Bulls n Bears Daily Market Commentary : 04 January 2019

Sat Jan 5 08:38:56 CAT 2019

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Bulls n Bears Daily Market Commentary : 04 January 2019

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Zimbabwe Stock Exchange Update

Market Turnover $5,987,873.83 with foreign buys at $1,343,833.70and foreign
sales were $1,425,025.99. Total trades were 50.

The All Share index retreated 1.14 points  to close at 145.18 points in a
session mainly dominated with losses. OLD MUTUAL LIMITED  dropped $0.1869 to
close at $7.604, INNSCOR  lost $0.0500 to $1.7500 and CASSAVA SMARTECH
traded $0.0440 weaker at $1.3775. ECONET  also decreased by $0.0320 to
$1.3875 and CBZ   was $0.0150 down at $0.1400. 

Only two counters gained ground as SIMBISA added $0.1200 to close at $0.8500
whilst FIRST MUTUAL HOLDINGS  traded $0.0205 stronger at $0.1240.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Zimbabwe

AB Inbev's Zimbabwe unit scraps hard currency payment plan after govt
opposition

(Reuters) - Zimbabwe’s largest brewing company Delta Beverages, part-owned
by Anheuser-Busch Inbev, said it has abandoned a plan to only accept hard
currency payments to cope with a crippling shortage of U.S. dollars, after
the government intervened.

Delta Beverages announced on Wednesday that it would only take payments in
U.S. currency and would no longer accept electronic dollars known as
“Zollars”, or a quasi-currency known as “bond notes”, amid a severe shortage
of hard currency in Zimbabwe.

However, the country’s commerce minister said on Thursday that the
government opposed the plan and Delta, 40 percent-owned by Anheuser-Busch
Inbev, scrapped the plan following a meeting with senior politicians and
reserve bank officials.

The reserve bank said it would endeavour to provide the foreign currency
required to ensure that Delta continues to trade “on the current basis”.

In a separate statement on Friday, Delta said shortages of its products,
particularly soft drinks, would persist while the arrangement gets underway.

Zimbabwe’s currency crisis is undermining President Emmerson Mnangagwa’s
efforts to win back foreign investors who were sidelined under his
predecessor Robert Mugabe.

Zimbabwe abandoned its currency in 2009, adopting the U.S. dollar in an
effort to tame hyperinflation, but a severe shortage of physical notes has
seen dollars in bank accounts lose value compared with cash.

Companies such as Delta have been left struggling because they have to spend
U.S. dollars overseas, but their takings consist of Zollars or ‘bond notes’,
which are worth far less.

Zimbabwe began issuing ‘bond notes’ in late-2016 in an effort to ease the
worsening cash crunch. The quasi-currency was supposed to trade in parity
with the U.S. dollar but it wasn’t long before it devalued sharply on the
street.

As inflation shot up, the reserve bank in October ordered banks to separate
dollars and the electronic “Zollars’ in customer accounts, effectively
recognising the country has two currencies.

That spooked investors and Zimbabweans panicked amid acute shortages of fuel
and basic goods, piling pressure on Mnangagwa as he attempts to rebrand
Zimbabwe after decades of international isolation under Mugabe.

South Africa

South Africa's rand rallies on U.S. rate cut bets, stocks follow

(Reuters) - South Africa’s rand firmed to a two-week best on Friday as
emerging markets were boosted by increased expectations of the U.S. central
bank cutting lending rates this year.

At 1430 GMT the rand was 0.84 percent firmer at 14.1550 after an overnight
close of 14.3075.

Traders of contracts tied to the Federal Reserve’s policy rate kept bets the
U.S. central bank will not deliver a single rate hike this year and will
begin cutting rates next year.

With little on the local data front in the first week of the new year, the
rand has looked to offshore events for direction, and has seen volatile
trade with swings in the dollar setting the tone.

The rand reached a session best of 14.0925 soon after trading in London
kicked off before some of the momentum after a surge in U.S. job growth
helped steady the greenback, which traded 0.15 percent higher after a rocky
start.

Survey data on Thursday showed U.S. factory activity slowed more than
expected, the latest sign the world’s largest economy was losing steam,
igniting bets the Federal Reserve could switch from raising to cutting
rates.

That aided the rand recovery from Wednesday’s “flash crash” that saw the
unit plunge to a three-month low in a global selloff.

Bonds were firmer, with yield on the benchmark paper due in 2026 down 5
basis points to 8.8 percent, its lowest since mid-August.

Stocks also continued to regain some of the losses they had endured in the
first few days of the new year, with the Johannesburg Stock Exchange’s
top-40 index up 0.96 percent to 46,059 points and the broader all-share
index up 0.82 percent to 52,093 by 1511 GMT.

Consumer-focused sectors, namely retailers and banks, led the top-40 index
upwards, with Truworths, The Foschini Group and Mr Price at the top, as well
as bourse heavyweight Naspers, which was up 2.3 percent.

Anglogold Ashanti, meanwhile, was the worst performer on the index, down 4
percent, after benefiting from rising gold prices as investors retreated to
safer assets earlier in the week.

       <mailto:info at bulls.co.zw> 

China

China's economic woes put U.S. in strong position in trade talks -Trump

(Reuters) - President Donald Trump on Friday said the United States could
reap some benefits in trade talks with China from that country’s current
economic weakness.

A warning by Apple of weaker than expected iPhone sales in China has
underlined concerns about the Chinese economy.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slides after solid jobs data; palladium crosses key $1,300 mark

(Reuters) - Gold fell on Friday, pulling back from a more than six-month
peak hit earlier in the session, as robust U.S. jobs data eased some
concerns about an ailing economy, while palladium prices punched through the
key $1,300 level for the first time.

Spot gold slipped 0.8 percent to $1,283.86 per ounce as of 1:55 p.m. EST
(1855 GMT), after dropping to $1,276.40.

The metal was however on track for a third straight weekly gain, up about
0.2 percent so far, mainly helped by recent strong gains. It touched its
highest level since mid-June at $1,298.42 earlier in the day.

U.S. gold futures settled down 0.7 percent at $1,285.80 per ounce, having
briefly surpassed the psychological $1,300 per ounce level earlier in the
session.

Data showed U.S. employers hired the most workers in 10 months in December,
suggesting a sustained strength in the economy that could soothe concerns of
sharp slowdown in growth.

Fed Chairman Jerome Powell on Friday moved to mollify financial markets
concerned about a U.S. economic slowdown, saying that while momentum is
solid, the central bank will be sensitive to the downside risks the market
is pricing in.

Powell’s remarks sent investors into riskier assets like stocks, which
rallied amid hopes of upcoming trade talks between United States and China,
further pressuring bullion.

Gold is highly sensitive to rising interest rates, as these increase the
opportunity cost of holding non-yielding bullion.

Elsewhere, palladium prices rose nearly 2 percent to $1,288.49 per ounce,
having hit a record high of $1,310 earlier.

Platinum also jumped 2.8 percent to $820.30, after touching $823.50 an
ounce, its highest price since Nov. 29.

Silver eased 0.4 percent to $15.68 per ounce, having earlier hit $15.87, it
highest level since mid-July. 

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
contents or otherwise arising in connection therewith. Recipients of this
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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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