Bulls n Bears Daily Market Commentary : 11 March 2019

Tue Mar 12 06:41:40 CAT 2019

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Bulls n Bears Daily Market Commentary : 11 March 2019

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Zimbabwe Stock Exchange Update

Market Turnover RTGS$460,465.00 with foreign buys at RTGS$361,189.50 and
foreign sales were nil. Total trades were 68.

The All Share index opened the week in red losing 0.98 points  to close at
140.95 points. OLD MUTUAL LIMITED  dropped $0.5334 to close at $6.9664,
INNSCOR  eased $0.0990 to end at $1.5010 and  CASSAVA SMARTECH  decreased by
$0.0500 to settle at $1.4000. ECONET traded $0.0297 lower at $1.2997 and
BINDURA  was $0.0004 weaker at $0.0722.

Losses were partially offset by gains in HIPPO VALLEY ESTATES  which added
$0.2000 to close at $1.2000, TSL  gained $0.1275 to $0.7675 and DELTA  was
$0.0510 stronger at $2.5996. BRITISH AMERICAN TOBACCO  also traded $0.04990
stronger at $33.0000.

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  Global Currencies & Equity Markets

Zimbabwe

Zimbabwe cenbank head hints at more weakening of new currency

(Reuters) - Zimbabwe’s central bank governor on Monday said the exchange
rate for the new transitional currency is unlikely to remain at 2.5 per U.S.
dollar by the time tobacco auctions open next week, suggesting the local
unit will be devalued further.

The southern African nation faces a dearth of dollars that has caused
shortages of fuel, drugs and food and hobbled an economy yet to recover from
the disastrous rule of Robert Mugabe, who was removed in a coup in 2017.

The Reserve Bank scrapped its discredited 1:1 dollar peg for surrogate bond
notes and electronic dollars last month, merging them into a lower-value
transitional currency called the RTGS dollar, which has been stuck at a rate
of 2.5 to the greenback.

Many companies have, however, continued to hold onto their dollars waiting
for the RTGS rate to weaken further, while most individuals sell their
greenbacks on the black market, where US$1 bought 3.8 RTGS dollars on
Monday.

Central bank chief John Mangudya said the official exchange rate was
expected to change by the time auctions for tobacco, Zimbabwe’s
second-largest earner of foreign currency after mining, open on March 20.

Mangudya maintained that the market would determine the exchange rate, after
accusations of manipulation by the central bank. But he ruled out a sharp
devaluation, which he said would result in a further spike in annual
inflation.

The governor said average annual inflation was expected to fall to 10 to 15
percent by the end of this year. He also said that any huge salary increases
for public workers would add to inflationary pressure.

Mangudya said an average $12 million had been traded every week at the
current forex interbank rate since Feb. 22, when banks started selling
dollars to large corporates.

Exporters, including miners and tobacco farmers, receive half their earnings
in the RTGS currency at the official exchange rate, while the other half,
which is deposited in their foreign currency accounts, must be sold within
30 days.

That requirement, which has been criticised by companies, is now being
reviewed to allow exporters to keep their dollars for longer, Mangudya told
a parliamentary committee.

Mangudya said last week that the central bank had borrowed $985 million from
pan-African banks against future gold export earnings. He said on Monday
that Zimbabwe was repaying $5 million every month. 

South Africa

South Africa's rand firms on improved risk appetite, Naspers lift stocks

(Reuters) - South Africa’s rand firmed on Monday, helped by increasing
demand for emerging market currencies amid a slew of disappointing economic
data in developed markets and growth warnings from central banks.

Stocks also rose, boosted by e-commerce and technology giant Naspers, though
a fall in the shares of financials after weak results capped gains on the
Johannesburg All-Share index.

At 1525 GMT the rand was 0.55 percent firmer at 14.3550 per dollar, moving
higher in tandem with developing-world peers.

Employment growth in the United States for February came in much weaker than
expected last week, triggering a revival in demand for risk assets as U.S.
Treasury yields dived.

Powell said on Sunday the U.S. central bank does “not feel any hurry” to
change the level of interest rates again as it watches how a slowing global
economy affects local conditions in the United States.

Expectations of lower U.S. interest rate expectations often boost investors’
appetite for emerging market assets, which offer higher returns but carry
more risk.

The rand has moved away from two-month lows of 14.5825 hit last week,
although the currency remains vulnerable to domestic risks mainly linked to
power utility Eskom and the threat it poses to the country’s sovereign
credit risk.

In fixed income, yield on the benchmark paper due in 2026 closed flat at
8.665 percent.

FINANCIAL STOCKS DIP

In stocks, the financial index fell 1.59 percent as South Africa’s No.2
insurer Old Mutual dropped 5.46 percent to 20.59 rand after a 12 percent
drop in adjusted full-year earnings and Absa Group fell 3.10 percent to 167
rand after the bank’s annual headline earnings per share dipped.

Tongaat Hulett fell 19.32 percent after its chief executive said last week
that a review of past accounting practices at the firm could affect
previously reported financial information.

Helping the market gain ground was market heavyweight Naspers, which ended
the session 2.44 percent stronger at 3,146.53 rand, thanks largely to its
one-third stake in Chinese internet group Tencent.

BP Bernstein trader Vasili Girasis said Naspers had gained on the back of
news that China’s content regulator has approved the monetisation of 95 new
video games, including titles from Tencent Holdings.

Aspen Pharmacare started the week 1.82 percent stronger following an
aggressive sell-off on Friday, which saw the multi-national drugmaker lose
almost a third of its value on concerns about ballooning debt.

The Johannesburg All-Share index rose 0.17 percent to 55,580 points while
the Top-40 index climbed 0.31 percent to 49,387 points.

       <mailto:info at bulls.co.zw> 

Europe

Pound soars, Asian shares rally after Brexit deal changes

(Reuters) - The pound jumped and Asian shares rallied on Tuesday after the
European Commission agreed to changes in a Brexit deal ahead of a vote in
the British parliament on a divorce agreement.

European Commission head Jean-Claude Juncker agreed to additional assurances
in an updated Brexit deal with British Prime Minister Theresa May on Monday,
but warned UK lawmakers would not get a third chance to endorse it.

Sterling, which had risen ahead of the talks between May and Juncker,
extended gains in hopes the changes may be enough to sway rebellious British
lawmakers who have threatened to vote down May’s plan again on Tuesday.

The pound was up 0.5 percent, buying $1.3215 and taking its gains over two
days to more than 1.5 percent.

A lower likelihood of crashing out of the EU with no Brexit deal could help
to inject some bullish sentiment into equity markets by eliminating one of
the three major concerns of global investors, alongside trade and slowing
global growth, said Greg McKenna, strategist at McKenna Macro.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.08
percent, with early gains reinforced by a rise in Chinese shares and oil
companies, which were buoyed by higher oil prices.

Chinese blue chips rose 1.3 percent, extending the previous day’s 2 percent
gain.

Despite slowing domestic economic growth and uncertainty about the outlook
for trade negotiations between China and the United States, Chinese markets
have been buoyed this year by investors’ expectations of more stimulus to
cushion any downturn.

The CSI300 index has risen more than 25 percent this year.

But Oliver Jones, market economist at Capital Economics cautioned that the
Chinese rally is “built on shaky foundations.”

Australian shares were up 0.4 percent, while Japan’s Nikkei stock index
jumped 1.9 percent, helped by a weaker yen.

The amended Brexit deal gave a further boost to investors’ appetite for
riskier assets, after global equity indexes climbed overnight on gains in
technology stocks and expectations of more stimulus from China.

U.S. shares rebounded from a week-long losing streak, with news that U.S.
chip supplier Nvidia Corp has agreed to buy Israeli chip designer Mellanox
Technologies Ltd for $6.8 billion helping to boost tech shares.

A nearly 7 percent gain in Nvidia shares helped to propel the Nasdaq
Composite 2.02 percent higher, to 7,558.06 points.

The Dow Jones Industrial Average rose 0.79 percent, with gains tempered by a
5.3 percent drop in Boeing shares after some airlines grounded the company’s
new 737 MAX 8 passenger jet following a second deadly crash of the airliner
in five months.

The S&P 500 gained 1.47 percent to 2,783.3.

RISING YIELDS

The market’s turn toward riskier assets lifted yields on U.S. Treasury
bonds, with benchmark 10-year Treasury notes at 2.6645 percent compared with
its U.S. close of 2.641 percent on Monday.

The two-year yield was at 2.4998 percent compared with a U.S. close of 2.477
percent.

The dollar index, which measures the greenback against a basket of rivals,
shed 0.2 percent to 97.036. But rising risk appetite weighed on the
safe-haven yen, pushing the dollar up 0.16 percent to 111.37.

The euro was up 0.13 percent on the day at $1.1262.

In commodity markets, oil prices rose on a combination of strong demand and
supply cuts by the Organization of the Petrolum Exporting Countries (OPEC).

A political and economic crisis in OPEC-member Venezuela is also seen as
lifting crude prices.

Venezuela’s opposition-run congress on Monday declared a “state of alarm”
over a five-day power blackout that has crippled the country’s oil exports
and left millions of citizens scrambling to find food and water.

U.S. crude was up 0.5 percent at $57.08 a barrel and Brent crude was 0.4
percent higher at $66.84.

Spot gold jumped 0.2 percent to $1,296.45 per ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

London metal prices rise on weaker dollar, Brexit boost

(Reuters) - London base metal prices rose across the board in early Asian
trade on Tuesday, supported by a weaker dollar and tracking stock markets
higher after the European  Commission agreed to changes in a Brexit deal.

A softer greenback makes dollar-denominated metals cheaper for holders of
other currencies and can boost prices. 

FUNDAMENTALS

* COPPER: Three-month copper on the London Metal Exchange  had climbed 0.4
percent to $6,434.50 a tonne by 0216 GMT, extending a 0.2-percent gain from
the previous session. The

most-traded May copper contract on the Shanghai Futures Exchange  added 0.5
percent to 49,250 yuan ($7,334.98) a tonne. 

* COPPER: Production at Chinese miner MMG Ltd's Las Bambas copper deposit in
Peru could fall "in the near-term" due to a month-long road blockade by a
community that was relocated to build the mine, the company said.

* TRADE: Chinese Vice Premier Liu He held a telephone call on Tuesday with
U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert
Lighthizer on key issues in their trade talks, state news agency Xinhua
said.

* U.S. DOLLAR: The dollar index fell almost 0.2 percent to 97.056 on a
modest improvement in risk appetite. 

* CHINA: China's automobile sales fell 13.8 percent year-on-year in
February, marking the eighth consecutive month of decline in the world's
largest auto market.

* ALUMINIUM: Queues to take aluminium out of LME-approved warehouses owned
by ISTIM UK in Port Klang, Malaysia rose to 229 days in February from 118
days in January and zero days in December.

* OTHER METALS: Nickel was the biggest gainer in base metals on the LME,
rising 1.2 percent to $13,050 a tonne, while aluminium added 0.7 percent and
zinc, Monday's top performer, nudged up 0.5 percent.

* ZINC: The global zinc market deficit narrowed to 28,000 tonnes in January
from a revised deficit of 62,400 tonnes in December, data from the
International Lead and Zinc Study Group

(ILZSG) showed.

Gold inches down as updated Brexit deal improves risk appetite

(Reuters) - Gold edged lower on Tuesday as appetite for risk improved after
the European Commission agreed additional assurances in an updated Brexit
deal, while stronger than expected U.S. data eased some fears about an
economic slowdown.

FUNDAMENTALS

* As of 0104 GMT, spot gold was down 0.1 percent at $1,293.17 per ounce.

* U.S. gold futures were up 0.1 percent at $1,292.90 an ounce.

* Asian shares rose after the European Commission agreed to changes to the
Brexit deal ahead of a vote in the British parliament on a divorce
agreement.

* Prime Minister Theresa May won legally binding Brexit assurances from the
European Union on Monday in a last ditch attempt to sway rebellious British
lawmakers who have threatened to vote down the deal again.

* Senior pro-Brexit members of Prime Minister Theresa May’s Conservative
Party believe she has “some kind of” Brexit deal to put to parliament on
Tuesday, the BBC’s political editor, Laura Kuenssberg, said.

* The dollar edged lower against major currencies following the U.S. retail
sales data and a rally in the pound.

* U.S. retail sales rose 0.2 in January, surprising economists who had
expected an unchanged result.

* Federal Reserve chairman Jerome Powell said the U.S. central bank does
“not feel any hurry” to change the level of interest rates again as it
watches how a slowing global economy affects local conditions in the U.S.

* The chief U.S. envoy for North Korea said on Monday that “diplomacy is
still very much alive” with Pyongyang despite a failed summit last month,
but cautioned that Washington was closely watching activity at a North
Korean rocket site and did not know if it might be planning a new launch.

* Barrick Gold Corp on Monday pulled its $18 billion offer for Newmont
Mining Corp and agreed to form a joint venture in Nevada with its rival,
ending a hostile takeover bid that sought to unite the world’s two largest
gold producers.

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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