Bulls n Bears Daily Market Commentary : 27 April 2020

Tue Apr 28 07:40:05 CAT 2020

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Bulls n Bears Daily Market Commentary : 27 April 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$15,026,682.05 with foreign buys at ZWL$1,730,845.00 and
foreign sales were ZWL $3,287,051.65 Total trades were 138.

The All Share index opened the week at 479.62 points after gaining 3.06
points . OK ZIMBABWE added $0.3149 to $1.9800, TSL rose by $0.1994 to
$1.4994 and POWERSPEED  was $0.0640 firmer at $0.38400. DAIRIBORD also
increased by $0.0478 to $0.7628 and TURNALL traded $0.0200 stronger at
$0.1200.

Trading in the negative; OLD MUTUAL LIMITED  and BAT both retreated by
$1.0000 to close at $42.0000 and $80.0000 respectively. RIOZIM also
decreased by $0.6994 to $5.0500, FIRST MUTUAL LIMITED lost $0.0400 to
$1.4000 and DELTA  was $0.0239 weaker at $5.9500.

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  Global Currencies & Equity Markets

Nigeria

Nigerian overnight rates drop after $3.9 bln liquidity squeeze

(Reuters) - Nigerian overnight rates dropped 20 percentage points on Monday
as traders hoped the central bank will boost liquidity to ease a cash
squeeze after withdrawing 1.4 trillion naira ($3.9 billion) from lenders to
try to support the currency.

Overnight rates fell to 15% from a high of 35% on Friday after the central
bank collected excess cash holdings from banks as part of measures to lift
the naira.

Money market rates had been 2% before the withdrawal.

Traders said the central bank refunded some of the cash on Monday, helping
to lower rates and fuelling hopes of an extra liquidity injection coupled
with a coupon payment.

The banking regulator has been withdrawing excess monies from the banks to
tighten liquidity especially before currency auctions to support the naira,
which it devalued last month.

The central bank took out liquidity from lenders two weeks ago but later
returned some of the cash, traders said, a system it has used to manage
forex demand to conserve its reserves, which are down 25% from a year ago.

In January, the central bank raised the cash reserve ratio that banks must
hold by 500 basis points to 27.5%, the first rise in four years to curb
excess liquidity in the banking system, which it said was contributing to
inflation.

Overnight repurchase deals rose to 48.44 billion naira on Monday from 4.7
billion naira in the previous session, and banks borrowed a total of 94.16
billion naira from the central bank to cushion the impact of the liquidity
squeeze.

Bonds rallied on Monday due to coupon payments but treasury bills traded
flat with no deals.

The naira has been hitting new lows on the over-the-counter spot and black
markets since last month after the central bank adjusted its official rate,
implying a 15% devaluation, to absorb the impact of an oil price crash
triggered by the coronavirus pandemic.

The naira was quoted at 450 on the black market on Monday, weaker than the
388.76 it traded at on the spot market.

In October, the central bank levied a charge of more than 400 billion naira
on 12 lenders for failing to increase loans to meet a regulatory target. ($1
= 360.00 naira)

Egypt

Egypt asking IMF for support during coronavirus crisis - PM

(Reuters) - Egypt has asked the International Monetary Fund for financial
support to help it deal with the coronavirus crisis and will begin talks
with it within days, Prime Minister Mostafa Madbouly said on Sunday.

The government is seeking help because the virus is putting pressure on
Egypt’s tourism sector, an important contributor to the economy, as well as
other sectors, Madbouly said.

The IMF said in a statement that it expects an Egyptian request for rapid
financing to be presented to its board within weeks.

The crisis has shut down Egypt’s tourism industry, which accounts for
12%-15% of gross domestic product, after the country closed its airports to
most traffic in March. It is also threatening remittances from Egyptians
working abroad, exports of natural gas and income from the Suez Canal.

Egypt is hoping to tap the IMF’s Rapid Financing Instrument (RFI) and its
Stand-By Arrangement, the cabinet said in a statement. The two programmes
are designed for countries facing urgent or potential balance of payments
problems.

Central Bank Governor Tarek Amer told the joint news conference with
Madbouly that Egypt was seeking a one-year financial support programme. He
added that the country had sufficient foreign reserves to help it cope with
the epidemic for one or two years.

Deputy Central Bank Governor Rami Aboul Naga told state news agency MENA
that the amount Egypt is asking for had yet to be decided but that it aimed
to receive the funds under the RFI immediately on signing an agreement and
would seek to repay over up to five years.

Radwa El-Swaify, head of research at Pharos Security Brokerage, estimated
that Egypt would seek around $3 billion-$4 billion from the IMF.

In February, before the virus arrived in the North African country, Egypt
had said it was in talks with the IMF about technical assistance on
non-financial structural reforms.

Egypt signed a three-year, $12 billion Extended Fund Facility with the IMF
in November 2016 after allowing its currency to weaken sharply, implementing
a valued-added tax and raising fuel prices to reduce its balance of payments
budget and deficits.

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GLOBAL MARKETS

Asian shares fall on fresh rout in crude prices

(Reuters) - Asian shares and U.S. stock futures dipped into the red on
Tuesday, erasing earlier gains as a renewed decline in oil prices
overshadowed optimism about the easing of coronavirus-related restrictions
seen globally.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3%.
Shares in China fell 0.7% and South Korean shares fell 0.22%.

Oil futures slumped after the largest U.S. oil exchange-traded fund said it
would sell all its front-month crude contracts to avoid further losses as
prices collapse.

Some investors are hoping the worst may be over for the world economy as
more countries allow businesses to re-open, but others see reasons to remain
cautious, especially as a coronavirus vaccine has yet to be developed.

All three major U.S. stock averages advanced on Monday and are all now
within 20% of their record closing highs reached in February.

The benchmark S&P 500 is on track for its best month since 1987, after
trillions of stimulus dollars helped U.S. equities claw back much of the
ground lost since the coronavirus crisis brought the economy to a grinding
halt.

But some analysts believe gains may be limited unless there is progress in
finding treatments for the disease.

>From Italy to New Zealand, governments announced the easing of restrictions,
while Britain said it was too early to relax them there. New York state is
not expected to reopen for weeks. .

Oil prices weakened again on persistent concerns about oversupply and a lack
of storage space. The front-month contract was trading at lower-than-usual
volumes on Monday as traders moved to later months in futures contracts.

U.S. crude skidded 14.24% to $10.96 a barrel while Brent crude fell 4.05% to
$19.18 per barrel.

Shares of United States Oil Fund LP, the country’s largest crude ETF, fell
more than 16% on Monday, after it said it would sell all of its front-month
crude contracts to avoid a repeat of the heavy losses suffered last week.

The U.S. dollar and the euro were little changed as traders refrained from
taking big positions before a Federal Reserve policy decision due on
Wednesday and a European Central Bank (ECB) meeting Thursday.

The Fed has already announced a raft of measures to lessen the economic blow
from the coronavirus pandemic and is expected to stay on hold this week.

The ECB is likely to extend its debt purchases to include junk bonds and
provide a backstop for corporate financing.

Major central banks have responded to the economic slump caused by the
coronavirus by slashing interest rates, buying more government debt, and
taking steps to increase lending to small companies.

Elsewhere in currencies, the Australian dollar traded near a six-week high
of $0.6472 as investors continued to cheer the country’s progress in
containing the coronavirus.

Gold, a safe-haven often bought during times of uncertainty, fell for a
third consecutive trading session in signs of improving risk appetite.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper falls after ICBC suspends some products to new investment

(Reuters) - Copper prices fell on Tuesday after the Industrial and
Commercial Bank of China (ICBC) suspended access for new investors to retail
products linked to copper, citing extreme market volatility.

Investors already holding such products, which include copper and crude oil,
among others, will not be able to add to their positions from Tuesday, but
existing positions can be traded as normal, the bank said on Monday.

The move comes after the China Banking and Insurance Regulatory Commission
asked commercial banks to halt new sales of products that might lead to
unlimited losses in the backdrop of heavy losses recorded in a crude oil
futures trading product sold by Bank of China .

The most-traded June copper contract on the Shanghai Futures Exchange (ShFE)
fell 0.8% to 42,240 yuan ($5,959.03) a tonne by 0223 GMT. Three-month copper
on the London Metal Exchange (LME) declined 0.3% to $5,180 a tonne.

FUNDAMENTALS

* OTHER PRICES: ShFE nickel fell 2.1% to 100,180 yuan a tonne, tin dropped
1.1% to 131,180 yuan a tonne, zinc eased 0.4% to 16,060 yuan a tonne, while
aluminium edged up 0.8% to 12,465 yuan a tonne.

* LME PRICES: London aluminium rose 0.5% to $1,515 a tonne, nickel fell 0.7%
to $12,160 a tonne, zinc edged up 0.3% to $1,910 a tonne and lead climbed 1%
to $1,651 a tonne.

* FREEPORT: Freeport-McMoRan’s El Abra copper mine in Chile said on Monday
it would scale back copper processing by 40% and lay off workers as global
prices for the red metal plunge amid the coronavirus pandemic.

* ANTAMINA: Peruvian copper mine Antamina, owned by global miners BHP and
Glencore, on Monday reported 210 cases infected with the novel coronavirus.

* For the top stories in metals and other news, click or

MARKETS NEWS

* Asian shares and U.S. stock futures dipped into the red on Tuesday,
erasing earlier gains as a renewed decline in oil prices overshadowed
optimism about the easing of coronavirus-related restrictions seen globally.

China's Zijin cuts 2020 gold output target after Porgera mine snub

(Reuters) - China’s Zijin Mining on Monday revised down its gold production
target for 2020 after Papua New Guinea (PNG) refused to extend the mining
lease at the Porgera mine it operates with Barrick Gold Corp.

Zijin, which produced 40.8 tonnes of mined gold in 2019, was previously
targeting output of 44 tonnes this year, rising to 42-47 tonnes in 2021 and
49-54 tonnes in 2022.

However, following the PNG decision, Zijin said in a filing it would strive
to “maintain the mine-produced gold production volume in 2020 about the same
as that of 2019” by speeding up the upgrade and construction of the Longnan
Zijin project in China and other mines in its portfolio that were already
producing.

The Porgera snub ended months of uncertainty after the lease for the project
expired in August but Zijin said its joint venture with Barrick would
“pursue all legal avenues to protect its legitimate interests and recover
any damages.”

Zijin’s share of Porgera production in 2019 was 8.827 tonnes.

Zijin said it would “proactively seek lawful and reasonable solutions” to
the impasse, the filing to the Hong Kong stock exchange said, warning that a
prolonged outage at the mine would “cause losses to all the stakeholders.”

Zijin, which has mines in countries including Colombia, Serbia and
Australia, said it expected its gold production to maintain “satisfactory
growth in the future.”

It said it would pay attention to market opportunities and consider
acquisitions of producing assets to boost output.

Zijin’s shares closed down 4.9% in Hong Kong on Monday and fell 9.2% in
Shanghai.

INVESTORS DIARY 2020

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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