Bulls n Bears Daily Market Commentary : 29 April 2020

Thu Apr 30 07:10:03 CAT 2020

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Bulls n Bears Daily Market Commentary : 29 April 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$11,998,937.80 with foreign buys at ZWL$761,912.00 and
foreign sales were ZWL $1,756,638.00 Total trades were 165.

The All Share index closed the day higher at 487.39 points after adding 6.
66points . OLD MUTUAL LIMITED further added $0.3140 to $43.0478, OK ZIMBABWE
LIMITED  rose by $0.1086 to settle at $1.8093 and FIRST MUTUAL LIMITED
traded $0.1033 firmer at $1.5200. Two more counters to advance were MASIMBA
HOLDINGS which added $0.0800 to end at $0.4800 and FIRST MUTUAL PROPERTIES
was $0.0784 higher at $1.1300.

Only three counters lost ground ;DELTA CORPORATION LIMITED  lost $0.0347 to
$5.8636, INNSCOR AFRICA LIMITED  eased $0.0111 to $7.1602 and PADENGA
HOLDINGS LIMITED   dropped $0.0001 to $5.3999. 

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  Global Currencies & Equity Markets

South Africa

South Africa's rand soars as risk-buying, yield-hunt overshadows WGBI exit

(Reuters) - South Africa’s rand climbed to a two-week best on Wednesday as
investors found more reasons buy risk assets with a number of major
economies readying to reopen their economies and hopes of a coronavirus
treatment resurfacing.

At 1530 GMT the rand was 2.08% firmer at 18.2760 per dollar, its firmest
since April 14, breaking through key technical levels as dollar bulls
buckled after economic growth in the United States shrank sharply.

Analysts had anticipated a significantly weaker rand with the country’s
government bonds set to formally fall out of the World Government Bond Index
(WGBI) on Friday, after Moody’s last month became the last major ratings
firms to revoke the country’s investment grade status.

Most of the selling, by active funds, seems to have already happened, while
the big jump in yields on the country’s debt has lured investors looking for
high returns - many of them local fund mangers with a keener understanding
of local dynamics.

About 160 billion rand of selling by foreign investors was expected due to
the WGBI exit, but a chunk of that has already happened.

Since late 2017, when Fitch and S&P Global cut South Africa to “junk”,
roughly 180 billion rand has flowed out local bonds.

The Johannesburg Stock Exchange (JSE) records year-to-date sales at near 68
billion rand. Locals have stepped into the breach, in addition to
yield-seeking offshore investors, who in April have been net buyers of
bonds.

On the day the yield on the 2030 government bond was down 26 basis points to
10.52%, a near 300 basis point drop from it highs in mid-March.

The JSE All-Share index went up by 1.66% to end at 50,857 points. The rally
was led by the country’s banks and mining companies with the banking index
up 4.95% and the resources index, representing top 10 miners of the country,
up 3.38% (1 South African rand = $0.0548)

Kenya

Kenya's central bank cuts benchmark lending rate again

(Reuters) - Kenya’s central bank cut its benchmark lending rate again on
Wednesday, to 7.0% from 7.25%, saying measures to tackle the impact of the
coronavirus were having an effect but it needed to do more due to the
adverse economic outlook.

Kenya has confirmed 384 cases and 14 deaths, and its tourism and agriculture
exports businesses have suffered from global shutdowns aimed at curbing the
virus’ spread.

It has imposed a daily curfew, suspended international passenger travel and
restricted movement in and out of the regions most affected by the virus,
including the capital Nairobi.

The bank forecast economic growth of 2.3% this year, down from its March
forecast of 3.4%, and from its estimate of 6.2% earlier this year.

At its meeting in March, the bank cut the lending rate by 100 basis points,
and also lowered the cash reserve ratio for commercial banks to 4.25% from
5.25%. It said it stood ready to take any additional measures as necessary
and that it would reconvene within a month. Typically, the monetary policy
committee meets once every two months.

The bank said 43.5% of the funds — 35.2 billion Kenyan shillings ($328.48
million) — released into the banking system had already been used, with most
going to the tourism, real estate, trade and agriculture sectors.

It also said that as a result of emergency measures it announced in
mid-March, loans worth 81.7 billion Kenyan shillings ($762.41 million) had
been restructured mainly in tourism, restaurants and hotels, real estate,
building and construction and trade.

The bank said there was a need to set up a mechanism to cushion small and
medium businesses.

It said it forecast the current account deficit to be 5.8% of gross domestic
product this year, from its projection of 4.0 to 4.6% in March, and from
5.8% in 2019 and 2018.

The bank said a projected fall in remittances was going to be more than
offset by lower oil imports.

Finance Minister Ukur Yatani said on Tuesday 2020 economic growth would
decline to 2.5% but may fall to 1.8%, compared with 5.4% in 2019, because of
the coronavirus outbreak.

The Finance Ministry had forecast growth of 6.1% for this year before the
health crisis swept around the globe.

The government has announced a series of tax cuts for individuals and
companies and allowed lenders to restructure loans for individuals and firms
who might fall into distress. ($1 = 107.1600 Kenyan shillings)

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Stocks rally on treatment hopes, currencies await ECB

(Reuters) - Asian stocks rose to a fresh seven-week high on Thursday, lifted
by encouraging early results from a COVID-19 treatment trial, though bonds
and currencies held cautious ranges ahead of a European Central Bank meeting
later in the day.

Anthony Fauci, the top U.S. infectious disease official, said Gilead’s
antiviral remdesivir will become the standard of care for COVID-19 after
early results from a trial seemed to show it helped speed recovery.

The news rallied Wall Street on Wednesday and lifted MSCI’s broadest index
of Asia-Pacific shares, excluding Japan , by 0.8% to its highest since
mid-March.

Japan’s Nikkei, returning from a holiday on Wednesday, jumped 2.5% to a
seven-week high as well, catching up on the week’s gains. More caution was
evident in other asset classes, with the U.S. dollar firm and U.S. futures
steady.

Futures for Wall Street’s S&P 500 handed back early gains to turn flat and
the dollar held its own against the risk-sensitive Antipodean currencies -
rising for the first time in a week against the Aussie and kiwi.

The yield on benchmark U.S. 10-year Treasuries stayed parked at 0.6237%,
after the U.S. Federal Reserve left interest rates near zero and gave no
indication of lifting them any time soon.

Australia’s ASX 200 rose 1.4%. The Shanghai Composite rose 1%. Markets in
Hong Kong and South Korea were closed for public holidays.

OF MONEY AND MEDICINE

Markets have been excited by the prospect of a COVID-19 treatment because it
may help countries emerge from lockdowns - even though investors’ hopes
don’t seem to take into account regulatory and distribution difficulties
should a treatment be found.

Another focus has been the enormous fiscal and monetary policy efforts from
world governments and central banks to staunch the economic damage from the
pandemic.

That has the ECB under increasing pressure to deliver even more support on
Thursday - probably by expanding its bond buying programme - as European
leaders seem unable to agree on the details of a rescue package.

A press conference following the ECB meeting is due at 1330 GMT.

The euro was stuck at $1.08640 on Thursday, near the top of a range where it
has been pegged for two weeks, but drifted lower as the dollar broadly
firmed.

The greenback scraped off multi-week lows against the Antipodean currencies
and last sat at $0.6537 per Aussie and $0.6122 per kiwi.

Elsewhere there was encouraging news from South Korea, which on Thursday
reported no new domestic coronavirus cases for the first time since its Feb.
29 peak.

However, comments from U.S. President Donald Trump accusing China of seeking
to defeat his re-election bid in November gave cause for renewed caution.

Gold was steady at $1,711.31 per ounce.

Brent crude and U.S. crude futures each rose more than 6% amid optimism that
a storage squeeze is not as bad as first feared, and that demand for fuel
may soon return.

 <mailto:info at bulls.co.zw> 

Commodities Markets

India's scrap gold supplies seen at record high on price rally, coronavirus
- WGC

(Reuters) - Scrap gold supplies in India are likely to hit an all-time high
in 2020 as consumers sell jewellery to reap record high prices and cope with
the financial crunch from the coronavirus lockdown, the World Gold Council
(WGC) said on Thursday.

Rising scrap supplies amid a fall in demand could dent the world’s
second-biggest bullion consumer’s imports and cap a rally in global prices,
which hit a more than seven-year high earlier this month.

Falling bullion imports, however, could help reduce India’s trade deficit
and support the ailing rupee.

Record high local prices, coupled with short-term pressure on household
finances, could encourage people to sell gold, said Somasundaram PR, the
managing director of WGC’s Indian operations.

Scrap supplies in India jumped 37% in 2019 from a year ago to a record 119.5
tonnes, the WGC said, driven by rising prices.

Local gold prices surged 25% in 2019 and have risen another 16% so far in
the year.

Millions of Indians have lost their jobs or taken a pay cut after India
extended a nationwide lockdown on its 1.3 billion people until at least 3
May.

Moody’s Investors Service earlier this week slashed India’s growth forecast
for calendar 2020 to 0.2 percent, the lowest in decades, as coronavirus
cases exceeded 33,000.

India’s gold consumption in the March quarter fell 36% to 101.9 tonnes, the
lowest since the first quarter of 2009, on a sharp drop in jewellery and
investment demand, the WGC said in a report on Thursday.

Consumption typically jumps in the June quarter due to weddings and key
festivals such as Akshaya Tritiya, when buying gold is considered
auspicious.

However, June quarter demand this year could fall below the March quarter as
jewellery stores were closed during the crucial buying season, Somasundaram
said.

Weak first half demand would bring full-year consumption in 2020 below last
year’s 690.4 tonnes, he said, without giving an estimate.

At the start of the year, the WGC had expected gold demand in 2020 to
improve to 700-800 tonnes.

An Indian trade body earlier this month said India’s gold consumption could
fall to 350 tonnes to 400 tonnes, the lowest since 1991. 

Gold hoarding investors avert coronavirus demand collapse- WGC

(Reuters) - Massive stockpiling of gold by investors spooked by the
coronavirus outbreak offset a collapse in jewellery production to keep
global demand for the metal

stable in the first three tumultuous months of 2020, the World Gold Council
said on Thursday. 

The coronavirus has upended the gold trade, with lockdowns shuttering the
two biggest markets, China and India, and disrupting supply routes. 

It has also roiled financial markets, triggering a surge of investment in
the metal traditionally seen as an asset able to hold its value over the
long term. 

Over January-March, exchange traded funds (ETFs) storing gold on behalf of
investors mainly in the United States and Europe added a whopping 298 tonnes
worth some $16 billion to their hoard, the WGC said in its latest quarterly
report. 

At the same time, use of gold in jewellery dropped to 325.8 tonnes, down 39%
from the first quarter last year and the lowest in at least a decade. 

Bar and coin sales fell 6% to 241.6 tonnes, purchases by central banks
slipped 8% to 145 tonnes and use of gold in electronics, other industry and
dentistry declined 8% to 73.4 tonnes.  

Total demand was 1,083.8 tonnes, up 1% from 2019, the WGC said. 

With ETFs increasing their stocks by more than 150 tonnes so far in April,
investors are likely to support overall demand again in the second quarter,
Reade said.

But he said jewellery and central bank purchases could be lower for some
time, and while it is too early to estimate precisely, consumption in China
and India could fall by half this year.

The supply of gold fell to 1,066.2 tonnes over January-March, down 4% from
2019, with both mined and recycled production decreasing, the WGC said. 

Coronavirus containment measures will likely disrupt mine supply in the
second quarter but scrap supply should increase, said Reade.

Gold prices have risen to eight-year highs above $1,700 an ounce this year,
and hit record levels in other currencies including the euro, yuan and
rupee. 

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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opinions expressed and recommendations made are subject to change without
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companies typically involve a higher degree of risk and more volatility than
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