Bulls n Bears Daily Market Commentary : 22 January 2019

Wed Jan 23 07:26:05 CAT 2019

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Bulls n Bears Daily Market Commentary : 22 January 2019

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Zimbabwe Stock Exchange Update

Market Turnover $12,107,772.84 with foreign buys at $5,001,762.98 and
foreign sales were $6,314,989.87. Total trades were 208.

The All Share index added another 3.70 points  to close at 160.82 points.
OLD MUTUAL LIMITED  went further up by $1.4579 to close at $10.1003, INNSCOR
gained $0.0995 to settle at $2.0001 and  DELTA  was $0.0902 stronger at
$3.2002. PPC also increased by $0.0500 to $1.8000 and ECONET  traded $0.0460
higher at $1.6670.

Trading in the negative was SIMBISA which lost $0.0038 to $0.7504, ZPI
dropped $0.0019 to end at $0.0281 and STAR AFRICA  was $0.0010 lower at
$0.0130. FIRST MUTUAL LIMITED  inched down $0.0001 to settle at $0.1399. 

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  Global Currencies & Equity Markets

Nigeria

Floating Nigerian currency would cause crisis, central bank head says

(Reuters) - Allowing Nigeria’s naira to float would cause a currency crisis,
the country’s central bank governor said on Tuesday, after the main
opposition candidate in next month’s presidential election proposed a free
float.

Godwin Emefiele made the comments shortly after announcing that the bank’s
monetary policy committee had left its benchmark interest rate at 14 percent
- a record level that has remained unchanged for more than two years.

Nigeria emerged from its first recession in 25 years in 2017. Higher oil
prices and recent debt sales have helped it accrue billions of dollars in
foreign reserves. But growth remains fragile.

A presidential election is set for Feb. 16. Incumbent Muhammadu Buhari has
campaigned on infrastructure development; the main opposition candidate,
former vice president Atiku Abubakar, says he will allow the naira to float
and overhaul the central bank.

Emefiele imposed currency restrictions in 2015, defying advice from bankers
to float the naira and raise interest rates as some other oil exporters had
done. His decisions were in line with the stance taken by Buhari, an
opponent of letting the naira float freely.

Answering a question about an unnamed presidential candidate criticising the
central bank’s policies, Emefiele said: “I have always said that we are
apolitical. We will remain apolitical.”

Currency controls imposed by Emefiele saw investors cutting their exposure
to Nigerian assets as the once-promising emerging market was ejected from
key bond indexes.

Tuesday’s decision to hold the benchmark rate at 14 percent was widely
expected. Most analysts polled by Reuters expect the rate to be kept on hold
until at least the middle of the year.

The bank has kept the benchmark rate unchanged in an effort to curb
inflation, support the naira and attract foreign investors into the debt
market.

Inflation has been rising steadily since July, increasing chances that the
central bank would tighten interest rates this year. The inflation rate has
been in double digits for three years and rose to a seven-month high of
11.44 percent in December.

South Africa

South Africa's rand slips on global growth fears

(Reuters) - The South African rand slipped on Tuesday, as fears about the
health of the global economy dampened appetite for riskier emerging market
assets.

At 1435 GMT, the rand was 0.2 percent weaker versus the dollar at 13.8575.

The International Monetary Fund’s warning of a darkening economic outlook
after China’s confirmation of its slowest growth rate in nearly 30 years
were among factors weighing on investor sentiment.

The rand fell by more than 13 percent against the dollar in 2018 but is up
around 3.5 percent since the end of last year, helped by a retreat in the
dollar in early January.

On the Johannesburg stock market, the Top-40 index was down 0.4 percent at
47,865 points, while the broader All-share index fell 0.3 percent to 53,974
points.

South African government bonds bucked the weaker trend, edging higher as the
yield on the benchmark 2026 instrument fell 4.5 basis points to 8.855
percent.

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Asia

Asian stocks pause amid worries over growth and trade

(Reuters) - Asian stocks took a breather on Wednesday, with mounting signs
of slowing global growth and concerns over a yet-unresolved Sino-U.S. trade
dispute putting the brakes on investor appetite for risk assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan was mostly
unchanged, stalling after climbing to a seven-week high on Monday.

The Shanghai Composite Index was last up 0.1 percent, having flitted in and
out of the red.

Australian stocks were a shade lower and Japan’s Nikkei nudged up 0.2
percent.

On Wall Street, the S&P 500, the Nasdaq and the Dow all posted their biggest
one-day percentage drops since Jan. 3 on Tuesday.

Following a sharp drop in December, U.S. shares gained through much of
January, supported in part by expectations for a thaw in U.S.-China trade
tensions and a more dovish-sounding Federal Reserve. That also prompted
global investors to plow into riskier assets.

But putting a dent on sentiment again was a report by the Financial Times
that the Trump administration had rejected an offer from China for
preparatory trade talks this week ahead of high-level negotiations scheduled
for next week.

White House economic adviser Larry Kudlow denied the report, helping U.S.
equities pare some losses though the fresh concerns about U.S.-China
relations kept share prices in check.

Data published over the last 24 hours all pointed to a rough year ahead for
the world economy.

U.S. home sales tumbled 6.4 percent in December, falling short of the
weakest forecast, to their lowest in three years. Compared with a year
earlier, they were down more than 10 percent for the first time since 2011.

House price increases slowed sharply, adding to evidence of a further loss
of momentum in the housing market.

Canadian factory sales and wholesale trade both slumped more than expected
in November, while in Germany a survey by the ZEW research institute showed
morale among German investors improved slightly in January, but their
assessment of the economy’s current condition deteriorated to a four-year
low.

Japan’s exports and imports also fell short of market expectations, with
exports posting their biggest fall in more than two years.

As expected the Bank of Japan kept monetary policy easy and trimmed its
inflation forecast on Wednesday with the domestic economy facing headwinds.

The latest weak indicators came after the IMF trimmed its global growth
forecasts for 2019 and 2020 on Monday, in its second downgrade in three
months, just after China reported its 2018 growth slipped to the worst level
in nearly three decades.

U.S. bond prices rebounded, with the benchmark 10-year yield slipping to
2.741 percent from Friday’s peak of 2.799 percent, the highest since Dec.
27, with money market futures pricing out any chance of a Fed rate hike this
year.

The euro weakened against the dollar under the weight of recent weakness in
the euro zone economy and worries about fallout from Brexit.

The common currency traded at $1.1365, having hit a three-week low of
$1.1336 on Tuesday.

The dollar rose 0.35 percent to 109.73 yen, recovering the previous day’s
losses.

In commodities, U.S. West Texas Intermediate (WTI) crude futures dipped 0.02
percent to $52.99 per barrel after shedding 1.9 percent the previous day. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

China Dec refined copper output at 2018 high; lead output hits record

BEIJING, Jan 23 (Reuters) -     * China's December refined copper output
rose by 4.5 percent year-on-year to 839,000 tonnes, its highest monthly
total in 2018, the National Bureau of Statistics said on Wednesday.

* The bureau typically does not provide individual numbers for  January and
February due to the impact of Chinese New Year

* China 2018 refined copper up 8 percent y/y at 9.03 million tonnes - stats
bureau   

* China Dec lead output soars 30.5 percent year-on-year to  561,000 tonnes -
stas bureau 

* Figure is the highest in stats bureau records going back to 1995, beating
the previous record of 484,000 tonnes set in November.

* China 2018 lead output up 9.8 percent year-on-year at 5.11  million tonnes
- stats bureau

* China Dec zinc output down 1.7 percent y/y at 509,000 tonnes - stats
bureau

* China 2018 zinc output down 3.2 percent y/y at 5.68  milliontonnes - stats
bureau

* China Dec iron ore output up 3.3 percent y/y at 68.42 mln tonnes - stats
bureau

* China 2018 iron ore output down 3.1 percent at 763.37 million tonnes

* China Dec alumina output up 19.6 percent y/y at 6.21 mln tonnes - stats
bureau

* China 2018 alumina output up 9.9 percent y/y at 72.53 million tonnes -
stats bureau

The following table shows output figures in tonnes.

Metal             Dec 2018  Pct Chg*  Jan-Dec 2018  Pct Chg

Refined copper     839,000       4.5  9.03 mln            8

Lead               561,000      30.5  5.11 mln          9.8

Zinc               509,000      -1.7  5.68 mln         -3.2

Iron Ore         68.42 mln       3.3  763.37 mln       -3.1

Alumina           6.21 mln      19.6  72.53 mln         9.9

Note: *Year-on-year percentage changes

Gold steady on global growth, Sino-U.S. trade worries

(Reuters) - Gold prices held steady on Wednesday, as mounting concerns over
a slowing global economic growth and uncertainty around Sino-U.S. trade
tensions dampened appetite for risk.

FUNDAMENTALS

* Spot gold was little changed at $1,284.19 per ounce by 0112 GMT, while
U.S. gold futures were also steady at $1,283.40 per ounce.

* Spot gold rose 0.4 percent on Tuesday, its biggest one-day percentage gain
in more than a week, as global stock markets fell on concerns over global
growth. Asian stocks dipped further on Wednesday

* Investors shunned risky assets like equities as the International Monetary
Fund warned of a dimmer outlook on Monday, China confirmed its slowest
growth rate in nearly 30 years, and as Brexit uncertainty dragged on
sentiment.

* The Trump administration has rejected an offer from China for preparatory
trade talks this week ahead of high-level negotiations scheduled for next
week, the Financial Times reported on Tuesday, citing people briefed on the
talks.

* White House economic adviser Larry Kudlow told CNBC the report was not
true.

* As much as U.S. President Donald Trump wants to boost markets through a
trade pact with China, he will not soften his position that Beijing must
make real structural reforms, including how it handles intellectual
property, to reach a deal, advisers say.

* Recent economic data has made the situation more gloomy for investors.

* U.S. home sales tumbled to their lowest level in three years in December
and house price increases slowed sharply, suggesting a further loss of
momentum in the housing market.

* Morale among German investors improved slightly in January, but their
assessment of the economy’s current condition deteriorated to a four-year
low, a survey showed on Tuesday.

* Japan’s exports and imports also fell short of market expectations, with
exports posting the biggest fall in more than two years.

* South Africa’s Gold Fields said on Tuesday that rumours it was looking to
merge with rival bullion firm AngloGold Ashanti were “absolutely false”
after shares of both companies firmed on speculation of a merger.

* A South African union representing just under half of all workers at
Sibanye-Stillwater’s platinum mine will extend a one-day strike if the
company does not return to the negotiating table, its president said on
Tuesday.

* The Shanghai Futures Exchange (ShFE), one of China’s biggest commodity
derivatives markets, is to end its current system of determining margin
requirements based on the size of an investor’s position, it said on
Tuesday. 

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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