Bulls n Bears Daily Market Commentary : 06 June 2019

Fri Jun 7 04:23:56 CAT 2019

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Bulls n Bears Daily Market Commentary : 06 June 2019

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Zimbabwe Stock Exchange Update

Market Turnover RTGS$ 10,246,064.15 with foreign buys at RTGS$ 2,847,768.75
and foreign sales were RTGS$ 1,518,481.00. Total trades were 148.

The All Share index added another 0.42 points to close at 190.63 points.
INNSCOR gained $0.0982 to end at $2.2532, MEIKLES rose by $0.0747 to settle
at $0.9973 and CBZ  was $0.0208 stronger at $0.4900. Other counters to
advance include FIRST MUTUAL LIMITED  which increased by $0.0200 to settle
at $0.1800 and GETBUCKS MICROFINANCE BANK  which put on $0.0050 to close at
$0.1200.

Gains were partially offset by losses in OLD MUTUAL LIMITED  which retreated
by $0.2740 to $13.7289, PADENGA lost $0.0176 to close at $1.7500 and DELTA
was $0.1580 weaker at $3.6042. CASSAVA SMARTECH also declined by $0.0046 to
$1.7439 and ECONET was $0.0005 down at $1.7438.

.

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  Global Currencies & Equity Markets

South Africa

South African current account deficit widens to 2.9% of GDP in Q1 2019

(Reuters) - South Africa’s current account deficit widened to 2.9 % of gross
domestic product (GDP) in the first quarter of 2019, from a 2.2% shortfall
in the fourth quarter of the previous year, central bank data showed on
Thursday.

The quarterly deficit came in slightly below the 3.05 % of GDP forecast by
economists surveyed by Reuters.

The quarterly trade balance narrowed to 43 billion rand ($2.89 billion) from
71.8 billion rand in the three months to the end of December. 

Uganda

Ugandan shilling trades weaker on importer demand

(Reuters) - The Uganda shilling traded a touch weaker on Thursday, on the
back of some pick up in appetite for hard currency from energy and goods
importers.

At 0935 GMT commercial banks quoted the shilling at 3,762/3,772, compard to
Wednesday’s close of 3,755/3,765.

       <mailto:info at bulls.co.zw> 

Asia

Asia shares dazed by trade uncertainty, U.S. jobs risks

(Reuters) - Asian share markets dithered on Friday as investors waited for
concrete signs of progress in the U.S.-Mexican trade standoff, while bracing
for a U.S. jobs report that could sway the course of interest rates there.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.04%
higher and looked set for another cautious session being up just 0.6% for
the week so far.

Japan’s Nikkei firmed 0.3%, but South Korea slipped 0.5%. E-Mini futures for
the S&P 500 were mostly flat.

Mexican and U.S. officials had held a second day of talks on trade and
migration on Thursday amid reports President Donald Trump might delay the
imposition of tariffs that was due on Monday.

That had helped the Dow end Thursday up 0.71%, while the S&P 500 gained
0.61% and the Nasdaq 0.53%.

However, the White House later said the tariffs would go ahead as scheduled,
and there were reports Trump might declare a national emergency to dodge any
Senate objections.

The uncertainty kept investors from getting too bullish, particularly with
the U.S. payrolls report promising to be an unknown quantity later in the
session.

Market forecasts are for jobs to rise a solid 185,000 in May and
unemployment to stay at a low 3.6%, though much was in doubt after dismal
data on private hiring released earlier in the week.

Oddly, a weak number might actually prove positive for equities since it
would bolster the case for an early rate cut from the Federal Reserve.

Markets have fully priced in a cut by September, and a further two easings
by mid-2020.

Two-year Treasury yields were near their lowest since December 2017 at
1.88%, having fallen 28 basis points in just two weeks.

KILLER PUNCH

That seismic shift in Fed expectations has hampered the U.S. dollar, which
was currently down 0.7% for the week so far against a basket of currencies
at 97.020.

The dollar has at least steadied on the yen at 108.44 and was off the recent
five-month low of 107.80.

It fared less well on the euro which was currently holding gains of almost
1% for the week at $1.1273.

The single currency bounced sharply overnight after the European Central
Bank pushed back the timing of any rate hike, but failed to canvass the
policy easing that many had wagered on.

Money market futures are now pricing in a 45% chance of a 10 basis point
euro zone rate cut by the end of year versus 75% before the ECB statement.

In commodity markets, all the chatter of rate cuts globally kept gold near
15-week highs at $1,333.45 per ounce.

Oil prices regained a little ground after a rough week but was still
vulnerable to worries about global demand and oversupply.

Brent crude futures bounced 59 cents to $62.26, but were still down 3.5% for
the week so far, while U.S. crude firmed 58 cents at $53.17 a barrel.

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Commodities Markets

Stocks, oil jump amid optimism over Mexican tariffs delay

(Reuters) - Major world stock indexes and oil prices jumped on Thursday as
investor optimism grew following a report that the United States is
considering a delay in imposing tariffs on Mexican imports.

The Mexican peso also surged after the Bloomberg News report, which cited
unidentified sources saying that U.S. President Donald Trump could put off
implementing the tariffs he has threatened to impose on Mexican goods as
soon as Monday.

Adding to investor bullishness was a Washington Post report on the outlines
of an immigration deal being discussed by U.S. and Mexican officials to
thwart the threatened tariffs.

Quincy Krosby, chief market strategist at Prudential Financial in Newark,
New Jersey, said that while investors are viewing the tariff delay news as a
positive, they are likely to remain guarded when it comes to trade-related
news.

After the closing bell, a White House spokeswoman said the Monday deadline
for tariffs on Mexico has not changed, and U.S. Vice President Mike Pence
said Mexico has to take decisive action on immigration to avoid tariffs.

Earlier in the day, Trump said he would decide on whether to levy more
tariffs on China “probably right after the G20,” which is being held on June
28-29. That came after his overnight threat to put tariffs on “at least”
another $300 billion worth of Chinese goods.

On Wall Street, Thursday was the first time since mid-May that the three
major indexes gained ground for three sessions in a row.

Hopes of an interest rate cut from the Federal Reserve have helped to
support the market amid the trade tensions and mixed economic data that has
rekindled worries about the health of the world’s top economies.

Friday brings the closely watched monthly U.S. jobs report.

The Dow Jones Industrial Average rose 181.09 points, or 0.71%, to 25,720.66,
the S&P 500 gained 17.34 points, or 0.61%, to 2,843.49, and the Nasdaq
Composite added 40.08 points, or 0.53%, to 7,615.55.

The pan-European STOXX 600 index lost 0.02% and MSCI’s gauge of stocks
across the globe gained 0.33%.

Mexico’s peso gained as much as 1.2% from where it was trading before the
Bloomberg report on the Mexico tariffs. Earlier, it suffered a double whammy
of trade woes with the United States and a downgrade of the country’s credit
rating.

In late trading, the Mexican peso lost 0.57% versus the U.S. dollar to
19.71.

The dollar index fell 0.28%, with the euro up 0.49% to $1.1274.

Oil prices jumped on the U.S.-Mexico trade report. U.S. crude rose 2.73% to
$53.09 per barrel.

U.S. YIELD CURVE FLATTENS

The U.S. Treasury yield curve flattened as the European Central Bank
committed to leaving interest rates alone into the first half of 2020.

The gap between two-year and 10-year yields narrowed by 4.4 basis points to
23.30 basis point.

The ECB’s move disappointed traders who had bet on a rate cut, but most
yields ended the day higher in the wake of the Bloomberg report on tariffs.

In late U.S. trading, benchmark 10-year Treasury yields were up 0.80 basis
point at 2.131%.

Venezuela loses $1.4 bln of gold to banks for guarantees -sources

(Reuters) - Citibank and Deutsche Bank have taken control of around $1.4
billion of Venezuelan government gold, which they received as guarantees for
loans, as a result of U.S. sanctions on the Venezuelan Central Bank,
according to five sources.

Between 2014 and 2016 the central bank (BCV) used a portion of its foreign
gold reserves to guarantee financial operations with banks to boost
liquidity, with the intention of repaying the loans to avoid losing the
gold.

Five sources with knowledge of the deals said the BCV had agreed with
Citibank and Deutsche Bank to buy back the gold in 2020 and 2021, but since
the U.S. government imposed sanctions on the BCV in April the banks had
invoked a condition of the contracts to retain ownership of the bars.

Both banks had resolved that an “event of default” had occurred due to the
sanctions, as established in agreements underpinning the gold swap deals,
the sources said.

Citibank took control of gold for around $400 million BCV was supposed to
repay in 2020. For a separate guarantee Deutsch Bank took $1 billion, the
sources said.

Citibank and Deutsche Bank declined to comment, and the BCV did not respond
to a request to comment.

Reuters has not been able to review the gold swap contracts the BCV signed
with the banks and it is not clear if the central bank could initiate legal
proceedings to seek to regain control of the gold.

ADVERTISEMENT

Since 2017, the BCV has partially recovered some gold bars it used to
guarantee the loans, at the same time as it began to sell dozens of tonnes
of gold to Turkey and other Middle Eastern allies to earn vital foreign
currency, according to the sources and official data.

The BCV in 2018 had paid $172 million to Citibank to recover part of the
gold it had put up as guarantee in a swap operation.

In March of this year, the BCV was unable to pay $1.1 billion to Citibank
via a repurchase agreement to recover part of the gold it gave to Citibank
for a $1.6 billion loan, sources told Reuters at the time. The BCV was
supposed to pay another $400 million in 2020 to Citibank under the
agreement, but Citibank has now taken the gold instead.

Both banks can now sell the Venezuelan gold to recover the value of the
loans, and any money left over would be returned to Venezuela, the sources
said. But under U.S. sanctions banks are restricted from carrying out any
transactions with the BCV.

Opposition leader Juan Guaido’s team has approached Citibank and Deutsche
Bank to ask the banks to deposit a portion of the gold in accounts that
President Nicolas Maduro’s government can not access, three sources said.

Guaido, head of the opposition-controlled National Assembly, in January
invoked the constitution to assume a rival interim presidency, denouncing
Maduro as illegitimate after he secured re-election last year in a vote
widely considered fraudulent.

Most Western nations recognize Guaido as Venezuela’s rightful leader, while
Maduro calls Guaido a coup-mongering U.S. puppet. 

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

Dairibord

AGM

Steward Room, Meikles

31 May 2019, 12pm

Lafarge

AGM

Manresa Club, Arcturus

05 June 2019 , 12pm

CBZ

AGM

Stewart Room, Meikles

05 June 2019 , 3pm

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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
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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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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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