Bulls n Bears Daily Market Commentary : 26 February 2019

Wed Feb 27 08:37:24 CAT 2019

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Bulls n Bears Daily Market Commentary : 26 February 2019

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Zimbabwe Stock Exchange Update

Market Turnover $2,238,656.54 with foreign buys at $71,263.08 and foreign
sales were $187,020.95. Total trades were 101.

The All Share index dropped another 0.19 points  to close at 151.99 points.
OLD MUTUAL LIMITED  lost a further $0.1361 to settle at $8.8539, HIPPO
VALLEY ESTATES  was $0.0374 down at $1.7101 and EDGARS   decreased by
$0.0250 to end at $0.1015. DELTA  traded $0.0246 lower at $2.8703 and ECONET
weakened by $0.0067 to settle at $1.4533.

Losses were partially offset by gains in AFDIS  which gained $0.1387 to
$1.7000, SIMBISA  added $0.0375 to settle at $0.7452 whilst AFRICAN SUN
traded $0.0200 firmer at $0.1700. UNIFREIGHT   put on $0.0138 to close at
$0.0828.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabwe

Zimbabwe limits dollar sales to foreign payments only

(Reuters) - Zimbabwe’s commercial banks are under orders to restrict U.S.
dollar transactions to companies and individuals with foreign payments to
make, according to a central bank directive that demonstrates the slow
progress of currency reforms.

The document, a measure of the foreign exchange controls that remain in
place six days after authorities announced moves to ease chronic cash
shortages, also states such transactions should be aimed at stimulating
economic growth.

It was sent to banks on Friday and seen by Reuters on Tuesday.

Zimbabwe abandoned 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.

It launched the RTGS dollar in a “managed float” at 2.5 per U.S. dollar, but
as of Tuesday, banks had yet to start selling hard currency in cash.

Banks were only selling U.S. dollars to firms and individuals with invoices
or receipts for imports deemed a priority, such as fuel and medicines.

Dealers were encouraged to take steps “to ensure efficient utilisation of
foreign currency that is tilted towards the productive sectors of the
economy,” it added.

The state-owned Herald newspaper reported that Botswana had offered to lend
Zimbabwe $600 million to support its diamond industry and private firms.

Economists say the RTGS reform shows promise provided the government makes
good on a plan to let the new currency fluctuate.

Finance Minister Mthuli Ncube told Reuters in an interview on Monday that,
while the market should determine the RTGS rate, the government wanted to
avoid excessive volatility.

However, the current official rate values the RTGS far higher than on a
thriving black market that many ordinary Zimbabweans use to buy and sell
U.S. dollars.

‘SEED U.S. DOLLAR CAPITAL’

The central bank has sold small amounts of U.S. dollars to banks at 2.5 RTGS
in recent days, and a currency dealer told Reuters the RBZ had authorised
banks to buy and sell U.S. dollars at 2.5 percent either side of that rate.

Tellers at two banks in downtown Harare said they could help clients make
payments for overseas purchases at 2.5625 RTGS, the rate that other banks
offered on Monday.

However, “the RBZ hasn’t given us any U.S. dollars in cash yet,” a teller at
a CABS bank branch said.

The central bank sold what it called “seed foreign currency capital” to
banks, but the sums in question appear to be tiny.

A senior RBZ official told The Standard newspaper around $5 million had
changed hands on the interbank market on Friday.

Bureaux de change can in theory sell people U.S. dollars in cash, but they
are few and far between and the central bank directive said some would have
to re-apply for operating licences.

One exchange bureau at the Road Port bus station in Harare was not selling
U.S. dollars in cash yet but hoped it would start making sales next Monday.

Exchange rates on the black market for the bond note - which many people
still use in shops - were at 3.6 to the U.S. dollar, unchanged from Monday,
informal currency traders said.

South Africa

South Africa's rand falls as risk demand cools, stocks inch up

(Reuters) - South Africa’s rand fell on Tuesday, ending a rally that had
seen the currency breach a key technical mark, amid cooling demand for
emerging-market currencies that had been fuelled by optimism over U.S.-China
trade talks.

At 1508 GMT, the rand was 0.43 percent weaker at 13.8850 per dollar,
compared to a close of 13.8250 on Monday.

The rand has traded below the psychologically significant 14.00 per dollar
level for the past few sessions as last Wednesday’s budget lowered market
bets of a credit rating cut by Moody’s after a week of power cuts by utility
Eskom had spooked investors.

Demand for the rand and other emerging market currencies in the previous
session was boosted by U.S. President Donald Trump’s decision to delay a
deadline for increasing tariffs on Chinese imports.

But risk demand faded on Tuesday after Trump said a U.S.-China trade deal is
not a certainty, even though talks have made progress.

Federal Reserve Chairman Jerome Powell said on Tuesday rising risks and
recent soft data shouldn’t prevent solid growth for the U.S. economy this
year, but the Fed will remain “patient” in deciding on further interest rate
hikes.

Bonds firmed, with the yield on the benchmark 10-year government issue
falling 4.5 basis points to close at 8.65 percent. On the bourse, stocks
ended higher, led by Shoprite after the retailer gave a somewhat upbeat
outlook after reporting its worst half-year performance in a decade.

The blue-chip JSE Top-40 index was up 0.66 percent at 49,965 and the broader
All-share index ended 0.65 percent higher at 56,242.

Shoprite topped the gainers list on the benchmark index, rising 4.89 percent
to 169.75 rand, after the company said it had seen evidence of improved
sales since January. 

       <mailto:info at bulls.co.zw> 

Asia

Asia shares inch up, dollar near 3-week low after Powell comments

(Reuters) - Asian shares inched towards a five-month high on Wednesday and
the dollar hovered near a three-week low after Federal Reserve Chairman
Jerome Powell reinforced the U.S. central bank’s shift to a more “patient”
approach on policy in the face of a slowing economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced nearly
0.2 percent, climbing back toward the five-month peak scaled on Monday.

Japan’s Nikkei share average gained half a percent, while Australian stocks
were 0.2 percent higher.

China’s blue-chip CSI300 and Hong Kong’s Hang Seng Index also rose, by 0.4
percent and 0.5 percent, respectively.

U.S. stock futures were basically flat, with E-Minis for the S&P 500 holding
steady following a technical disruption that halted trading for hours.

Powell, spelling out the Fed’s approach to an economy that is likely
slowing, told U.S. lawmakers on Tuesday it is in “no rush to make a
judgment” about further changes to interest rates.

In two hours of testimony to the Senate Banking Committee, Powell elaborated
on the “conflicting signals” the Fed has tried to decipher in recent weeks,
including disappointing data on retail sales and other aspects of the
economy that contrast with steady hiring, wage growth, and ongoing low
unemployment.

More evidence of the hot and cold economy came overnight, with
weaker-than-expected U.S. housing data and a rosy consumer confidence
report..

U.S. homebuilding tumbled to a more than two-year low in December as
construction of both single and multi-family housing declined, which
overshadowed the rebound in consumer confidence in February after three
months of declines.

The contrasting data points left Wall Street underpowered, with the
benchmark S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite
closing down 0.1 percent each.

In the currency market, the dollar was softer after the Fed chief’s
testimony, with its index against major peers dipping more than 0.4 percent
to its lowest in three weeks overnight. It recovered a little bit of ground
in Asian trade, last trading 0.1 percent higher at 96.120.

The British pound vaulted after Prime Minister Theresa May offered lawmakers
the chance to vote on delaying Brexit.

Sterling last traded at $1.3246, having risen to $1.3288 on Tuesday, its
highest levels in five months. Against the euro, it hit a 21-month high of
85.63 pence.

The euro was down a tad at $1.1380 after hitting a three-week high of
$1.1402 overnight.

Against the Japanese yen, the greenback held steady at 110.62 yen per
dollar.

Investors will be keeping an eye on the U.S.-North Korean summit, which
begins in Hanoi later on Wednesday.

U.S. President Donald Trump and North Korean leader Kim Jong Un were due to
meet for their second summit, betting that their personal relationship can
break a stalemate over the North’s nuclear weapons and end more than 70
years of hostility.

Oil futures rose slightly on Tuesday after news that OPEC planned to
continue production cuts despite Trump criticising the producer group for
rising crude prices a day earlier.

U.S. crude futures stood at $55.96 per barrel, up 0.8 percent while Brent
was 0.6 percent higher at $65.62 a barrel .

Gold was down slightly at $1,328.10, 1.4 percent below a 10-month peak of
$1,346.70 scaled last Wednesday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

London copper slips as dollar recovers after Fed chief comments

(Reuters) - Copper slipped on Wednesday as the dollar picked up from a
three-month low it hit, after U.S. Federal Reserve Chairman Jerome Powell
said he is in "no rush to make a judgment" about further changes to interest
rates.

The metal recorded its highest close since July in the previous session and
is still not far off the $6,500 a tonne mark as low inventories remained in
focus. 

Available copper stocks MCU-STOCKS in warehouses monitored by the London
Metal Exchange have tumbled to less than 30,000 tonnes from more than
130,000 tonnes in mid January, reaching the lowest level since mid 2005. 

Citing LME data that showed speculators had increased their bullish bets on
LME copper by 3,735 net long positions to 31,665, ANZ said "the recent
improvement in sentiment amid the

easing trade tension has seen investors become more bullish on the red
metal." 

    FUNDAMENTALS

* COPPER: LME copper edged down 0.3 percent to $6,475 a tonne by 0503 GMT,
after closing up 0.2 percent in the previous session. The most traded April
contract on the Shanghai

Futures Exchange copper was up 0.1 percent at 50,210 yuan ($7,502.76) a
tonne by the end of the morning.    

* COPPER: Vedanta Ltd is selling down copper concentrate stocks from its
Sterlite smelter in southern India, looking to cut costs at the plant
ordered permanently shut in May..

* M&A: Africa-focused explorer Nzuri Copper Ltd has received a A$109.5
million ($78.64 million) takeover bid from a unit of China's Chengtun
Mining.

* CME GLITCH: U.S. exchange operator CME Group said on Wednesday operations
on its CME Globex platform had returned to normal after it had to halt all
trading due to technical

issues.

* OTHER METALS: Aluminium rose 0.3 percent and nickel was little changed,
while all other LME metals were down 0.2-0.3 percent. 

* ALUMINIUM: Glencore has lodged a complaint with the LME about the
company's inability to take speedy delivery of aluminium from warehouses
owned by ISTIM UK in Port Klang,

Malaysia.

Gold steady amid subdued dollar after Fed comments, palladium above $1,550

(Reuters) - Gold prices were steady on Wednesday as the dollar stood near a
three-week low after the Federal Reserve’s chairman reiterated the U.S.
central bank would stay patient on further interest rate hikes, while
palladium hovered near a record-peak.

FUNDAMENTALS

* Spot gold was flat at $1,328.90 per ounce at 0152 GMT, while U.S. gold
futures were up 0.2 percent at $1,331.20.

* Rising risks and recent soft data shouldn’t prevent solid growth for the
U.S. economy this year, but the Fed will remain “patient” in deciding on
further interest rate hikes, Fed Chair Jerome Powell said on Tuesday.

* The dollar was trading near its lowest against major currencies since
early February.

* The pound surged against the greenback after UK Prime Minister Theresa May
offered lawmakers the chance to vote in two weeks for a potentially
disorderly no-deal Brexit or to delay Britain’s exit from the European Union
if her attempt to ratify a divorce agreement fails.

* Spot palladium, which scaled a record-peak of $1,565.09 per ounce in the
previous session, was flat at $1,560.

* Palladium has climbed about 24 percent this year on widening supply
tightness in the market, while threats of strikes by mineworkers in South
Africa added support to the autocatalyst metal.

* Norilsk Nickel, the world’s largest palladium producer, said tighter
emissions regulations in all major markets and flattish primary supply would
widen a palladium deficit in 2019.

* U.S. President Donald Trump and North Korean leader Kim Jong Un meet on
Wednesday for their second summit, betting that their personal relationship
can break a stalemate over the North’s nuclear weapons and end more than 70
years of hostility.

* In a stinging rebuke to President Trump, the House of Representatives
brushed aside veto threats and passed legislation to terminate the emergency
he declared at the U.S.-Mexico border in order to build a wall there.

Meanwhile, the White House formally notified Congress that if the measure
passes Congress, Trump’s advisers would recommend that he veto it in order
to maintain the power he activated on Feb. 15 as a way of circumventing
Congress.

* China’s net gold imports via main conduit Hong Kong doubled in January
from the previous month, as banks in the world’s top consumer likely stocked
up at the beginning of the year.

* Uganda’s gold exports jumped 23 percent last year from 2017, for the first
time overtaking coffee as the East African country’s top foreign exchange
earner, central bank data showed.

* Indonesia’s disaster agency said on Wednesday that rescuers were searching
for survivors after more than 60 people were feared buried by the collapse
of an illegal gold mine on the island of Sulawesi.

DATA AHEAD (GMT) 1500 Fed’s Powell to testify on U.S. monetary policy and
the economy before the House Financial Services Committee

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> 

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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