Bulls n Bears Daily Market Commentary : 18 October 2019

Mon Oct 21 00:31:01 CAT 2019

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Bulls n Bears Daily Market Commentary : 18 October 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$12,734,389.03 with foreign buys at ZWL$ 2,065,783.40 and
foreign sales were ZWL$ 2,025,112.75 Total trades were 216

The All Share index closed the week on a lower note,losing 0.15 points to
close at 228.19 points. ECONET WIRELESS dropped $0.0386 to $1.6505, OLD
MUTUAL   lost $0.0273 to $33.0001 and NMB LIMITED  was $0.0100 weaker at
$0.3900. CASSAVA SMARTECH LIMITED  also decreased by $0.0099 to settle at
$1.4680 and FIRST CAPITAL BANK   traded $0.0016 lower at $0.0984.

Losses were countered by gains in SEEDCO LIMITED which advanced by $0.2000
to $2.2000, PADENGA HOLDINGS LIMITED   added $0.0086 to $2.9000 and SEEDCO

INTERNATIONAL LIMITED   traded $0.0075 higher at $2.7725. SIMBISA HOLDINGS
advanced by $0.0046 to end at $1.3921 and OK ZIMBABWE LIMITED

increased by $0.0042 to close at $0.6500.

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  Global Currencies & Equity Markets

South Africa

South Africa's rand rides optimism over new power plan

(Reuters) - South Africa’s rand firmed on Friday, building on gains made
after the government released a long-delayed plan for electricity generation
to address crippling power cuts.

At 1620 GMT, the rand was up 0.3% at 14.7900 per U.S. dollar.

The South African currency rallied from near 15.00 to a session-best 14.77
on Thursday, ending a losing streak triggered by state power utility Eskom’s
resumption on Wednesday of nationwide controlled blackouts.

Eskom has blamed unforeseen breakdowns at some of its coal-burning plants,
but analysts say they are a symptom of mismanagement over many years, which
has seen it sink into roughly 440 billion rand ($30 billion) of debt.

The release of the new electricity generation plan, replacing a previous
blueprint not updated for almost a decade, gave investors a degree of policy
certainty, but Eskom still does not have a permanent chief executive.

South African government bonds traded slightly firmer, with the yield on the
benchmark government paper due in 2026 down 2 basis points at 8.24%.

Stocks closed weaker, with the Johannesburg All-share index down 0.48% to
55,723 points, while the benchmark Top-40 index declined 0.41% to 49,511
points.

Bank stocks fell as the index edged 1.24% lower. FirstRand slipped 1.89% to
65.99 rand, Standard Bank shed 1.44% to 179.20 rand and Rand Bank Merchant
lost 1.02% to 80.17 rand.

Gold stocks shone with the index up 1.76% amid global market uncertainty.
Harmony rose 3.41% to 46.96 rand and AngloGold America 2.02% to 306.70 rand.

Angola

Angola FX market overhaul sees kwanza tumble to record lows

(Reuters) - Angola’s kwanza tumbled to a record low on Friday as the central
bank sought to close a widening gap between official and black market rates
in an overhaul of the southern African country’s foreign exchange regime.

Africa’s second-largest oil producer was pushed into an economic crisis by
the sharp tumble in oil prices in mid-2014, which prompted Luanda to strike
a deal with the International Monetary Fund last December and embark on
several reforms - one of which is to fully unshackle its foreign currency
market.

Yet faced with limited foreign currency reserves and subdued oil prices, a
recent sharp depreciation in the parallel market rate has ramped up the
pressure on policy makers to adjust the official rate, analysts and traders
said.

The kwanza’s official rate weakened more than 6% on Friday to 438 to the
dollar, taking its decline to near-16% since the start of the month.

On Friday, the kwanza stood at 540 to the dollar in the parallel market -
23% above the official rate, according to Absa.

FX SALES SLOW

Absa Africa strategist Samantha Singh said one driver for the Kwanza slide
was a crackdown on illegal mining and informal commerce limiting the amount
of dollars finding their way onto the street.

President João Lourenço, who was elected in 2017 after 38 years of rule by
José Eduardo dos Santos, has said he wants to revive the economy by opening
up to foreign investment, privatising state assets and diversifying away
from oil, which accounts for more than 90 percent of exports.

Yet the journey has not been easy. Angola’s economy is expected to contract
this year due to a decline in oil production and recover only mildly next
year, the International Monetary Fund forecast in its World Economic Outlook
released on Tuesday. This is well below growth rates across sub-Saharan
Africa forecast at 3.2%, according to the IMF.

To attract foreign investors, it was key to have a foreign exchange market
that “works properly”, central bank governor Jose Massano said earlier this
week in London.

Analysts expected the new regime of letting banks determine the price to be
beneficial in the long run. However, in the short term, FX sales have slowed
in recent months, also making it more difficult for authorities to bridge
the gap between the parallel and official rates.

Pressure on foreign currency reserves contributed to the push to let the
Kwanza slide, many suspected. Foreign reserves are crucial to a country’s
ability to support its currency as well as meet its import bills and
external debt repayments.

Absa’s Singh calculated the central bank sold $6.8 billion into FX markets
in the first nine months, an average of $725 million a month. In 2018,
policy makers flogged all $13.5 billion - or $1.13 billion a month, she
added.

Gross reserves fell to $16.1 billion in August from $16.7 billion at the
start of the year.

       <mailto:info at bulls.co.zw> 

Europe

Dollar weakens on Brexit, shares sapped by weaker China growth

(Reuters) - The dollar posted its worst week in almost four months on
Friday, pummelled by sterling and euro rallies driven by a deal on Britain’s
departure from the European Union, while China’s weakest growth in nearly
three decades weighed on equities.

The dollar crept lower against the euro as the common currency enjoyed a
lift from hopes a Brexit deal could improve the odds of the euro zone
avoiding a recession.

Dismal manufacturing data and worries the U.S.-China trade war could slow
euro zone economies even further have rattled the euro this year, while
fears of a disorderly Brexit had slammed sterling until a week ago.

The euro rose 0.36% to an almost two-month high of $1.1162. Sterling climbed
0.42% to a fresh five-month high of $1.2942.

British Prime Minister Boris Johnson confounded his opponents on Thursday by
clinching a new deal with the EU, even though the bloc had promised it would
never reopen a treaty agreed on last year.

Parliament will vote Saturday on a deal that could lead shares in
British-oriented businesses, such as housebuilders and retailers, to rocket
to record highs if approved. Investors also predict the pound could rally
about 5%.

Michael Hewson, chief market analyst at CMC Markets in London, said however
members of parliament cast their vote, the Brexit saga is unlikely to be
over.

Gloomy earnings reports from French carmaker Renault and food group Danone
drove European shares lower while negative headlines about Johnson & Johnson
and Boeing on Wall Street offset generally positive U.S. corporate earnings.

MSCI’s gauge of stocks across the globe shed 0.24% while the FTSEurofirst
300 index of leading European shares closed down 0.38%.

Bleak Chinese economic data also soured risk appetite, with the Shanghai
Shenzhen index falling 1.2%.

Asian stocks stumbled after China’s third-quarter growth slowed more than
expected to its weakest pace in almost three decades as the bruising U.S.
trade war hit factory output. Gross domestic product (GDP) rose 6.0%
year-on-year.

Wall Street also edged lower on worries about the global economy following
China’s GDP data and J&J after it moved to recall a batch of baby powder.

J&J shares fell 6.2% while Boeing slid 6.79% after it turned over messages
from 2016 between two employees that suggest the airplane maker may have
misled U.S. aviation officials about a key safety system on the grounded 737
MAX.

Robust earnings from Coca-Cola Co and Schlumberger NV , among others, helped
mitigate the losses. Coke rose 1.84% and Schlumberger added 1.32%.

The Dow Jones Industrial Average fell 255.68 points, or 0.95%, to 26,770.2.
The S&P 500 lost 11.75 points, or 0.39%, to 2,986.2 and the Nasdaq Composite
dropped 67.31 points, or 0.83%, to 8,089.54.

Euro zone bond yields rose a day before the Brexit vote. Yields have
generally pushed higher since Irish and British leaders said a week ago they
saw a path to a deal, boosting risk appetite and eroding demand for
safe-haven assets such as bonds.

Germany’s 10-year Bund yield was at -0.39%, after touching its highest since
late July on Thursday.

U.S. Treasury yields fell as investors awaited Saturday’s Brexit vote, with
the benchmark 10-year U.S. Treasury note up 1/32 in price to push yields
down to 1.7501%.

Oil prices edged lower as concerns about China’s economy outweighed bullish
signals from its refining sector.

Benchmark Brent crude oil futures settled down 49 cents to $59.42 a barrel.
U.S. West Texas Intermediate (WTI) crude futures fell 15 cents to settle at
$53.78 a barrel.

Gold steadied, helped by a weaker dollar. U.S. gold futures settled 0.3%
lower at $1,494.10 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Barrick Gold reaches deal with Tanzania over Acacia Mining

(Reuters) - Barrick Gold Corp said it had reached a deal to settle a
long-running tax dispute between Tanzania and mining group Acacia, which
Barrick bought in a $1.2 billion transaction approved by a British court
last month.

The tax deal includes the payment of $300 million to settle outstanding tax
and other disputes, the lifting of a concentrate export ban, and the sharing
of future economic benefits from mines on a 50-50 basis, Barrick said in a
statement on Sunday.

A new operating company named Twiga Minerals will be formed to manage the
Bulyanhulu, North Mara and Buzwagi mines after a review by Tanzania’s
attorney general, the statement added.

Under the agreement, the Tanzanian government will also buy a 16%
shareholding in each of the mines.

Kabudi, speaking at the news conference, said the deal marked a new
partnership with Barrick under the new Twiga Minerals name.

He said details of the deal would be submitted to the country’s attorney
general for review and he expected that to be completed by November 15.

An Africa-focused international dispute resolution framework will also be
established as part of the agreement, Barrick said.

The deal comes days after the Canadian company fell short of analysts’
estimates for third-quarter gold production due to low output at its North
Mara mine in Tanzania.

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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