Bulls n Bears Daily Market Commentary : 27 February 2019

Thu Feb 28 07:07:24 CAT 2019

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Bulls n Bears Daily Market Commentary : 27 February 2019

 <mailto:info at bulls.co.zw> 

Zimbabwe Stock Exchange Update

Market Turnover RTGS$3,064,066.60 with foreign buys at RTGS$301,995.00 and
foreign sales were RTGS$12,744.93. Total trades were 91.

The All Share index lost 2.66 points  to close at 149.33 points. OLD MUTUAL
LIMITED  led the shakers with a $1.3509 loss to trade at $7.5030, PADENGA
dropped $0.0900 to $1.0000 and MEIKLES  was $0.0800 lower at $0.5200. DELTA
also decreased by $0.0712 to end at $2.7991 and SEEDCO INTERNATIONAL  was
$0.0500 down at $1.7000.

Two counters gained ground as MASIMBA picked up $0.0010 to settle at $0.0860
and DAIRIBORD   added a marginal  $0.0003 to close at $0.1568.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabwe

Zimbabwe sold up to $20 million to banks for trade on new forex platform -
sources

(Reuters) - Zimbabwe’s central bank has sold up to $20 million to banks for
trading on a newly-launched forex interbank market, but the money could be
exhausted by the end of next week due to high demand, banking sources said
on Wednesday.

Zimbabweans had hoped the end of Robert Mugabe’s rule in 2017 after an army
coup would change their economic fortunes, but have instead watched as a
severe dollar crunch hobbles businesses and brings shortages of medicines,
fuel and food.

Many anticipated walking into banks to buy U.S. dollars after the Reserve
Bank of Zimbabwe (RBZ) scrapped a discredited 1:1 dollar peg for surrogate
bond notes and electronic dollars last week, merging them into a lower-value
transitional currency called the RTGS dollar.

But banks were under orders to restrict transactions to companies and
individuals with foreign payments to make that would stimulate economic
growth, according to a central bank directive seen by Reuters.

That, and the fact the exchange rate has remained stuck at around 2.5 RTGS
to the dollar since the currency started trading on Friday, brought
criticism from bankers and economists that it was not the monetary reform
needed.

The central bank sold what it called “seed” U.S. dollars to a handful of
banks on Friday, but RBZ governor John Mangudya and Finance Minister Mthuli
Ncube have refused to say the amount.

Dealers at banks said the reason sellers were not coming forward was because
they wanted a higher rate for dollars.

On the black market, $1 bought 3.6 RTGS, unchanged from Tuesday. But dealers
said the central bank was giving indications to the market that it did not
want the official rate to move beyond 2.5 for now.

The central bank says it removed the 1:1 dollar peg to benefit exporters who
previously surrendered a portion of their dollars at the official rate.

Exporters, including miners who earn the most dollars for the economy, can
now sell part of their U.S. dollars at the 2.5 rate. But they can only keep
dollars in local foreign currency accounts for 30 days, after which they are
required to sell on the interbank market.

This, the central bank hopes, will create a ready pool of dollars for
importers and the government.

But some analysts are sceptical, saying exporters should be allowed to keep
all their dollars and only sell when they need to, if Zimbabwe is to attract
foreign investment.

In another sign of the acute dollar shortages, long queues resurfaced at
petrol stations this week where fuel is supplied by government purchases in
the U.S. currency. 

South Africa

South African rand dips as risk demands dips, Tradehold lifts stocks

(Reuters) - South Africa’s rand weakened on Wednesday as risk demand in
global markets was soured by an escalation in tensions between India and
Pakistan, prompting investors to flee into safe haven assets.

At 1520 GMT the rand was down 0.58 percent at 13.9200 per dollar compared to
an overnight close of 13.8400, with most of the losses coming as New York
traders came online after a subdued start to the local session.

Nuclear powers India and Pakistan claimed that they shot down each other’s
fighter jets, with Pakistan capturing an Indian pilot a day after Indian
warplanes struck inside Pakistan for the first time since a 1971 war.

The dollar gained from risk aversion and recovered from three-week lows,
while traditional safe havens such as the Swiss franc and Japan’s yen as
well as gold also rose.

The rand had advanced around one percent since last week’s budget where
Finance Minister Tito Mboweni announced a 69 billion rand bailout for ailing
utility Eskom, but the currency has treaded water in the past few sessions.

Bonds edged weaker, with the yield on the benchmark paper due in 2026 adding
1 basis point to 8.67 percent.

In the equities market, Tradehold Limited helped lift stocks, topping the
bourse after it said it had been approached by a private property investor
to invest 833 million rand ($59.77 million) directly into its portfolio of
South African property assets and 200 million rand into Tradehold.

Shares in Tradehold jumped 13.19 percent to 11.50 rand, its biggest daily
gain in 7-1/2-weeks.

Shares in Africa’s biggest pay-TV group MultiChoice leapt around 15 percent
on its market debut earlier, launching the firm straight into the top-40
firms on the bourse.

MultiChoice, a spin-off from e-commerce giant Naspers , stood at 106.01
percent, 11 percent higher than its opening price of 95.5 rand.

Portfolio Managers at asset management firm Vestact said in a note that
Multichoice shares jumped as the market tried to figure out what it was
worth.

The Johannesburg All-share index inched up 0.1 percent to 56,297 points,
while the Top-40 index was little unchanged at 49,955 points. 

       <mailto:info at bulls.co.zw> 

Asia

Asian stocks shaky as Sino-U.S. trade optimism retreats

(Reuters) - Asian stocks struggled for traction on Thursday after cautious
comments from U.S. Trade Representative Robert Lighthizer deflated some
optimism that China and the United States were closing in on a trade deal.

The dollar held onto its gains from Wednesday, supported by higher bond
yields.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped in and
out of the red, while South Korea’s KOSPI shed 0.25 percent and Japan’s
Nikkei lost 0.35 percent.

The Shanghai Composite Index dipped 0.3 percent as more weak data weighed on
sentiment. Figures released on Thursday showed factory activity contracted
for the third straight month in February as export orders fell to the lowest
level since the global crisis.

Lighthizer said on Wednesday it was too early to predict an outcome in talks
between Washington and Beijing.

U.S. issues with China are “too serious” to be resolved with promises from
Beijing to purchase more U.S. goods and any deal between the two countries
must include a way to ensure commitments are met, he told U.S. lawmakers.

The conflict between India and Pakistan heated up after both said on
Wednesday that they shot down each other’s fighter aircraft.

PULLING BACK

Global equities scaled a four-month high earlier this week helped by upbeat
expectations towards U.S.-China trade talks, before pulling back after
Lighthizer spoke.

In currency markets, the dollar index against a basket of six major
currencies stood little changed at 96.097.

The index had edged up 0.1 percent on Wednesday, pulling away from a
three-week trough as Treasury yields rose ahead of the release of U.S.
fourth-quarter GDP data later on Thursday.

The dollar traded at 110.87 yen, having bounced back from a low of 110.355
on Wednesday as tensions between India and Pakistan flared.

The yen often attracts demand in times of political tensions and market
turmoil. It showed little response to data showing Japan’s factory output
posted the biggest decline in a year in January.

The euro was a shade higher at $.1.1377 after slipping 0.15 percent on
Wednesday.

The pound stood within distance of a near eight-month peak of $1.3351
reached the previous day. Sterling has rallied this week as investors ramped
up bets that a no-deal Brexit was less likely and that Britain’s departure
from the European Union would be delayed.

U.S. crude oil futures were steady at $56.96 per barrel, holding Wednesday’s
gains of 2.5 percent.

Crude rallied after U.S. inventories unexpectedly plummeted and as Saudi
Arabia brushed aside comments from U.S. President Donald Trump seeking to
keep oil prices from climbing.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper flat after China PMI miss, heads for best month since late 2017

(Reuters) - Copper prices were steady in early trade on Thursday, with
concerns over low stocks balancing out a contraction in China manufacturing
and a U.S. warning that it was too early to say what the outcome of trade
talks with Beijing will be.     

Copper is on course to rise 5.5 percent in February amid supply concerns and
earlier optimism over the trade talks, which would mark its best month since
December 2017. 

    FUNDAMENTALS

* LME COPPER: Three-month copper on the London Metal Exchange was flat at
$6,509 a tonne at 0129 GMT, after closing up 0.2 percent in the previous
session. The most-traded copper contract on the Shanghai Futures Exchange
nudged up 0.2 percent to 50,240 yuan ($7,518.48) a tonne. 

* CHINA: Factory activity in China shrank for the third straight month in
February, with its official Purchasing Manager's Index falling to a
three-year low of 49.2, missing the 49.5 forecast in a Reuters poll of
analysts.

* TRADE: U.S. issues with China are "too serious" to be resolved with
promises from Beijing to purchase more U.S. goods and any deal between the
two countries must be include a way to ensure commitments are met, U.S.
Trade Representative Robert Lighthizer said.

* STOCKS: Copper inventories in LME-registered warehouses MCU-STOCKS, near
130,000 tonnes, are close to their lowest in 10 years.

* CODELCO: Chile's Chuquicamata underground copper mine is due to start
operations in middle of this year, state copper miner Codelco's chairman
said.

* BHP: BHP Group Ltd, the world's biggest miner,  announced a raft of
management changes, in line with its "transformation agenda" led by Chief
Executive Andrew Mackenzie.

* HKEX: Hong Kong's stock exchange operator said it would expand its connect
schemes and launch a series of new products, as it announced its strategy
for the next three years.

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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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
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for guideline purposes only and sourced from third parties.

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