Bulls n Bears Daily Market Commentary : 18 June 2019

Wed Jun 19 05:04:39 CAT 2019

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Bulls n Bears Daily Market Commentary : 18 June 2019

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Zimbabwe Stock Exchange Update

Market Turnover RTGS$ 10,629,236.52 with foreign buys at RTGS$ 5,101,661.90
and foreign sales were RTGS$ 2,942,030.40 Total trades were 200.

The All Share index increased by 0.64 points to close at 219.03 points.
DELTA CORPORATION LIMITED added $0.0626 to settle at $3.8999, INNSCOR AFRICA
LIMITED  gained $0.0498 to close at $2.7500 and SIMBISA BRANDS LIMITED
advanced by $0.0476 closing at $1.3000. Other counters to advance were CAFCA
LIMITED    which rose by $0.0475 to end at $1.1000 and  MEIKLES LIMITED
(MEIK.zw) which improved by  $0.0315 to $1.1200.

Trading in the negative: ECONET WIRELESS ZIMBABWE LIMITED lost $0.0422 to
close at $2.1982. CBZ HOLDINGS LIMITED dropped by $0.0363 to close at
$0.4537.PADENGA HOLDINGS LIMITED lost $0.0240 settling at $2.1500 and SEEDCO
LIMITED was $0.0097 lower , at $1.7403.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

Rand rallies as Ramaphosa set to give more support for Eskom

(Reuters) - South Africa’s rand rallied in late trade on Tuesday after the
government signalled it will give additional support to power firm Eskom and
as emerging currencies were lifted by expectations the Federal Reserve could
signal U.S. rate cuts.

At 1400 GMT the rand was 1.76% percent firmer at 14.5475 per dollar, after
early in the day trading at around the 14.80 mark. It jumped late in the
session as demand for emerging market assets was buoyed by the potential for
policy easing by the U.S. and European Union central banks.

The U.S. Federal Reserve concludes a two-day meeting on Wednesday and is
expected to lay the groundwork for a rate cut later this year.

On Tuesday the European Central Bank chief Mario Draghi said there would be
more stimulus if inflation failed to pick up.

The rand tumbled to 15.1750 on June 7, its worst level in 2019, following a
3.2% contraction to economic growth in the first quarter and a row between
ruling African National Congress and government officials over the central
bank’s mandate.

News that President Cyril Ramaphosa will announce more measures to support
cash-strapped power utility Eskom after meeting with the company’s board
also aided the currency, traders said.

“The comments from Ramaphosa about additional support for Eskom have
certainly boosted the rand. You saw stops triggered at 14.60 and a move
lower in illiquid conditions against a weakening dollar,” said Oliver Alwar,
a senior dealer at Standard Bank.

In February government pledged a 23 billion rand ($1.58 billion) a year
bailout for Eskom over the next three years, but the firm has said it needs
more cash to keep the lights on after nationwide power cuts earlier in the
year.

Bonds also jumped, with the yield on the benchmark 10-year government bond
falling 11 basis point to 8.27%, their lowest level since April 2018.

On the stock market, the Johannesburg Stock Exchange’s benchmark Top-40
Index advanced 1% to 52,692 points while the All-Share Index rose 0.9% to
58,723 points, as retailers and banks were boosted by the firmer currency.

Shoprite, Nedbank and Discovery led the blue-chip pack, all gaining more
than 3% on the day, while the losers were led by commodity traders with Gold
Fields plunging more than 6% and AngloGold Ashanti sliding 4%. 

Morocco

Morocco central bank leaves benchmark rate at 2.25%

(Reuters) - Morocco’s central bank left its benchmark interest rate
unchanged at 2.25 percent on Tuesday, saying current borrowing costs were
consistent with medium-term inflation and growth outlook.

The central bank, Bank al-Maghrib, has kept the key rate on hold since March
2016, when it cut it by 25 basis points.

Inflation, mainly affected by food prices, is expected to slow to 0.6% in
2019 from 1.9% last year, before picking up to 1.2% in 2020 as domestic
demand improves, the bank said in a statement following its quarterly board
meeting.

Economic growth will slow to 2.8% in 2019 from 3% in 2018, it said, amid a
drop in agricultural activity. Morocco expects to produce 6.1 million tonnes
of cereals this year, down 40.7 percent from last year due to a lack of
rainfall.

Gross domestic product growth should increase in 2020 to 4% the bank said,
citing a 6% growth in agricultural production.

The current account deficit is expected to narrow to 4.5% in 2019 and 3.1%
in 2020, from 5.5% in 2018, the bank said. The gaps should shrink because of
cheaper energy imports and a rise in exports with the upcoming opening of a
PSA plant in Kenitra, near Rabat.

Sales of the automotive sector accounted for 27.1% of Morocco’s exports with
27.7 billion dirhams in the first four months of 2019, up 0.3% compared to
the same period last year, as the North African country is home to
production plants of French carmaker Renault and car part suppliers.
Morocco’s foreign exchange reserves are expected to stand at 239 billion
dirhams in 2019 and 234.5 billion in 2020, enough to cover five months of
imports. The government plans to issue two international sovereign bonds in
2019 and 2020, each worth 11 billion dirhams ($1.14 billion).

The budget deficit, excluding privatisation revenue, is expected to reach
4.1% in 2019 from 3.7% in 2018, the central bank said. Privatisation revenue
would help shrink the budget deficit to 3.3% according to the government,
which plans to inject 8.87 billion dirhams into the state budget this month
from the sale of an 8% stake in Maroc Telecom, Morocco’s largest telecom
operator. 

       <mailto:info at bulls.co.zw> 

Asia

Asian shares jump on Fed rate fever, trade war hope

(Reuters) - Asian share markets jumped on Wednesday as investors dared to
hope the Federal Reserve would follow the lead of the European Central Bank
and open the door to future rate cuts at its policy meeting later in the
day.

Indeed, ECB President Mario Draghi’s shock turnaround on easing fuelled talk
of a worldwide wave of central bank stimulus, firing up stocks, bonds and
commodities.

Adding to the cheer was news U.S. President Donald Trump would meet with
Chinese President Xi Jinping at the G20 summit later this month, and that
trade talks would restart after a recent lull.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.6% in
early trade, adding to a 1% gain the day before.

Japan’s Nikkei rose 1.5% and South Korea 1.1%. E-Mini futures for the S&P
500 were a fraction firmer after a upbeat Wall Street session.

The Dow ended Tuesday with gains of 1.35%, while the S&P 500 rose 0.97% and
the Nasdaq 1.39%. The S&P 500 has gained 6% so far this month to be 1% from
the all-time high hit in early May.

All eyes are now upon the Fed which is scheduled to release a statement at
1800 GMT on Wednesday, followed by a press conference by Chairman Jerome
Powell shortly after.

Yet the heightened anticipation also creates risks the Fed might fail to
meet investors’ high expectations.

Futures are almost fully priced for a quarter-point easing in July and imply
more than 60 basis points of cuts by Christmas. “Markets will be looking for
validation of this pricing,” he added. “We think this represents a fairly
high bar for the Fed to deliver a dovish surprise.”

SUB-ZERO YIELDS

BofA Merrill Lynch’s latest fund manager survey spoke volumes about the sea
change in sentiment.

Allocation to global equities dropped 32 points to a net 21% underweight,
the lowest since March 2009, while the bond allocation hit the highest since
September 2011.

Interest rate expectations collapsed, while concerns about a trade war
soared to be the top risk for investors, ahead of monetary policy impotence,
U.S. politics and a slower China.

The shift was clear in bond markets where German yields hit record lows deep
in negative territory, while Japanese yields sank to the lowest since august
2016 at -0.145%.

Yields on the U.S. 10-year note reached the lowest since September 2017 at
2.016%, a world away from the 3.25% top touched in November last year.

The fallout in currencies was significantly less, in large part because it
was hard for one to gain when all the major central banks were under
pressure to ease.

The euro did pull back a bit after Draghi’s comments, but at $1.1198 was
still well within the recent trading range of $1.1106-$1.1347.

The dollar remained sidelined against the yen at 108.53 , and a shade firmer
on a basket of currencies at 97.628 .

In commodity markets, the rate-cut buzz kept gold near 14-month highs at
$1,346.62 per ounce.

Michael Hsueh, an analyst at Deutsche, noted the decisively dovish shift in
central bank expectations was bullish for gold.

Reflation trades also supported oil prices, as did hopes for a thawing in
the Sino-U.S. trade dispute.

Brent crude futures bounced 40 cents to $62.54, while U.S. crude firmed 45
cents at $54.35 a barrel.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold pares gains on U.S.-China trade war optimism

(Reuters) - Gold prices pared gains on Tuesday after U.S. President Donald
Trump confirmed he would meet with Chinese President Xi Jinping at an
international summit, fanning hopes for a quick end to the U.S.-China trade
dispute.

Earlier in the session, gold prices had briefly surged to 1% after central
banks in Europe and the United States hinted at monetary easing.

Spot gold gained 0.5% to $1,345.70 per ounce as of 1:32 p.m. EDT (1732 GMT).
Prices had risen to $1,354.20 earlier, before Trump said in a tweet he had a
“very good telephone conversation” with China’s Xi.

The two leaders will meet at the G20 meet later this month in Japan, where
the discussions will focus on trade in the midst of a bitter tariff spat,
that has upset global markets since its conception a year ago.

U.S. gold futures settled 0.6% higher at $1,350.7 per ounce.

Equity markets rallied following Trump’s comments while the dollar index
held tight at two-week highs.

European Central Bank President Mario Draghi said the bank would need to
ease policy again with tepid inflation, while markets expect the U.S.
Federal Reserve to cut interest rates later this year.

Spot gold may break a support at $1,337 per ounce and fall to the next
support at $1,324, according to Reuters technical analyst Wang Tao.

Other precious metals rose as well, with silver gaining 1.1% to $15 per
ounce and platinum up 1.4% at $802.75.

Palladium rose 2.2% to $1,481.51 per ounce, after hitting $1,489.03 the
session, its highest level since March 27. 

Copper rises as U.S.-China trade talks set to resume

(Reuters) - Copper jumped to a three-week high on Tuesday after U.S.
President Donald Trump said trade talks with China would resume ahead of a
meeting at the G20 summit, raising hopes for a resolution to the damaging
conflict.

The tit-for-tat trade war between the world’s top two economies has sapped
demand for metals and overshadowed strong fundamentals in markets such as
copper, analysts say.

Benchmark copper on the London Metal Exchange (LME) ended 1.7% higher at
$5,945 per tonne, after touching its highest since in May 28 at $5,974.

Prices were also supported by supply disruptions at one of the world’s
largest mines in Chile and Glencore’s Zambian smelter.

BMO has forecast a deficit of 260,000 tonnes this year in the 24-million
tonne market, Hamilton said.

CODELCO: Workers at Codelco-owned Chuquicamata mine, which produced 320,744
tonnes of copper in 2018, downed tools on Friday after a failed labour deal.

Tensions flared on Tuesday when Chilean police fired rubber bullets and tear
gas in clashes with miners striking at the mine as the workers tried to
block access to a site.

COPPER STOCKS: Supporting prices was a slight decline in headline copper
inventories in warehouses monitored by the LME. They fell 600 tonnes to
250,750 tonnes. MCUSTX-TOTAL

Inventories of copper in warehouses registered with the Shanghai Futures
Exchange have nearly halved since mid-March to 139,556 tonnes. CU-STX-SGH

INDONESIA COPPER: Indonesian copper miner Amman Mineral Nusa Tenggara said
it expected to export about 236,000 tonnes of copper concentrate in 2019,
below its export quota, as it increases supplies to a local smelter.

COPPER LONG-TERM: Analysts at BofA Merrill Lynch said the U.S-China trade
dispute overshadowed strong copper fundamentals, with steady Chinese demand
and falling treatment and refining charges.

INTEREST RATES: U.S. Federal Reserve is expected to lay the groundwork for a
rate cut later this year at a meeting on Wednesday, a day after the European
Central Bank indicated a possibility of new rate cuts or asset purchases.

PRICES: Aluminium ended 1.3% higher at $1,781 per tonne, zinc finished up
1.7% at $2,512, lead was up 1.8% at $1,919.50, tin added 1.2% to $19,170,
while nickel was bid about 1.6% higher at $11,775.

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

TSL

AGM

28 Simon Mazorodze Road, Southerton

19 June 2019, 12pm

Zimpapers

AGM

Boardroom, 6th Floor, Herald House

20 June 2019, 12pm

Masimba Holdings

AGM

Head Office, 44 Tilbury Road, Willowvale

21 June 2019, 12:30pm

RioZim

AGM

1 Kenilworth Road, Highlands

24 June 2019, 10:30am

Proplastics

AGM

Palm Court, Meikles

25 June  2019, 10am

Fidelity Life

AGM

Great Indaba Room, Crowne Plaza Monomotapa

26 June 2019, 10am

GB Holdings

AGM

Cernol Chemicals Boardroom,  111 Dagenham Road, Willowvale

26 June 2019, 11:30am

Dawn Properties

AGM

Ophir Room, Monomotapa Hotel

27 June 2019, 10am

Unifreight

AGM

Royal Harare Golf Club

27 June 2019, 10am

African Sun

AGM

Ophir Room, Monomotapa Hotel

27 June 2019, 12pm

FMP

AGM

Palm Court, Meikles

27 June 2019, 12pm

MedTech

AGM

Boardroom, Stand 619, corner Shumba/Hacha Roads, Ruwa

27 June 2019, 2pm

FML

AGM

Palm Court, Meikles)

27 June 2019, 2:30pm

FBC

AGM

Royal Harare Golf Club

27 June 2019, 3pm

ZHL

AGM

Aquarium Room, Crowne Plaza Monomotapa Hotel

30 June 2019, 10am

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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
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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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