond notes — which many
businesses are reluctant to accept — are still in circulation.

 

But big firms are happy that they have been promised greater access to
foreign currency for critical imports.

 

The last time Zimbabwe had its own currency, a decade ago, then-President
Robert Mugabe’s government turned on the printing presses to fund higher
salaries for government workers and curry favour with the military — with
disastrous economic results.

 

Mugabe’s successor Emmerson Mnangagwa has promised a break with the past,
but many Zimbabweans are wary after his government ramped up borrowing ahead
of a national election last July and inflation rose to a 10-year high in
January.

 

‘MANAGED FLOAT’

Mnangagwa, who replaced Mugabe after an army coup in November 2017, hopes to
steer the economy back to credibility and lure foreign investors, who have
also been deterred by violent security crackdowns on post-election protests
last year and demonstrations last month against a steep fuel price hike.

 

But the new RTGS currency has been dogged by criticism that the level of 2.5
RTGS per U.S. dollar is too strong for the Zimbabwean unit.

 

A dealer at a bank which operates on Zimbabwe’s interbank market said
launching the RTGS at 3 to the dollar or higher would have been better to
encourage U.S. dollar sellers.

 

There are also indications the central bank is not selling many dollars.
Only around $5 million changed hands on Friday, a senior central bank
official told The Standard newspaper.

 

A Standard Chartered bank teller in Harare said her branch was not selling
dollars to individuals yet, and downtown bank queues were no longer than
normal.

 

On Monday, one U.S. dollar was being sold on the black market for four
electronic dollars — those locked in individuals’ accounts for months due to
the chronic cash shortages — compared to 4.2 on Friday, currency traders
said.

 

 

 

 

South africa

 

South Africa's rand gains on trade deal hopes; stocks weak

(Reuters) - South Africa’s rand rose on Monday, holding onto its post-budget
gains, after U.S. President Donald Trump extended a deadline for China and
the United States to reach a trade agreement.

 

Stocks weakened as rand-hedges weighed on the market.

 

At 1510 GMT, the rand was 1.32 percent stronger at 13.8150 per dollar after
closing at 14.0000 on Friday in New York.

 

Trump’s announcement was the clearest sign yet that China and the United
States were near an agreement to end a trade war that has slowed global
growth and disrupted markets.

 

After an initial slip following last Wednesday’s budget, where Finance
Minister Tito Mboweni announced a 69 billion-rand ($5 billion) bailout for
ailing utility Eskom and a slower growth forecast, the rand regained ground
as traders saw some positives in the speech.

 

Moody’s, the last of the major credit agencies to rate South Africa as
investment grade, said the budget showed South Africa’s limited options in a
challenging economy, reflecting sympathy for a situation Mboweni inherited
when he took over the Treasury in October.

 

Bonds also gained, with the yield on the benchmark 10-year government issue
down 3 basis points to 8.695 percent.

 

On the stock market, the benchmark Top-40 index and the All-Share index
slipped as investors sold shares in local companies that earn most of their
revenues in hard currency, known as rand hedge shares, as the rand
strengthened.

 

The All-Share dropped 0.2 percent to 55,878 points; the Top-40 fell 0.2
percent as well, to 49,638 points. Anglo American fell 1.53 percent to
367.97 rand and Glencore was down 1.47 percent to 55.80 rand. MediClinic
weakened 0.81 percent to 58.52 rand. 

 

 

       <mailto:info at bulls.co.zw> 

 

 

Asia

 

Asian shares slip from 5-mth highs, pound jumps on Brexit delay hopes

(Reuters) - Asian shares lost steam on Tuesday after scaling a five-month
high as investors waited to see if Washington and Beijing can clinch a trade
deal, while the pound advanced on hopes UK Prime Minister Theresa May will
delay a Brexit deadline.

 

Spreadbetters pointed to a weak start for Europe with futures for London’s
FTSE off 0.6 percent even as fears of a no-deal Brexit faded. U.S. stock
futures were down too, with E-Minis for the S&P 500 falling 0.4 percent.

 

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 percent
from its highest since mid-September as U.S. and Chinese negotiators work to
hammer out a deal that would end a protracted tit-for-tat tariff battle.

 

President Donald Trump said on Sunday he would delay a tariff hike on $200
billion of Chinese imports in the clearest sign yet that both sides were
making progress in the talks, but he also sounded a note of caution, saying
a deal “could happen fairly soon, or it might not happen at all.”

 

Tuesday’s losses in Asian stock markets came as JPMorgan analysts urged
investors to “curb some of their enthusiasm” over the trade talks, saying
the extension to the deadline was a “foregone conclusion”.

 

Elsewhere, Indian markets were battered amid concerns about flaring border
tensions between India and Pakistan, both of which have nuclear arms. The
broader NSE stock index skidded, the rupee fell and bonds rose in a flight
to safety.

 

Australian shares lost 0.9 percent, weighed by energy stocks as oil prices
tumbled overnight.

 

Chinese shares see-sawed between positive and negative territory after a
sharp rally the previous day.

 

Japan’s Nikkei stumbled 0.4 percent as some selling pressure built ahead of
the fiscal year-end.

 

Investors were also wary of weakening estimates for current quarter
earnings, with Wall Street on Monday expecting a 0.9 percent decline in S&P
first-quarter earnings per share compared with expectations for 5.3 percent
growth on Jan. 1, according to IBES data from Refinitiv.

 

BREXIT DEADLINE

In currency markets, sterling jumped to $1.3149, a near four-week high, in
early Asian trade after Bloomberg reported May was expected to allow her
cabinet to discuss extending the Brexit deadline beyond March 29 at a crunch
meeting later in the day.

 

The news was a relief to investors who had feared Britain would crash out of
the European Union without a deal. However, a delay could anger May’s
pro-Brexit colleagues who might then support a vote of no confidence in the
government, potentially triggering a general election.

 

The dollar fell against the safe-haven Japanese yen from its highest since
late December. The greenback was last at 110.77.

 

The dollar index was mostly flat at 96.399 against a basket of currencies.

 

Markets are now awaiting testimony from U.S. Federal Reserve Chairman Jerome
Powell to a U.S. Senate committee on Tuesday, after the central bank last
month shifted to a more cautious stance on further interest rate hikes.

 

Investors will also keep an eye on a two-day U.S.-North Korea summit this
week where leaders of the two countries will try to reach an agreement on
Pyongyang’s pledge to give up its nuclear weapon programme.

 

Oil prices fell again after posting their largest daily percentage drop this
year on Monday as Trump called on OPEC to ease its efforts to boost crude
prices, which he said were “getting too high.”

 

U.S. crude was last down 32 cents at $55.16 a barrel while Brent eased 20
cents to $64.56.

 

 <mailto:info at bulls.co.zw> 

 

 

 

Commodities Markets

 

 

Palladium soars past $1,550 on mine strike fears; gold firm

(Reuters) - Palladium surged to a record high on Tuesday, rising above
$1,550, as the threat of strikes in the South African mining industry
aggravated supply concerns in an already tight market, while gold prices
were firm on a subdued dollar.

 

FUNDAMENTALS

 

* Spot palladium, which rose to as high as $1,553 per ounce, was up 0.7
percent at $1,552 as of 0128 GMT.

 

* Spot gold was flat at $1,327.40 per ounce, while U.S. gold futures were
steady at $1,329.9 per ounce.

 

* At least 15 mining firms in South Africa have received notices of strikes
to be held this week in support of colleagues at Sibanye-Stillwater who
downed tools over wages and job cuts, Minerals Council South Africa said.

 

* The dollar index was little changed at 96.381 against major currencies.

 

* Trump said on Monday he may soon sign a deal to end a trade war with
Chinese President Xi Jinping if their countries can bridge remaining
differences, saying negotiators were “very, very close” to a deal.

 

* However, he also sounded a note of caution, when he said a deal “could
happen fairly soon, or it might not happen at all.”

 

* Asian shares paused at a five-month peak on signs Washington and Beijing
were making progress on a trade deal.

 

* British Prime Minister Theresa May is considering a plan to delay Brexit
to ensure the U.K. does not leave the European Union without a deal,
Bloomberg reported on Monday, citing people familiar with the situation.

 

* Trump headed for Vietnam on Monday for a second summit with Kim Jong Un,
having stressed the benefits to Pyongyang if the North Korean leader gives
up his nuclear weapons, but saying there was no rush.

 

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund,
said its holdings fell 0.15 percent to 788.33 tonnes on Monday from 789.51
tonnes on Friday.

 

DATA AHEAD (GMT) 1500 U.S. Consumer Confidence Feb 1500 U.S. Federal Reserve
Chairman Jerome Powell to testify on U.S. monetary policy and the economy
before the Senate Banking Committee 

 

 

Mexico to renew 15 pct steel tariff on countries without trade deals

(Reuters) - Mexico will renew for six months a 15 percent steel tariff on
countries with which it does not currently have free trade agreements, a
senior government official said on Monday.

 

The tariff was established in 2015 as a means to protect Mexico’s domestic
steel producers against growing Asian imports. Since then, the protectionist
measure had been re-authorized every six months.

 

The tariff expired in January, prompting speculation that Mexico’s new
government might not re-authorize it.

 

Ernesto Acevedo, the economy ministry’s deputy minister for industry and
trade, said the tariff will apply to the same 186 products that have
previously been renewed.

 

Last year, the U.S. government imposed tariffs on foreign exporters of steel
and aluminum, including Mexico, citing national security concerns. The
tariffs were widely denounced as unfair by Mexican officials.

 

The U.S. steel tariff was set at 25 percent, while a separate aluminum
tariff was set at 15 percent.

 

Acevedo said the Mexican government will continue to insist that the United
States exclude Mexican firms from the metals tariffs, which took effect last
June.

 

He added the government will also set between a 25 and 30 percent tariff on
textiles and shoes from countries that do not have free trade deals with
Mexico, a measure that also lapsed in January. 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


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> 

 


 

 


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opinions expressed and recommendations made are subject to change without
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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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