Bulls n Bears Daily Market Commentary : 17 September 2019

Wed Sep 18 01:22:21 CAT 2019

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Bulls n Bears Daily Market Commentary : 17 September 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 10,117,882.03 with foreign buys at ZWL$3,656,836.30 and
foreign sales were ZWL$2,477,346.25 Total trades were 293.

The All Share index gained 4.56 points ending at 171.79 points. OLD MUTUAL
LIMITED added $3.3127 to close at $27.6054, MEIKLES also gained $0.1600 to
close at $1.2975 while SEEDCO LIMITED advanced by $0.1315 to end at $1.4915.
Other counters trading in the positive were DELTA CORPORATION which advanced
by $0.0859 to close at $3.0823 and PADENGA HOLDINGS LIMITED  which gained
$0.0573 to close at $1.6473.

Trading in the negative; AXIA  traded $0.0004 lower at $0.36000 while
DAIRIBORD ZIMBABWE PRIVATE LIMITED   shed $0.0002 to close at $0.3100.
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  Global Currencies & Equity Markets

Kenya

Kenyan shilling weakens, undercut by high liquidity, dollar appetite

(Reuters) - The Kenyan shilling was under pressure on Tuesday, fuelled by an
excess of local currency liquidity and surging demand for hard currency from
goods importers.

At 1043 GMT, commercial banks quoted the shilling at 103.80/104.00 per
dollar, compared with 103.75/95 at Monday's close.    

South Africa

South African rand hurt by oil price spike

(Reuters) - South Africa’s rand extended its losses on Tuesday to a one-week
low as heightened tensions in the Middle East after the weekend attack on
Saudi Arabia’s crude oil facilities soured risk demand globally.

At 1530 GMT the rand was 0.46% weaker at 14.7325 per dollar, having slipped
to 14.8425 earlier, its weakest level since September 9 and closer to the
15.00 mark that could trigger further selling.

South Africa is a net importer of oil for fuel and other industrial inputs
and the spike in crude prices, up nearly 15% at close on Monday before
retreating on Tuesday, will likely push up inflation and hurt already
anaemic consumer spending.

Brent crude traded at $65.37 per barrel at 1530 GMT, down about 6% from
Monday’s high of $71.35. The jump in oil prices has lifted market volatility
with run-on risk may offset any rate move by the Federal Reserve this week.

The Fed is seen lowering rates on Wednesday, a move that would typically
support the rand, but the currency’s use as a risk and emerging market proxy
looks set to outweigh the Fed move.

South Africa’s statistics agency publishes August inflation figures on
Wednesday, while the central bank decides on lending rates on Thursday.

Bonds were weaker, with the yield on the benchmark instrument due in 2026
adding 4.5 basis points to 8.26%.

In equities, stocks weakened with the broader All-share index down 1.66% to
56,895 points, while the benchmark Top-40 index declined 1.79% to 50,873
points.

Dragging the bourse downwards was petrochemicals group Sasol which lost 4.9%
to 291.00 rand as oil prices retreated again on Tuesday.

Banking stocks also shed 3.41%, with FirstRand down 4.9% to 64.71 rand,
while Nedbank slipped 3.64% to 242.09 rand and Standard Bank declined 3.36%
to 186.79 rand.

Gold stocks however were up 3.11% as investors sought a safe haven.
Sibanye-Stillwater gained 6.72% to 17.62 rand, AngloGold up 3.21% to 290.50
rand and Harmony increased 2.56% to 45.19 rand. 

       <mailto:info at bulls.co.zw> 

Europe

Global daily FX trading at record $6.6 tln as London extends lead

(Reuters) - Global daily currency turnover surged to a record $6.6 trillion,
with London shrugging off Brexit uncertainty to extend its lead as the
world’s dominant trading hub, the Bank for International Settlements (BIS)
said on Monday.

Foreign exchange markets had been shrinking when the BIS released its last
triennial forex survey - considered the most comprehensive take on what is
the world’s largest financial market - in 2016 as banks and hedge funds
pulled back from trading.

The latest edition, however, shows the market has bounced back with a hefty
29% jump in daily trading volumes from the $5.1 trillion recorded in 2016,
lifted by huge growth in FX swaps activity, the rise of new proprietary and
high-speed trading firms and more demand for emerging market currencies.

But the topline increase in daily global FX turnover hides growing headwinds
facing the industry. Among them is the rise of FX swaps used by banks and
investors to hedge their currency exposure and which typically generate less
revenue than plain old cash trading or highly complex and structured deals.

The survey by the BIS, a central bank umbrella group, showed that spot, or
cash, volumes continued to decline, slipping to 30% of all daily volumes
from a peak of 38% in 2013. FX swaps, meanwhile, gained market share and
totalled 49% of all volumes in April 2019, up from 47% in the previous
survey.

The BIS collated the data from volumes reported in April by nearly 1,300
financial institutions across 53 jurisdictions.

In a separate survey, the BIS said the market for over-the-counter interest
rate derivatives more than doubled to $6.5 trillion from $2.7 trillion in
2016, driven mainly “by increased hedging and positioning amid shifting
prospects for growth and monetary policy”.

The BIS said improved reporting contributed to the rise. Britain recorded
the biggest share of daily turnover, accounting for $1 in every $2 of
interest rate derivatives traded.

LONDON DOMINANCE

The survey also showed the United Kingdom extending its dominance of the FX
trading industry, defying sceptics who had predicted Britain’s 2016
referendum vote to leave the European Union would damage London’s financial
services sector.

Foreign exchange is the crown jewel of London’s financial sector. Industry
experts say the city’s convenient time zone and its grip on FX trading
infrastructure and personnel mean the sector could emerge unscathed from all
the Brexit uncertainty.

The BIS said London’s share of daily volumes rose to 43%, up from 37% in
2016, while the United States’ share shrank to 17% from 20%. In Asia,
growing volumes in Hong Kong offset weakness in Singapore and Tokyo.

Notably, mainland China registered an 87% increase in trading activity to
become the eighth-largest forex trading centre, up from 13th in 2016.

EMERGING ASIA GAINS, YEN SHARE SHRINKS

The dollar remained the world’s most dominant currency and was on one side
of 88% of all trades.

There was little change in the ranking of the major currencies and market
shares, though lower volatility in dollar-yen trading led to a drop of 5
percentage points in the Japanese yen’s share to 17%, keeping it in third
place behind the euro.

Sterling’s share stood at 13%, unchanged from three years earlier despite
prolonged bouts of Brexit-induced volatility, remaining ahead of the
Australian and Canadian dollars.

Emerging market currencies raised their share to 25%, up from 21% in 2016.
The growth came from a jump in Hong Kong dollar trading, as well as in the
Korean won, Indian rupee and Indonesian rupiah, the BIS said.

Despite Beijing’s push to broaden international use of the Chinese currency
in recent years, the survey showed the yuan rising in line with overall
market growth, leaving it with a 4.3% market share behind the Swiss franc.

The Mexican peso and Turkish lira - the latter suffering a currency crisis
in 2018 - dropped in the rankings.

Banks trading with “other financial institutions” - including nonreporting
banks, hedge funds, proprietary trading firms, institutional investors and
official sector financial institutions - grew significantly to $3.6
trillion, 55% of the global total, BIS said.

That included growing activity by smaller regional banks - reflecting their
strength in FX swap activity - and hedge funds. Institutional investor
participation, however, declined to 12% of global FX turnover from 16% three
years earlier.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper and other metals ease ahead of U.S.-China talks

(Reuters) - Copper edged lower on Tuesday as investors doubted that
U.S-China talks this week would lead to a speedy resolution of a
long-running trade dispute and a recovery in metals demand.

Deputy-level talks between the world’s two largest economies are scheduled
to start in Washington on Thursday, the U.S. Trade Representative’s office
said, paving the way for high-level talks in October.

The 14-month trade war has disrupted financial markets and subdued global
growth and demand for metals including copper.

Benchmark three-month copper on the London Metal Exchange (LME) was down
1.2% at $5,796 a tonne in official open-outcry trading.

ANALYSIS: The trade war has hardened into a political and ideological battle
that runs far deeper than tariffs, trade experts, executives, and officials
in both countries say, adding an agreement at talks this week is expected to
be a superficial fix.

RATES CUT: The U.S. Federal Reserve is expected cut interest rates on
Wednesday and close scrutiny will be paid to the central bank’s language and
new economic projections, given the backdrop of the trade war.

TRADE: The slowdown in China’s economy deepened in August, with growth in
industrial production at its weakest in 17-1/2 years.

China accounts for about half of global demand for base metals.

DOLLAR: Metals were under pressure from a stronger U.S. dollar, which traded
close to recent two-year highs on ongoing geopolitical risks in the Middle
East.

ZINC JUMPS: China’s zinc output rose by 18.9% year-on-year to 528,000 tonnes
in August, data released by the National Bureau of Statistics showed.

Meanwhile, on-warrant LME inventories fell to the lowest since at least
1998, at 33,450 tonnes. MZNSTX-TOTAL

LME zinc fell from a six-week high touched in the previous session, down
0.9% to $2,344 a tonne.

BOND FAILS: Sirius Minerals scrapped a plan to raise $500 million through a
bond sale, sending its shares more than 50% lower and delaying a project to
mine for fertiliser under a national park in northern England.

PRICES: Aluminium was bid down 0.8% to $1,778 a tonne, lead eased 1.4% to
$2,068, tin shed 2.5% to $16,725, nickel slipped 2.4% to a more than
two-week low of $16,650. 

Oil falls as supply worries fade; stocks edge higher

(Reuters) - Oil prices dropped sharply on Tuesday after Saudi Arabia’s
energy minister said the kingdom has fully restored its oil supply following
an attack over the weekend that shut 5% of global oil output.

Stocks edged higher and U.S. Treasury yields slipped ahead of an expected
interest rate cut by the Federal Reserve at the conclusion of its two-day
policy meeting on Wednesday.

The oil market remained on tenterhooks over the threat of retaliation for
attacks on Saudi Arabian crude oil facilities on Saturday. During a news
conference on Tuesday, Saudi Arabia’s energy minister said it will keep its
full oil supply to its customers this month and will restore its lost oil
output by the end of September.

Brent crude futures settled at $64.55 a barrel, down $4.47, or 6.48%. WTI
crude futures settled at $59.34 a barrel, down $3.56, or 5.66%.

MSCI’s All-Country World Index, which tracks shares across 47 countries, was
up 0.2% on the day.

On Wall Street, stocks finished modestly higher even as investors shunned
big bets ahead of the Fed’s policy decision.

Investors are waiting for clues on how far U.S. monetary policy easing may
go, given that Fed policymakers are deeply divided on whether more rate cuts
are warranted.

The Dow Jones Industrial Average rose 33.77 points, or 0.12%, to end at
27,110.59, the S&P 500 gained 7.72 points, or 0.26%, to finish at 3,005.68,
and the Nasdaq Composite added 32.47 points, or 0.4%, to close at 8,186.02.

With the retreat in oil prices, shares of energy companies, which had risen
hard on Monday, gave up much of their gains.

European shares slipped slightly, although investors sought refuge in oil
stocks and defensive sectors in response to heightened volatility after the
attacks in Saudi Arabia. The pan-European STOXX 600 index closed down 0.05%.

U.S. Treasury yields edged lower as traders bided their time before the Fed
decision on rates.

While a rate cut is seen as near-certain this week, there are deep
disagreements among Fed policymakers on whether a reduction in borrowing
costs now or further decreases are warranted. Investors will focus on the
“dot plot,” a graphic which shows where policymakers expect rates to be in
the future.

Benchmark 10-year notes were last up 10/32 in price to yield 1.81%, down
from 1.843% on Monday.

Investors were watching an overnight spike in dollar funding costs after the
overnight rate, or the cost for banks and Wall Street dealers to borrow
dollars, surged to 10% on Tuesday, the highest since at least January 2003,
according to Refinitiv data.

In currency markets, the dollar slipped in choppy trading, moving within
narrow ranges.

With investors adopting a wait-and-see approach ahead of the Fed meeting,
gold prices were modestly higher. Spot gold was 0.25% higher at $1,501.6647
per ounce.

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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