Bulls n Bears Daily Market Commentary : 04 March 2019

Tue Mar 5 07:53:38 CAT 2019

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Bulls n Bears Daily Market Commentary : 04 March 2019

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Zimbabwe Stock Exchange Update

Market Turnover RTGS$1,396,335.63 with foreign buys at RTGS$2,266.00 and
foreign sales were RTGS$9,042.71. Total trades were 108.

The All Share index opened the week in red after losing 1.86 points  to
close at 146.56 points. OLD MUTUAL LIMITED  retreated by $0.5085 to close at
$6.9718, HIPPO VALLEY ESTATES   dropped $0.3300 to $1.3800 and INNSCOR
traded $0.1096 lower at $1.6503. BRITISH AMERICAN TOBACCO   also decreased
by $0.0481 to settle at $32.9519 and SIMBISA   was $0.0250 down at $0.7200.

Three counters gained ground as BINDURA  added $0.0078 to settle at $0.0800,
WILLDALE  increased by $0.0023 to settle at $0.0173 and ARISTON   traded
$0.0001 stronger at $0.0291.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Nigeria

Nigeria's central bank head to end five-year term in June

(Reuters) - The head of Nigeria’s central bank is likely to exit in June and
would take leave from this month before stepping down at the end of his
five-year term, a move that could alter the path for interest rates and the
currency, sources said on Monday.

Godwin Emefiele has kept interest rates high at 14 percent for over two
years to tighten liquidity and support the naira after a crisis forced the
central bank to devalued the currency. The bank has since introduced
multiple exchange rates to prop up the naira.

It was not clear when Emefiele’s replacement would be appointed but central
bank governors in Nigeria typically go on a 3-month leave before the end of
their tenures. The central bank declined to comment.

Muhammadu Buhari secured a second term in office as Nigerian president in
last month’s election that was closely-fought on the economy, recovering
after it entered into recession in 2016.

Several candidates have been touted to replace Emefiele. Among them is the
head of Nigeria’s “bad bank” AMCON, Ahmed Kuru, who led the sale of the
country’s nationalised banks, sources say. Also Aisha Mohammed, deputy
governor of the apex bank is in the running.

Whoever succeeds Emefiele would be expected to continue to keep the naira
stable to attract foreign investors, a policy which Buhari has backed.

Foreign investors have been buying Nigerian bonds over the past six months
owing to the stable currency and as tight liquidity keep yields attractive,
as high as 15 percent. 

Zimbabwe

Zimbabwe central bank borrows $985 million from African banks

(Reuters) - Zimbabwe’s Reserve Bank has borrowed $985 million from African
banks to purchase fuel and other critical imports with current reserves
covering imports for just four weeks, underscoring the severity of dollar
shortages, governor John Mangudya said.

The southern African nation last month ditched a discredited 1:1 dollar peg
for its surrogate bond notes and electronic dollars, merging them into a
lower-value transitional currency called the RTGS dollar.

Mangudya said the central bank borrowed $641 million from the African Export
and Import Bank, $152 million from Eastern and Southern African Trade and
Development Bank, and $25 million from Mozambique’s central bank, among
others.

The loans, which would be repaid from future gold earnings, have a tenure of
between three and five years and attract an interest of up to 6 percent
above the Libor rate, Mangudya said.

Gold is Zimbabwe’s single biggest mineral export earner, accounting for a
third of its $4.2 billion earnings last year after a record output, central
bank data shows.

The central bank takes 45 percent of dollar sales from gold producers and
half from other miners to fund imports like fuel and power and repay foreign
loans.

But the miners only have 30 days to keep their dollar balances in local
foreign currency accounts, after which they must sell them. The companies
have asked the central bank to extend the period they may keep their dollars
to 90 days, according to mining executives.

OVERDRAFT LIMIT

Unable to get funding from foreign lenders like the International Monetary
Fund and World Bank due to arrears of more than $2.4 billion, Zimbabwe has
looked to financiers from the continent and local banks to shore up its
budget.

The central bank chief said Zimbabwe had just $500 million in reserves,
enough to purchase four weeks’ worth of imports.

Mangudya said government borrowing from the central bank reached $2.99
billion in December, about three times its permissible overdraft limit.

President Emmerson Mnangagwa’s government has promised to curb borrowing in
2019 under reforms to revive the southern African economy, after the budget
deficit soared last year following a spike in spending ahead of elections.

Finance Minister Mthuli Ncube told Reuters last week that the local RTGS
dollar, Zimbabwe’s new de facto currency, will be backed up with fiscal
discipline and the government would allow it to fluctuate but would manage
excessive volatility.

On the interbank forex market on Monday, one U.S. dollar fetched 2.5 RTGS
dollars, the same rate as on Feb. 22 when the central bank sold some dollars
to banks. That compares to a rate of 3.5 RTGS dollars per U.S. dollar on the
black market. 

       <mailto:info at bulls.co.zw> 

Asia

Asian shares retreat as China targets slower growth

(Reuters) - Asian shares stepped back on Tuesday, weighed by U.S. growth
concerns and as China cut its economic expansion target amid growing
challenges from rising debt and a dispute over trade and technology with the
United States.

Beijing lowered the growth target for this year to 6.0 to 6.5 percent, as
expected, from around 6.5 percent last year and offered more stimulus,
including cuts in taxes and social security fees, increases in
infrastructure investment and lending to small firms.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5
percent. Hong Kong’s Hang Seng was down 0.6 percent and Japan’s Nikkei lost
0.6 percent.

While Asian shares were broadly weaker, China’s spending plans gave mainland
markets some support with the blue-chip CSI300 index briefly gaining as much
as 0.5 percent from Monday’s nine-month high in early trade. It later gave
up these gains and fell 0.1 percent.

Reflecting lower tax revenue and higher government spending, Beijing has set
a budget deficit target of 2.8 percent of GDP, up from last year’s 2.6
percent.

The Finance Ministry set the quota for local government’s special bond
issues at 2.15 trillion yuan ($320 billion), 0.8 trillion yuan above last
year’s quota.

BACK TO OCTOBER

Wall Street’s major indexes fell on Monday, with the Dow Jones Industrial
Average shedding 0.79 percent and the S&P 500 losing 0.39 percent.

An unexpected fall in U.S. construction spending, data that normally
attracts little attention, was cited as a factor.

But others saw the retreat as a long overdue correction after a rally since
late last year.

MSCI’s ACWI,, a gauge of 47 markets in the world, has risen 16 percent from
its near two-year low set on Dec. 26 low, even as the earnings outlook
stagnated, driven by hopes of a dovish Federal Reserve and a compromise
between Beijing and Washington on trade.

The index is now trading at 14.6 times expected earnings, on par with levels
last seen in early October, when a bear market began globally.

Thus a media report on Monday that U.S. President Donald Trump and Chinese
President Xi Jinping could reach a formal trade deal at a summit around
March 27 prompted profit-taking rather than follow-through buying.

The 10-year U.S. Treasuries yield dropped to 2.724 percent after touching
from six-week highs of 2.768 percent in the past two sessions.

In currency markets, the dollar held an upper hand against many of its
rivals as other major central banks are seen tilting to a more dovish stance
than the Federal Reserve.

The euro fetched $1.1333, having dropped 0.25 percent on Monday, amid
expectations the European Central Bank is preparing to give banks more
cheap, long-term funding at its policy meeting on Thursday.

The dollar traded at 111.88 yen, near a 10-week high of 112.08 on Friday.

The Australian dollar dipped 0.25 percent to $0.7072 after weak net exports
reading suggested Australia’s economy came close to stalling last quarter.

The news comes as the Reserve Bank of Australia (RBA) holds its March policy
meeting amid rising speculation it might have to bite the bullet and cut
interest rates in coming months.

Gold has fallen for four days in a row by Monday to as low as $1,283.10 per
ounce, its lowest level since Jan. 25. It last stood at $1,286.6. Silver hit
two-month lows of $15.0725 per ounce.

Oil prices were little changed, hovering below their recently-hit
three-month peaks.

U.S. crude futures stood at $56.41 per barrel, down 0.3 percent in early
Asia but still up 1 percent on the week.

International benchmark Brent futures were down 0.2 percent at $65.55 per
barrel.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hovers near five-week lows on firm dollar

(Reuters) - Gold hovered on Tuesday near a five-week low touched in the
previous session as rising U.S. Treasury yields boosted the dollar, making
gold expensive for holders in other currencies.

FUNDAMENTALS

* Spot gold was flat at $1,286.35 per ounce as of 0123 GMT, after touching
its lowest since Jan. 25 at $1,282.50 in the previous session.

* U.S. gold futures were also steady at $1,287.70 an ounce.

* The U.S. currency was trading against a group of six major currencies at
close to its two-week high of 96.816 posted in the previous session.

* The dollar enjoyed some support from higher U.S. Treasury yields as data,
including fourth-quarter gross domestic product, eased fears of a
potentially rapid loss in economic momentum.

* U.S. Secretary of State Mike Pompeo said on Monday he thought the United
States and China were “on the cusp” of a deal to end their trade war, adding
to positive signs about negotiations from both sides of the Pacific.

* Asian shares stepped back on Tuesday after China cut its economic growth
target and pledged measures to support the economy amid growing challenges
from rising debt and a dispute over trade and technology with the United
States.

* China has set its 2019 economic growth target at 6.0 to 6.5 percent,
Premier Li Keqiang said in his annual work report on Tuesday, lower than
last year’s goal of around 6.5 percent.

* China and India raised gold holdings in January, according to data from
IMF.

* Bank of America Merrill Lynch lifted its forecast for palladium, expecting
it to hit a key $2,000 level this year. The bank said it expects platinum to
average $883 for the same period.

* Barrick Gold Corp Chief Executive Mark Bristow said on Monday he wants to
speak immediately with Newmont Mining Corp about a proposed Nevada joint
venture, even as his company moves to take an $18 billion takeover offer
directly to Newmont shareholders.

* Bank of Italy’s Governor Ignazio Visco said on Monday the country’s
reserves of gold belonged to the central bank and could not be used to fund
government spending.

DATA AHEAD (GMT) 0930 UK Markit Services PMI (FEB) 1500 U.S. ISM
non-manufacturing PMI (FEB) 0930 UK The Bank of England’s Financial Policy
Committee statement from its meeting (Feb. 26, 2019)

Deficit expectations fuel nickel's climb to six-month peak

(Reuters) - Nickel prices climbed to a six-month peak on Monday as
expectations of a fourth consecutive year of supply deficit were reinforced
by signs of robust demand from stainless steel mills in China.

Benchmark nickel on the London Metal Exchange ended 0.5 percent up at
$13,255 a tonne, having touched its highest since the end of August at
$13,485. The price has risen 24 percent this year, the best performer among
LME metals.

TRADE: The trade dispute between China and the United States has fuelled
concern about global growth and demand, undermining sentiment in metals
markets.

DEFICIT: Data from the International Nickel Study Group shows the nickel
market deficit at 46,000 tonnes in 2016, 115,000 tonnes in 2017 and 127,000
tonnes last year.

Global nickel demand is estimated at about 2.4 million tonnes this year. Of
that, about two thirds is destined for stainless steel mills, mostly in
China. “The price of stainless steel continues to rise (and) supply of
ferronickel is very tight,” GF Futures said in a note, adding that Wuxi
Stainless Steel Exchange inventories had risen by more than 10,000 tonnes,
or 4.2 percent, since the first half of February.

STOCKS: Nickel stocks at 196,542 in LME-registered warehouses have nearly
halved since the start of January last year, while cancelled warrants —
metal earmarked for delivery — stand at 37 percent. MNISTX-TOTAL

Inventories in warehouses monitored by the Shanghai Futures Exchange are
below 10,000 tonnes and have fallen nearly 40 percent since the middle of
November. SNI-TOTAL-W

SPREADS: Traders say the discount for the cash over the three-month contract
is an incentive to buy nickel and sell it forward on the LME. The discount,
or contango, of about $80 a tonne is enough to cover financing costs and
leave a healthy profit. MNI0-3

PROFIT-TAKING: Prices of copper are down on profit-taking by funds with long
positions betting on higher prices.

Traders say the market has been long on copper for some time. Others say the
premium for the cash over the three-month contract at $34 a tonne should
attract metal to LME warrant, relieving some of the tightness.

PRICES: LME copper was down 1.1 percent at $6,409 a tonne, aluminium fell
2.2 percent to $1,875.50, zinc slipped 1.2 percent to $2,751, lead ceded 1.4
percent to $2,113 and tin finished 0.8 percent lower at $21,450. 

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

Zimbabwe 

Independence Day

Zimbabwe

18 Apr 2019 

Good Friday

19 Apr 2019

Easter Saturday

20 Apr 2019

Easter Sunday

21 Apr 2019

Easter Monday

22 Apr 2019

Workers Day

01 May  2019

Africa Day

25 May 2019

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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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