Bulls n Bears Daily Market Commentary : 14 January 2019

Tue Jan 15 08:05:29 CAT 2019

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Bulls n Bears Daily Market Commentary : 14 January 2019

 <mailto:info at bulls.co.zw> 

Zimbabwe Stock Exchange Update

Market Turnover $2,310,761.36 with foreign buys at $109,898.80 and foreign
sales were nil. Total trades were 106.

The All Share index opened the week in the positive adding a significant
5.11 points  to close at 149.01 points in a session dominated only with
gainers. SEEDCO INTERNATIONAL LIMITED  put on $0.2561 to end at $2.0000,
ECONET  gained $0.1311 to $1.5105 and OLD MUTUAL LIMITED  traded $0.1211
firmer at $8.2941. INNSCOR   also incresead by $0.1183 to close at $1.8188
and CASSAVA SMARTECH  was $0.0994 stronger at $1.4391.

There were no trades in the negative as ZB FINANCIAL HOLDINGS , NAMPAK and
DAWN PROPERTIES  all traded unchanged at $0.3500,$0.3000 and $0.0280
respectively.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South African rand treads water; Brait sends stocks lower

(Reuters) - The South African rand was little changed on Monday as investors
awaited closely watched data releases including mining output later in the
week, while a plunge in investment firm Brait sent stocks lower.

At 1550 GMT the rand was at 13.8100 against the dollar, more than 0.1
percent stronger than its previous close.

The South African currency has started 2019 on the front-foot, rallying more
than 3.5 percent against the dollar. But it remains vulnerable to swings in
global risk appetite as well as uncertainty surrounding this year’s
parliamentary election.

Later this week investors will scrutinise domestic data releases including
mining output and retail sales, as well as a repo rate decision by the South
African Reserve Bank (SARB).

Economists polled by Reuters expect the SARB to leave the rate on hold,
while retail sales and mining are seen expanding modestly.

Africa’s most industrialised economy emerged from recession in the third
quarter last year, but the recovery has been halting since.

On the Johannesburg bourse, Brait plunged 21.48 percent to 25 rand after its
British fashion chain New Look announced a deal with creditors to cut 1
billion pounds ($1.3 billion) off its debts, its latest turnaround attempt.

It was the biggest decliner on the All-Share Index, which fell 0.31 percent
to 53,485 points.

Ron Kiplin, portfolio manager at Cratos Capital, which does not hold Brait
shares but researches the stock, said the restructuring served to show the
weakness of Brait’s position in terms of both capital and liquidity. ($1 =
0.7786 pounds)

Angola

(Reuters) - Angola’s net foreign exchange reserves fell to $11.121 billion
in December from a revised $11.902 billion in November, data on the central
bank’s website showed on Monday.

       <mailto:info at bulls.co.zw> 

Asia

Asia stocks reach 5-week high, yuan makes big weekly gains

(Reuters) - Asian stocks inched up to five-week highs on Friday, after
Chairman Jerome Powell reiterated the Federal Reserve will be patient about
raising interest rates and news that trade talks between Washington and
Beijing are moving to higher levels.

As the Fed’s dovish stance kept a lid on the dollar, China’s yuan rose to
its highest levels in more than five months and was on course for its
biggest weekly gains since the 2005 revaluation in onshore trade.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.2
percent to the highest levels since Dec. 6, while Japan’s benchmark Nikkei
advanced 0.7 percent. Shanghai Composite Index initially rose 0.8 percent,
but that was pared to just 0.1 percent.

Wall Street extended its rally into a fifth straight day on Thursday in a
whipsaw trading session as investors responded to mixed comments by Powell,
while a warning from Macy’s pummelled retail stocks.

At the Economic Club of Washington, Powell reiterated the views of other
policymakers that the Fed would be patient about interest rate hikes.

Major U.S. stock indexes also quickly recovered from brief losses after
Powell said that the Fed’s balance sheet would be “substantially smaller”.

U.S. and Chinese officials are working on arrangements for higher-level
trade talks after mid-level officials this week discussed U.S. demands that
would require structural change in China to address issues such as IP theft,
forced technology transfers and other non-tariff barriers.

U.S. Treasury Secretary Steven Mnuchin said late on Thursday that Chinese
Vice Premier Liu He will “most likely” visit Washington later in January for
trade talks.

Still, fundamental tensions between the U.S. and China “are unlikely to go
away and there is a high likelihood that any agreement to suspend tariffs
eventually breaks down when it becomes clear that Trump’s objectives cannot
really be met.”

Some investors are also increasingly wary of lingering disputes in
Washington over a wall Trump wants on the U.S.-Mexico border, which has led
to a weeks-long partial government shutdown.

Flanked by border agents who are going without paychecks during the
shutdown, Trump again threatened on Thursday to declare a national emergency
to bypass Congress to fund a wall.

In the foreign exchange markets, the dollar was broadly soft after a small
rebound from three-month lows the previous day.

The dollar index, measuring it against major peers, dipped 0.1 percent to
95.38.

The euro firmed 0.2 percent to $1.1523, while the dollar dipped 0.1 percent
to 108.28 yen.

The yuan, both onshore and offshore, climbed to the highest levels since
late July, aided by a weaker dollar and rising hopes of progress in the
U.S.-China talks.

In onshore trade, the Chinese currency has risen 1.6 percent this week, the
biggest gain since July 2005 when Beijing abandoned the yuan’s peg to the
dollar.

U.S. Treasury debt prices erased early gains after a soft 30-year bond
auction and in reaction to Powell’s comments on the Fed “substantially”
reducing the size of its balance sheet.

The 10-year U.S. Treasuries yield last stood at 2.728 percent.

Crude prices held near one-month highs, but a more than week-long in oil
rally slowed as optimism surrounding U.S.-China trade talks faded a little.

In Asian trade, West Texas Intermediate crude futures slipped 0.6 percent to
$52.30 per barrel.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Shanghai copper, aluminium edge down after weak Chinese trade data

(Reuters) - Shanghai copper and aluminium inched down on Tuesday after weak
Chinese trade data disappointed investors, although metals traded in London
drew some support from U.S. President Donald Trump’s comments on reaching a
trade deal with China.

Trump on Monday predicted Washington would reach a deal with China to end a
tit-for-tat trade war, saying Beijing wants to negotiate and that talks are
going well.

FUNDAMENTALS

* The most-traded Shanghai copper contract had fallen 0.4 percent to 46,850
yuan ($6,923.51) a tonne by 0119 GMT, on track for its third consecutive
decline. Shanghai aluminium dropped as far as its lowest since September
2016 at 13,230 yuan a tonne.

* Three-month copper on the London Metal Exchange rose 0.4 percent to $5,920
a tonne, reversing losses from the previous session, while London aluminium
edged up 0.1 percent to $1,830.5 a tonne.

* The U.S. Senate will begin voting on Tuesday on a resolution criticising
the Trump administration’s decision to ease sanctions on companies linked to
Russian oligarch Oleg Deripaska, including aluminium giant Rusal.

* For the top stories in metals and other news, click or

MARKETS NEWS

* Asian shares were on the back foot as an unexpected drop in China’s
exports heightened worries about the global economy, while the British pound
braced for a showdown in parliament over the government’s Brexit plan.

Eyes on Newcrest as gold dealmaking heats up

(Reuters) - Two recent large M&A deals in the gold sector have prompted
speculation that Newcrest Mining , Kinross Gold Corp and B2Gold Corp may be
among the next gold companies to combine with a rival, bankers and analysts
said.

On Monday, Newmont Mining announced a $10 billion takeover of Goldcorp Inc,
close on the heels of Barrick Gold’s purchase of Randgold Resources.

Deal-making had largely been dormant in the gold sector in recent years, as
companies focused on cutting costs amid investor criticism of inadequate
management of capital. But the need to bolster shrinking gold reserves to
boost growth and take advantage of rising gold prices are now providing the
impetus for consolidation.

Gold producers who have good assets but face stagnant growth are seeking to
partner with well-run companies, according to bankers and analysts.

Eyes are on Australia’s Newcrest, capitalised at around 18 billion
Australian dollars ($13 billion), a banker close to the Newmont-Goldcorp
deal said.

A buyout of a North American miner could improve Newcrest’s valuation by
offering a dual listing, said Andy Forster, portfolio manager at Argo
Investments in Sydney.

Brenton Saunders, an analyst with Sydney-based fund manager Pendal Group,
said Newcrest was more likely a buyer than a target.

Newcrest spokesman Chris Maitland told Reuters, “If we can see an asset
where we can ... use one of our competitive advantages to increase the value
of that asset, that’s how we’d approach M&A.”

Newcrest, which has expertise in a type of mining called blockcaving, is
vying with BHP Group as major stakeholders in Ecuador’s SolGold.

TIE-UP POTENTIAL

Canadian miner Kinross and AngloGold Ashanti, based in South Africa, are
among the gold producers that could combine with other companies, analysts
and bankers said.

Kinross did not immediately respond to a request for comment. AngloGold
Ashanti could not be reached outside business hours.

Kinross needs to focus on replacing depleted assets, and would likely hone
in on North America if it were to do a deal, analysts at Scotiabank wrote in
November.

Vancouver-based B2Gold, which has operations in Africa, South America and
the Philippines, could be a target because of its strong growth profile,
said sector watchers, including PI Financial’s Chris Thompson, who has a
“buy” rating on the stock.

B2Gold did not immediately respond to a request for comment.

The acquirer would likely be a company that has operational expertise in the
jurisdictions B2Gold operates in, particularly West Africa, which offers the
best growth prospects for the company, Thompson said. ($1 = 1.3875
Australian dollars) 

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
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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