Bulls n Bears Daily Market Commentary : 28 October 2019

Tue Oct 29 00:25:25 CAT 2019

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Bulls n Bears Daily Market Commentary : 28 October 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$36,414,903.30 with foreign buys at ZWL$ 51,273.00 and
foreign sales were ZWL$ 555,366.10 Total trades were 78

The All Share index opened the week on a positive note adding 0.31 points
to close at 230.11 points. OLD MUTUAL LIMITED   recovered $1.6800 to end at
$34.6833, PPC   gained $0.6175 to $3.7200 and INNSCOR (INN.zw) was $0.0299
firmer at $2.8525. CASSAVA SMARTECH   also increased by $0.0202 to $1.5000
and FIRST MUTUAL LIMITED   traded $0.0200 higher at $0.2700.

Gains were offset by losses in RIOZIM   which decreased by $0.4900 to
$2.1100, SEEDCO   lost $0.3500 to end at $1.5600 and MASIMBA   was $0.0380
weaker at $0.1520. ECONET WIRELESS   also eased by $0.0150 to $1.6900 and
NMB   traded $0.0086 lower at $0.3500

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  Global Currencies & Equity Markets

South Africa

South Africa's rand clings on to gains, Sasol leads stocks higher

(Reuters) - South Africa’s rand firmed to a new six-week high on Monday as
investors looked beyond an uncertain local and global backdrop and kept
buying the high-yielding currency, while stocks rose, led by chemicals firm
Sasol.

By 1500 GMT, the rand was 0.55% firmer at 14.5440 against the dollar,
trading at its strongest levels since Sept. 13.

A poll of 14 economists expects Finance Minister Tito Mboweni to expand the
deficit to 6.05% of gross domestic product, up from a projection of 4.5% in
February for the year that began in April, owing mainly to bailouts to state
power firm Eskom.

Crisis-hit Eskom was handed an additional 59 billion rand ($4 billion)
lifeline by parliament on Oct. 22, prompting criticism from opposition
parties that it was a “blank cheque” which would swell borrowing.

But the firm has not cut power to the national grid since last Sunday, when
breakdowns at some its coal-fired plants forced it to throttle supply,
easing investor concerns and breathing wind into the rand since the
beginning of the month.

In equities, the Top-40 index was up 1.6% while the broader all-share rose
by 1.3%.

Shares in petrochemicals group Sasol were up nearly 12% after the company
announced that its joint chief executives were stepping down after a review
of a project in the United States dogged by delays and rising costs.

The company said Bongani Nqwababa and Stephen Cornell, the joint CEOs, who
have not been found to have committed misconduct nor shown incompetence,
would step down at the end of this month to restore trust in Sasol.

Suffering losses on the day was miner AngloGold Ashanti , with shares
falling 7.5%, after the firm said it expected its full-year production will
be at the low end of its forecast range as output fell in the third quarter
from a year ago and costs rose sharply.

The yield on the benchmark government bond was down 0.5 basis points to
8.165%.

Kenya

Kenya's shilling holds steady against the dollar

(Reuters) - The Kenyan shilling was stable against the dollar on Monday
supported by inflows from horticulture exports and offshore investors buying
government debt, traders said. 

At 0808 GMT, commercial banks quoted the shilling at 103.50/60 per dollar,
unchanged from Friday's close.

       <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

U.S.-China trade hopes boost stocks; dollar weak

(Reuters) - An index of global stock markets rallied to a 21-month high on
Monday, boosted by growing hopes for a U.S.-China trade deal and the view
that the U.S. Federal Reserve this week will deliver its third interest rate
cut for 2019.

U.S. Treasury yields rose after the European Union agreed to a three-month
flexible delay of Britain’s departure. Improved risk sentiment also sapped
demand for the safe-haven U.S. dollar, the Japanese yen and gold.

MSCI’s All Country World Index, which tracks shares across 47 countries, was
up 0.44% to its highest intraday level since Feb. 2, 2018.

U.S. and Chinese officials are “close to finalizing” parts of a trade
agreement after high-level telephone discussions on Friday, the U.S. Trade
Representative’s office and China’s Commerce Ministry said. The USTR
provided no details on areas of progress.

U.S. President Donald Trump has said he hopes to sign the deal with China’s
President Xi Jinping next month at a summit in Chile.

Strong results from U.S. companies have boosted risk sentiment, and
investors are hopeful the Fed will cut interest rates at its meeting this
week.

On Wall Street, the S&P 500 closed at a record high. Microsoft Corp shares
boosted all three main indexes, after the tech giant beat Amazon.com Inc for
the Pentagon’s $10 billion cloud computing contract.

The Dow Jones Industrial Average rose 132.66 points, or 0.49%, to close at
27,090.72, the S&P 500 gained 16.87 points, or 0.56%, to finish at 3,039.42
and the Nasdaq Composite added 82.87 points, or 1.01%, to end at 8,325.99.

The pan-European STOXX 600 index rose 0.25% to close at its highest since
January 2018, helped by trade-exposed auto and mining stocks.

In currency markets, the U.S. dollar slipped as trade deal optimism reduced
demand for safe haven currencies.

The dollar index, which measures the greenback against a basket of six major
currencies was 0.09% lower on the day.

Sterling rose 0.25% after British lawmakers rejected Prime Minister Boris
Johnson’s bid to end the political paralysis around Brexit with a Dec. 12
election.

The vote took place after the European Union agreed to a three-month
flexible Brexit delay.

The benchmark 10-year U.S. Treasury yield was last up 4.5 basis points to
1.8455%.

Oil prices eased after four days of gains as worries about weak Chinese
industrial data offset hopes oil demand will rise on a Sino-American trade
deal.

Brent crude settled down 45 cents, or 0.7% at $61.57 a barrel, while U.S.
West Texas Intermediate crude settled 85 cents, or 1.5%, lower at $55.81.

Gold slipped as trade hopes limited gains after the precious metal jumped 1%
in the previous session. Spot gold was down 0.77% at $1,492.6949 per ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Zinc rises towards 4-month high as stocks fall

(Reuters) - Zinc prices climbed towards 4-month peaks on Monday as slumping
stocks fuelled fears of shortages, while copper hovered near five-week highs
on hopes of progress in trade talks between the United States and China.

Benchmark zinc on the London Metal Exchange was untraded in the closing
rings, but was bid up 1.3% to $2,542 a tonne.

Prices of the metal used to galvanise steel earlier touched $2,549, moving
back towards last week’s peak of $2,567.35, which was the highest since June
14.

Copper, used by investors as a gauge of economic health, was down 0.3% at
$5,908 a tonne, having earlier touched a session high of $5,927.

STOCKS: Zinc inventories in London Metal Exchange-registered warehouses are
at 57,775 tonnes. They fell to 50,425 tonnes in April, the lowest since the
1990s. MZN-STOCKS

Also supporting prices are cancelled warrants - metal earmarked for delivery
and so no longer available to the market - at nearly 43%. MZNSTX-TOTAL

SPREADS: Concern about the availability of zinc on the LME market has
created a premium of $44 a tonne for the cash over the three-month contract,
close to the $50 a tonne seen in September CMZN0-3.

BALANCE: Global zinc demand is estimated at around 14 million tonnes this
year. Some analysts expect an annual deficit of around 200,000 tonnes.

TECHNICALS: Zinc prices face heavy resistance at $2,545, where the 200-day
moving average currently sits, followed by $2,575, the 50% Fibonacci
retracement level of the April to September slide.

TRADE: U.S. and Chinese officials are “close to finalising” some parts of a
trade agreement after high-level telephone discussions on Friday, the U.S.
Trade Representative’s office and China’s Commerce Ministry said.

INDONESIA: Nickel briefly reversed early losses after Indonesia’s nickel
miners agreed to stop nickel ore exports immediately. Last month Jakarta
brought forward a ban on shipments to January 2020 from 2022.

It was down 0.8% at $16,640.

PRICES: Aluminium was up 0.5% at $1,736 a tonne, while lead rose 0.6% to
$2,236 and tin gained 0.3% to $16,725.

Constellium plans more aluminium recycling, wary of EU carbon rules

(Reuters) - Aluminium parts maker Constellium is increasing its recycling
capability, taking advantage of the metal’s reusability to meet calls for
lower-carbon output, but investments in Europe will depend on emissions
rules not hurting local industry.

Aluminium’s appeal as indefinitely recyclable has attracted the interest of
beverage makers faced with an outcry over plastic waste, prompting some
drinks firms to switch to cans from bottles.

Recycling also reduces aluminium’s considerable carbon footprint, linked to
the energy-intensive production process for primary aluminium.

Constellium, a leading supplier of products for sectors including packaging
and car and plane manufacturing, expanded recycling in the United States two
years ago by launching a new furnace at its Muscle Shoals plant in Alabama.

Yet the group is waiting to see if EU emissions policy takes into account
the overall benefit of a recycling project along the supply chain, or takes
a narrower approach that would force a firm to buy carbon credits to cover a
recycling furnace.

Recycled aluminium is estimated to consume 5% of the energy required to make
new aluminium and Germain said using coal-based power increases the metal’s
emissions by three or four times.

He declined to disclose Constellium’s recycling rate or detail its suppliers
of primary aluminium.

Constellium supported the idea of a carbon tax at the EU’s borders in order
to prevent local industry being penalised by imports not subject to the same
emissions standards, he said.

But its application could prove complex when dealing with products like cars
that have large numbers of parts, he added.

Constellium, whose roots lie in former French aluminium maker Pechiney, was
also facing pressure from its clients to guarantee lower-carbon supply.

It has begun certifying its sites under the industry’s “Aluminium
Stewardship Initiative” and this was expected to lead it to change its mix
of raw material suppliers, Germain said. 

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
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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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