Bulls n Bears Daily Market Commentary : 05 July 2019

Mon Jul 8 01:23:04 CAT 2019

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Bulls n Bears Daily Market Commentary : 05 July 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 4,766,511.35 with foreign buys at ZWL$ 3,337,090.40 and
foreign sales were ZWL$237,579.24 Total trades were 108.

The All Share index closed the week in the negative losing 2.72 points to
end at 188.70 points. SEEDCO  dropped by $0.2997 to $1.5000, ECONET eased
$0.1195 to end at $1.5295 and INNSCOR was $0.0724 weaker at $2.2560. OK
ZIMBABWE  also deacresed by $0.0559 to $0.4007 and EDGARS traded $0.0364
lower at $0.2236.

Trading in the positive; DELTA  added $0.0451 to $3.4514, BINDURA  rose by
$0.0140 to end at $0.0840 and OLD MUTUAL LIMITED  was $0.0033 stronger at
$14.0000. SEEDCO INTERNATIONAL LIMITED  also increased by $0.0016 to $2.1000
and RIOZIM traded $0.0015 higher at $2.264.

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  Global Currencies & Equity Markets

South Africa

Rand rattled by stronger U.S payrolls data, South African stocks slip

(Reuters) - The rand slumped on Friday as data showing U.S. job growth
rebounded strongly in June sent the dollar sharply higher, while the
resources sector led South African stocks lower.

The South African currency was on course for a fall of around 0.8% for the
week after dropping 1% against the U.S. dollar to 14.1900.

In fixed income, the yield on the benchmark government bond due in 2026
added 9.5 basis points to 8.170%.

On the bourse, the benchmark JSE Top-40 Index fell 0.4% to 51,539 points,
while the broader All-Share Index dropped 0.4% to 57,590 points.

Bullion shares fell 1.72%, with Gold Fields down 2.27% to 71.93 rand and
AngloGold Ashanti dropped 2.08% to 378.80 rand.

Iron Ore supplier Kumba Iron Ore, was among the biggest fallers, down 7.34%
to 471.68 rand.

Drugmaker Aspen Pharmacare, was among the fallers, down 4.89% to 99.64 rand
after it said it had terminated talks with a potential partner in Europe. 

Nigeria

Nigeria orders banks to lend or face sanctions

(Reuters) - Nigeria’s central bank will try to force banks to lend more or
face higher cash reserve requirements, part of a series of measures aimed at
reviving an economy stuck with low growth.

The bank in a circular dated July 3 said lenders who fall short of a target
minimum loan-to-deposit ratio of 60% by September would have to maintain
higher cash reserves.

The bank is seeking to boost credit to businesses and consumers after a
recent recession in Africa’s biggest economy muted lending.

Nigeria’s economy has since recovered from that contraction, but lending has
not returned as growth is slow and banks prefer to pack cash in risk-free
government securities rather than lend to businesses and consumers.

The new loan ratio will be subject to quarterly review, the bank said.

Several Nigerian banks had set ambitious expansion targets before an oil
price collapse mid-2014. Some have decided to conserve their capital at the
expense of higher profits through lending.

POLICY FROM THE PAST?

The bad loan ratio has dropped to around 9% from double digits at the peak
of a recession but still above a central bank target of 5%.

Lenders have failed to expand borrowing in Nigeria, blaming a weak economy
after the oil price crash triggered a recession and a currency crisis made
loans go sour.

Last week, the central bank said it would pursue a recapitalisation of the
banking sector over the next five years after a series of currency
devaluations weakened bank capital.

One banking analyst said the new lending rule risked taking Nigeria back to
the days when the central bank determined credit allocation, such as in 1984
when President Muhammadu Buhari was military leader.

Buhari won re-election in February and has pledged to get the economy
growing again. But he has failed to set up a cabinet four months after
winning a second term.

The regulator has also kept cash ratios high to maintain tight liquidity to
curb inflation, attract foreign investors into bonds and support the
currency. A policy has encouraged banks to lend more to government. Private
sector credit growth has been negative for several years.

Some doubted the new policy would boost lending as banks would have to ramp
up loans to meet the target or cut deposits.

Lenders with smaller deposit bases such as Fidelity Bank and FCMB are
already compliant, analysts say while Access Bank which bought Diamond Bank
this year, may not much room to grow loans.

Top tier lenders may need to issue new loans of almost one trillion naira,
analysts say, with FBN Holding and UBA most affected, analysts say.

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GLOBAL MARKETS

Tempered expectations of Fed rate cut sink stocks globally

(Reuters) - A strong U.S. jobs report that tempered expectations of an
aggressive interest rate cut by the Federal Reserve later this month and
weak economic data in Germany helped push global stock indices lower on
Friday after hitting record highs earlier this week.

Yields on benchmark 10-year Treasury notes rose back above 2.0% after
hitting their lowest since November 2016 on Wednesday.

Nonfarm payrolls increased by 224,000 last month as government employment
rose by the most in 10 months, the U.S. Labor Department reported.

The better-than-expected showing reduced the likelihood the Fed will cut
interest rates at its next meeting later this month. Expectations of an
equity-friendly rate cut helped push the S&P 500 to record highs earlier
this week.

Expected report is likely to throw cold water on those fairly dovish
expectations,” said Candice Bangsund, asset allocation manager at Fiera
Capital.

MSCI’s gauge of stocks across the globe shed 0.42%.

On Wall Street, the Dow Jones Industrial Average fell 43.88 points, or
0.16%, to 26,922.12, the S&P 500 lost 5.41 points, or 0.18%, to 2,990.41 and
the Nasdaq Composite dropped 8.44 points, or 0.1%, to 8,161.79.

Market volume in the U.S. was light due to the holiday-shortened week.

The losses in the U.S. market followed broad dips in European equities after
German data showed industrial orders had fallen far more than expected in
May, and a warning from the economy ministry that this sector of Europe’s
largest economy was likely to remain weak in the coming months.

The pan-European STOXX 600 index lost 0.72%.

Benchmark 10-year notes last fell 24/32 lower in price to yield 2.0373%,
from 1.955% late on Wednesday.

The dollar index rose 0.5%, with the euro down 0.53% to $1.1224.

Brent crude futures, the international benchmark for oil prices, gained 1.5%
to $64.27 per barrel while U.S. crude rose 0.4% to $57.59.

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Commodities Markets

Copper under dollar pressure as the metal has biggest weekly fall since May

(Reuters) - Copper fell on Friday and logged its biggest weekly fall since
May as the dollar hit an over two-week high and inventories in London Metal
Exchange (LME) warehouses rose.

The U.S. currency gained against a basket of major currencies, making
dollar-denominated commodities such as copper cheaper for non-U.S. firms,
after strong jobs data for June.

Benchmark three-month copper was down 0.3% to $5,902 per tonne and shed 1.6%
on the week.

Briesemann added that the weekly decline in copper was due to markets
seeking a firm deal between the United States and China, after the world’s
two largest economies agreed a truce at the weekend.

The nearly year-long trade dispute has rattled financial markets and dented
demand for metals.

On Friday, exchange data showed headline inventories of copper in LME
warehouses rose 31,450 tonnes to 302,975 tonnes, its highest in over a year,
helping to erode a supply deficit this year. MCUSTX-TOTAL

SHANGHAI: Copper stocks in warehouses approved by the Shanghai Futures
Exchange fell 3.5% to 140,904 tonnes from last Friday but are up about 23%
so far this year. CU-STX-SGH

CHINA PREMIUMS: Chinese Yangshan copper import premium SMM-CUYP-CN was at
$60.50 on Friday, its highest since February.

CHINA: Chinese banks extended less in new yuan loans in June, according to a
Reuters calculation based on official data, but regulators said credit needs
of the broader economy were met.

EUROPE DATA: German industrial orders fell far more than expected in May,
and the Economy Ministry warned on Friday that this sector of Europe’s
largest economy was likely to remain weak in the coming months.

ZINC SPREADS: The premium of cash zinc to the three-month contract fell to
$5 per tonne on Friday, down from $161 in May and the lowest since March,
suggesting greater availability of nearby metal. CMZN0-3

Available LME stocks have risen about 25% since June 4 to 73,700 tonnes.
MZNSTX-TOTAL

PRICES: Zinc fell 0.7% to $2,407, after touching its lowest since January,
aluminium shed 0.2% to $1,803 per tonne, lead was down 0.5% to $1,869, tin
was unchanged at $18,350, while nickel gained 1.1% to $12,480.

India hikes gold import duty, industry fears smuggling surge

(Reuters) - India raised the import duties on gold and other precious metals
on Friday in a surprise move that industry officials say could dampen retail
demand and boost smuggling in the world’s second-biggest bullion consumer.

Lower demand from India could weigh on global prices that are trading near
their highest level in six years.

Jewellery trade associations have asked India’s government to reduce gold
import duties, which have caused a surge in smuggling.

The government instead hiked the duty to 12.5% from 10% as policymakers try
to bring down the fiscal deficit and recapitalise banks.

Gold smuggling surged in India after the government raised the import duty
to 10% in August 2013. Grey market operators - businesses that smuggle gold
from overseas and sell it in cash to avoid the duties - got a further boost
in 2017 when India imposed a 3% sales tax on bullion.

The south Asian country also raised import duty on gold dore or non-refined
mined gold, to 11.85% from 9.35% and to 11% from 8.5% on silver dore,
Finance Minister Nirmala Sitharaman said in her first federal budget speech
on Friday.

India has been trying to bring transparency in bullion trading by curbing
cash transactions but the hike “will dilute efforts to reduce cash
transactions”, said Somasundaram PR, the managing director of the World Gold
Council’s Indian operations.

Gold futures jumped over 2% after the announcement to a record high of
35,100 rupees ($512.82) per 10 grams.

The high local prices may also further weaken demand, said Snehal Choksey,
director at Shobha Shringar Jewellers.

Shares of jewellery makers such as Titan, P C Jeweller, Tribhovandas Bhimji
Zaveri Ltd and Thanga Mayil Jewellery Ltd fell as much as 7.8%.

Up to 95 tonnes of gold was smuggled into India in 2018, according to the
WGC.

Industry officials fear the higher duties could prompt customers to buy
jewellery from some informal jewellers who use smuggled gold to make
ornaments.

($1 = 68.4450 Indian rupees)

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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