Bulls n Bears Daily Market Commentary : 01 April 2020

Thu Apr 2 07:41:20 CAT 2020

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Bulls n Bears Daily Market Commentary : 01 April 2020

 <mailto:info at bulls.co.zw> 

Zimbabwe Stock Exchange Update

Market Turnover ZWL$4,114,097.50 with foreign buys at NIL and foreign sales
were ZWL$1,414,781.00 Total trades were 78

The All Share index opened the month of April on a positive note adding 2.73
points  to close at 458.94 points. AXIA  gained $0.2404 to $2.0500, CASSAVA
SMARTECH   rose by $0.1193 to $2.6500 and BINDURA  was $0.0550 stronger at
$0.3550. ECONET  also increased by $0.0450 to $2.5500 and SEEDCO  was
$0.0064 up at $3.8823.

Trading in the negative; OLD MUTUAL LIMITED  retreated by $0.7221 to
$37.5779, MEIKLES LIMITED lost $0.1116 to $7.9898 and PADENGA was $0.0900
weaker at $5.5000. AFRICAN SUN  also decreased by $0.0840 to settle at
$0.4460 and HIPPO VALLEY  was $0.0328 lower at $5.3484.

   . <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

Rand roiled by rising South African growth fears

(Reuters) - The rand weakened on Wednesday, with confidence hit by further
signs of South Africa’s economic fragility.

South Africa has imposed some of the toughest restrictions on the continent
to try to contain the coronavirus outbreak, including deploying the army to
support police during a 21-day lockdown that began on Friday.

The likely toll on an economy already in recession showed-up in preliminary
tax numbers, with 2019/20 collection 160 billion rand below February’s
Treasury estimates.

After its worst quarterly performance since at least the 2008 global
financial crisis the rand was 0.53% weaker at 17.9610 per dollar at 1500 GMT
after earlier matching an all-time low of 18.0800.

Sentiment was also hit by the Absa purchasing manager’s index showing a
downturn in activity and news that state utility Eskom told independent wind
farms it could buy less of their power in the coming days as electricity
demand plummets during the lockdown also.

The Johannesburg Stock Exchange’s Top-40 index fell 2.08% to 39,892 points
and the All-Share index weakened 2% to 43,592 points as world equity markets
slumped on evidence that the coronavirus pandemic was sending the global
economy into a deep recession.

Among the biggest fallers were gold mining shares, with Gold Fields and
AngloGold Ashanti. 

Nigeria

Fidelity Bank cuts profit target as coronavirus hits Nigeria

(Reuters) - Nigeria’s Fidelity Bank said on Wednesday it has cut its profit
target for the year, citing the impact of the coronavirus pandemic, but
added it had set aside money for a Eurobond coupon payment due in two weeks,
before the country begins a lockdown.

Africa’s largest city Lagos ground to a halt on Tuesday and the capital
Abuja entered a two-week lockdown to slow the spread of the virus.

Mid-tier Fidelity Bank now expects to see a 15% drop in profit this year to
25.8 billion naira, compared with its 2019 profit of 30.4 billion naira,
Chief Operations and Information Officer Gbolahan Joshua told Reuters by
phone.

Africa’s largest economy has been hit hard by the coronavirus pandemic. It
is struggling for foreign income from its production of oil, for which
prices have slumped due to a drop in demand from China and a price war
between major producers Saudi Arabia and Russia.

But Joshua said Fidelity had enough cash to honour its Eurobond coupon
payments.

He said the bank had transferred $21 million to bond trustees for the
half-yearly coupon payment on its $400 million 2022 Eurobond due on April 13
as part of its contingency plans for a lockdown.

The bank transferred the funds to Citibank, the trustees, on Monday, Joshua
said.

He said the bond issue was now yielding 16% interest, compared with 5% in
January, due to investors shedding emerging market assets.

Around 60% of the bank’s 3,000 staff were working from home before the
lockdown began, and the bank has looked at several scenarios to keep
operations running, Joshua said.

Joshua said the bank had reduced its exposure to upstream oil and gas
production to $365 million from $500 million in 2015 shortly before Nigeria
entered a recession.

Fidelity has also increased its cost of risk guidance for 2020 to a six-year
high of 1.5%, he said, up from 1% last year, on its loan book worth around
1.1 trillion naira.

The higher cost of risk would hurt the bank’s profits, he said.

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Markets fall as virus woes strike again

(Reuters) - World markets fell on Wednesday as the coronavirus threat
ensured an ugly start to the second quarter for equities and commodities.

Traders headed for the safety of government bonds, the dollar and gold as
evidence continued to mount that the virus was sending the global economy
into a deep recession.

Tokyo’s Nikkei slumped 4.5% after the worst plunge in factory activity in
almost a decade. The pan-European STOXX 600 sank 3.2% and Wall Street
futures dived 3.1% after a dire forecast of likely U.S. coronavirus deaths.

Wall Street tumbled on Tuesday, capping the biggest quarterly fall since
1987 for the Dow Jones and the steepest for the S&P 500 since the financial
crisis. The fact it all happened in a month and from record highs made it
feel all the more brutal.

U.S. economic activity is likely to be “very bad” and the unemployment rate
could rise above 10% because of efforts to slow the spread of the
coronavirus, Cleveland Federal Reserve Bank President Loretta Mester told
CNBC.

There had been some glimmers of hope during Asian trading. China’s factory
activity improved in March after plunging in February. It just scraped into
positive territory, beating analysts’ expectations.

Blue-chip Chinese stocks failed to hold their gains, however, though
Australian shares bounced 3.5% as a slowdown in new coronavirus cases there
and rising iron ore prices lifted the market.

But Europe’s early plunge meant MSCI’s main gauge of world stocks was down
nearly 1% having slumped 22% since the start of the year.

The number of coronavirus infections globally headed toward 800,000. In a
positive development, Deutsche Bank analysts noted the global growth in new
cases was below 10% for two consecutive days, having exceeded that rate for
most of the past two weeks.

Health officials were not upbeat, however. A World Health Organization
official warned that even in the Asia-Pacific region, the epidemic was “far
from over.”

OIL, TOIL AND TROUBLE

In currency markets, the dollar’s safe-haven appeal saw it continue to rose.
The yen held its ground, but the euro dropped back under $1.10 as traders
braced for German manufacturing and European Union unemployment figures.

The pound fell to $1.2350 and plenty of commodity-exposed currencies from
the Australian dollar to the Russian rouble saw 1% losses.

“Don’t fight the Fed” is the old adage, but markets seem to be doing their
best to do that anyway – a new set of Fed FX swap lines on Tuesday was meant
to reassure markets that the U.S. central bank was there to ensure an
adequate supply of dollars.

Demand for the guaranteed income of government bonds pushed the yield on the
benchmark 10-year U.S. Treasury note down to 0.63%.

Italian bond yields also held steady as the benefit of recent European
Central Bank measures meant the country - which has been one of those hit
hardest by the coronavirus - successfully sold 8.5 billion euros of debt.

Commodity markets were much rougher. Brent crude fell 5.81% to $24.80 per
barrel as the United States, Russia, and Saudi Arabia jostled over a massive
oversupply of oil.

Crude oil benchmarks ended the quarter with their biggest losses in history.
Both U.S. and Brent futures got hammered throughout March by the pandemic
and a Saudi-Russia price war.

Global demand has been cut sharply by travel restrictions. Forecasters at
major merchants and banks see demand slumping by 20% to 30% in April, and
for weak consumption to linger for months.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Mitsubishi Materials plans to raise H1 copper output 9.8% yr/yr

(Reuters) - Japan's Mitsubishi Materials Corp  plans to produce 185,394
tonnes of refined copper in the first half of financial year 2020-21, it
said on Wednesday,

up 9.8% from a year earlier.

The country's first half falls between April and September.

Japan's Mitsui Mining sees 5.8% drop on-year in H1 zinc output

(Reuters) - Mitsui Mining and Smelting Co Ltd , Japan's biggest zinc
smelter, said on Wednesday it plans to produce 105,000 tonnes of refined
zinc in the first half of financial year 2020-21, a drop of 5.8% from a
year-ago period.   

The country's first half of the financial year falls between April and
September.

Zinc is used mainly as an anti-corrosive coating while manufacturing
galvanised steel.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

 <mailto:info at bulls.co.zw> 

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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