Bulls n Bears Daily Market Commentary : 28 January 2019

Tue Jan 29 09:43:08 CAT 2019

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Bulls n Bears Daily Market Commentary : 28 January 2019

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Zimbabwe Stock Exchange Update

Market Turnover $3,134,740.61 with foreign buys at $623,653.60 and foreign
sales were $34,640.00. Total trades were 107.

The All Share index opened the week in the positive after gaining 0.32
points  to close at 158.54 points. OLD MUTUAL LIMITED  led the movers with a
$0.0466 gain to close at $9.0536, CASSAVA SMARTECH   added $0.0156 to
$1.5499 and FIRST MUTUAL PROPERTIES traded $0.0100 stronger at $0.0800.
AFRICAN SUN also increased by $0.0094 to end at $0.1204 and MASIMBA  was
$0.0090 firmer at $0.0900.

Only three counters lost ground as ECONET  dropped $0.0234 to $1.5256, AXIA
eased $0.0045 to settle at $0.4300 and DELTA   traded $0.0003 lower at
$3.1500.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand steady; focus on Sino-U.S. trade talks

(Reuters) - South Africa’s rand was largely unchanged on Tuesday as traders
looked for direction from the latest developments in a trade dispute between
the United States and China.

* At 0634 GMT, the rand was 0.09 percent stronger at 13.6525 per dollar,
little changed from Monday’s close in New York.

* The rand has struggled to hold recent gains below the 13.60 technical
resistance mark and is seen by traders drifting within a narrow range, with
a topside target of 13.78.

* Uncertainty over high-level U.S.-China trade talks, set for Wednesday and
Thursday, has dominated global market sentiment at the start of the week.

* The prospects for progress at the talks have been undermined by
Washington’s placement of criminal charges against China’s Huawei
Technologies.

* With no major economic releases due locally, market attention also turns
to the beginning of the U.S. central bank’s policy meeting on Tuesday.

* Bonds opened weaker, with the yield on the benchmark paper due in 2026 up
0.5 basis points to 8.770 percent.

Nigeria

Angola readying first trip to borrowing markets since IMF deal

(Reuters) - Angola is readying a return to bond markets after securing an
IMF deal and hopes to kick-off a three-year privatisation programme this
year, Treasury Secretary Vera Daves told Reuters on Monday.

Angola, Africa’s second-largest oil producer, secured $3.7 billion of
International Monetary Fund aid in December having been pushed towards an
economic crisis by the fall in crude prices since mid-2014.

Its currency, the kwanza, dropped more than 40 percent last year, making it
the second worst performing in the world after Argentina’s peso, while its
international reserves fell to a seven-year low of $11.1 billion in
December.

Daves said the country had financing needs of around 3.5 trillion kwanza
($11.32 billion) this year compared to the nearly 5 trillion kwanza it spent
in 2018, and was hoping to tap international markets to secure some of the
money.

President João Lourenço, who took over in September 2017 after 38 years of
rule by José Eduardo dos Santos, has said he wants to revive Angola’s
fortunes by tackling corruption, opening it up to foreign investment and
diversifying away from oil, which accounts for more than 90 percent of
exports.

The IMF programme is aimed at bringing stability to the country and
fostering a return of growth to the economy, especially in the second half
of the year, when Daves expects an expansion of around 2.8 percent.

Privatisation is also part of the country’s plans and the IMF’s. Banks, oil
and mining firms, telecoms and agriculture companies are all on what is
likely to be a “staggered” agenda.

$1 = 309.2420 kwanzas 

       <mailto:info at bulls.co.zw> 

Asia

Asia shares slip as China's Huawei in legal hot water; focus on Sino-U.S.
talks

(Reuters) - Asian shares stumbled on Tuesday and the dollar hovered near
two-week lows as prospects for a long-awaited Sino-U.S. trade deal were
dealt another blow after the United States levelled sweeping criminal
charges against China’s telecom giant Huawei.

The mood was expected to be subdued elsewhere with spreadbetters suggesting
a tentative start for Europe while futures for the S&P 500, Dow and Nasdaq
were each off 0.2 percent.

In Asia, the losses were led by Australia and New Zealand, with their
benchmark indices down 0.5 percent and 1.2 percent respectively.

Chinese shares opened in the red, then recovered in the afternoon.
Shanghai’s SSE Composite was up 0.1 percent while the blue-chip index
climbed 0.4 percent.

Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan was
still down 0.2 percent even after recouping some of its earlier losses.

Japan’s Nikkei, down about 1 percent almost all day, turned around to end
0.1 percent higher.

Despite the late uptick in share prices, the mood was still gloomy after the
U.S. Justice Department unsealed indictments against China’s top telecom
equipment maker, Huawei Technologies Co Ltd, accusing it of bank and wire
fraud to evade Iran sanctions and conspiring to steal trade secrets from
T-Mobile US Inc.

The jolt threatens to undermine prospects for a trade deal between the
economic giants as markets nervously await a round of trade talks with
Chinese Vice Premier Liu He set to meet U.S. officials on Wednesday and
Thursday.

Further complicating matters, China triggered the legal process on Monday
for the World Trade Organization to hear Beijing’s challenge to U.S.
tariffs, and berated the United States for blocking the appointment of
judges who could rule on it.

Souring U.S.-China relations roiled global markets for much of last year,
and have kept investors on the back foot this month. The trade war’s
broadening impact on world growth is one reason the U.S. Federal Reserve has
signalled it will be patient on policy after raising rates four times in
2018.

Indeed, many economists, including the International Monetary Fund, have cut
their forecasts for global growth this year, citing the U.S.-China trade
war.

It noted that investors were pricing in a 1 percent contraction in global
earnings per share (EPS) this year. “This would be the worst year-on-year
percentage change in EPS since 2015” even though economic growth is likely
to be much higher this year than seen in 2015, the note said.

WARNING BELLS

Markets will have more catalysts this week with over 100 of the S&P500
companies reporting results, including Amazon , Apple and Facebook.

Overnight on Wall Street, the Dow and S&P 500 each closed down 0.8 percent
and the Nasdaq was off more than 1 percent.

The losses came as shares of Caterpillar and Nvidia Corp nosedived after the
two manufacturers joined a growing list of companies cautioning about the
crippling effects of softening Chinese demand.

Worryingly, earnings at China’s industrial firms too shrank in December,
pointing to more troubles for the country’s vast manufacturing sector
already struggling with a decline in orders, job layoffs and factory
closures.

Slowdown fears slugged the U.S. dollar, which faltered to its lowest in two
weeks on Monday. The dollar index, which measures the greenback against a
basket of major currencies, was last at 95.733.

Against the safe haven Japanese yen, the dollar was down at 109.32, on track
for a third straight session of losses.

The downbeat global growth impulse mean investors will look for further
confirmation the Fed will pause its rate-hike cycle at a two-day policy
meeting ending Wednesday.

Elsewhere, sterling dithered against the dollar ahead of voting in Britain’s
parliament on Tuesday that aims to break the Brexit deadlock. It was last at
$1.3152.

Oil bounced after hefty overnight losses. U.S. crude was last up 35 cents at
$52.34 a barrel while Brent gained 37 cents to $60.30.

U.S. gold futures hovered near seven-month highs at $1,302.2 per ounce. Spot
gold was last at 1,304.19 after breaking above a key psychological barrier
of $1,300 an ounce on Friday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hits over 7-month peak as Huawei case sparks risk-off sentiment

(Reuters) - Gold prices hit a more than seven-month high on Tuesday as
investors shun riskier assets on worries over escalation in Sino-U.S. trade
tensions after the U.S. Justice Department charged China’s Huawei
Technologies Co Ltd with fraud.

Spot gold rose to its highest since June 14, 2018 at $1,304.53 in morning
trade and was firm at $1,304 per ounce by 0555 GMT. U.S. gold futures were
also steady at $1,302.70 per ounce.

The United States on Monday charged Huawei, its chief financial officer and
two affiliates with bank and wire fraud to violate sanctions against Iran in
a case that has escalated tensions with Beijing.

Investors fear the charges could complicate high-level trade talks set to
begin on Wednesday where Chinese Vice Premier Liu He will meet with U.S.
Trade Representative Robert Lighthizer and others.

The dollar index, a gauge of its value versus six major peers, held close to
a two-week low, while Asian shares fell.

Meanwhile, the U.S. Federal Reserve’s two-day policy meeting begins later in
the day, where the central bank is expected to leave interest rates
unchanged.

The Fed raised interest rates four times last year, but some officials have
said they will be patient in raising rates given the stalemate over global
trade, the U.S. federal government shutdown, and waning business and
consumer confidence.

Gold tends to rise on expectations of lower interest rates, which reduce the
opportunity cost of holding non-yielding bullion.

The yellow metal has risen over 12 percent since touching a more than
1-1/2-year-low in August mostly due to volatile stock markets and a softer
dollar on the back of expectations that the Fed will pause its multi-year
rate-hike cycle.

Reflecting investor sentiment in bullion, holdings of SPDR Gold Trust, the
world’s largest gold-backed exchange-traded fund (ETF), rose 0.73 percent to
815.64 tonnes on Monday, their highest since June 2018.

“ETF interest remains supportive to the yellow metal, while a number of
ongoing geopolitical concerns continue to facilitate top-side momentum,” MKS
PAMP Group said in a note.

In other metals, palladium was steady at $1,331 per ounce. Prices hit a
record high of $1,434.50 on Jan. 17.

Silver was firm at $15.74 per ounce, while platinum slipped 0.1 percent to
$808.50. 

Aluminium prices rise; stocks may gain after Rusal sanctions lifted

(Reuters) - London aluminium prices rose on Tuesday, rebounding from a 2.8
percent plunge in the previous  session, with investors' focus returning to
inventories, U.S.-China trade talks and the upcoming U.S. Federal Reserve
meeting.

Monday's drop came after the United States lifted sanctions on Russian
aluminium producer Rusal, while the London Metal Exchange (LME) said it
would also start accepting all Rusal metal into its warehouses again.

More metal will likely be available in the near future  because Rusal has
been transporting volumes from its Siberiansmelters to Russian ports so it
could be shipped quickly once sanctions were lifted, the bank said.

    FUNDAMENTALS

* ALUMINIUM: Three-month LME aluminium had climbed 0.3 percent to $1,872.50
a tonne by 0430 GMT. The most-traded March aluminium contract on the
Shanghai Futures Exchange (ShFE)  was down 1 percent to 13,405 yuan
($1,986.37) at midday. 

* RUSAL: Aluminium users around the world will pay less for their material
but U.S. tariffs on imports of the metal mean  limited gains for the
consumers in the United States.

* STOCKS: Inventories of aluminium stand at 1.3 million tonnes in
LME-approved warehouses MAL-STOCKS, near their lowest since May 2018. The
lifting of a ban on placing certain

Rusal metal on warrant "has stoked fears that a flood of Russian material
will hit the warehouses," ANZ wrote in a note. 

* U.S.-CHINA: The United States on Monday announced criminal charges against
China's Huawei Technologies Co Ltd, escalating a fight with the world's
biggest telecommunications equipment maker days before trade talks between
Washington and Beijing.

China expressed serious concern over the charges.

* OTHER METALS: London copper prices edged up 0.1  percent to $6,009 a
tonne, while ShFE copper was down0.3 percent. Zinc was the worst performer
on the LME, falling 0.6 percent to $2,664 a tonne.

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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