Bulls n Bears Daily Market Commentary : 06 August 2020

Thu Aug 6 17:09:33 CAT 2020

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Bulls n Bears Daily Market Commentary : 06 August 2020

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ZSE commentary

ZSE losing streak extends

The ZSE continued to lose its grip since the reopening as it registered
losses for the fourth consecutive session. News of the spiking pandemic data
amidst heavy selling pressure continued to dampen investor confidence. For
the day, all the indices ended lower with the mainstream All Share Index
easing 2.14% to settle at 1581.72pts. The Industrials lost 2.19% to
5188.30pts while, the Top Ten suffered most after letting go 2.95% to
1052.20pts. The resources Index remained unchanged at 3618.74pts with no
activity in the two counters. Activity aggregates reflected a mixed outcome
as volumes exchanged added 41.36% to 3.49m shares, yielding a value outturn
of $20.89m which was 7.84% down from prior session. OKZIM was the most
sought-after stock of the day as it drove the volumes and values with 75.79%
and 63.44% contributions, respectively. The other notably traded counter was
Delta which claimed 19.38% of the day’s value outturn.

Medtech was the worst performer after plunging19.10% to end at $0.0648 as
selling pressure continued the counter. Willdale was 18.77% softer at
$0.1800 while, Turnall lost a further 16.90% to close at $0.6648. General
Beltings was 14.29% softer at $0.1500 on a rare trade, while, construction
group Masimba completed the top five losers set with a 12% drop to $1.1000.
Notable losses were recorded in Delta (-9.77% to $16.1035), Econet (-3.11%
to $7.8345), Cassava (-2.66% to $7.8121) and SeedCo (-2.04% to $18.0506).
Gains for the day were seen in the duo of Simbisa and OKZIM which added
0.11% and 0.03% to $8.4500 and $5.0001 in that order. Overall, twenty-six
counters were active in the session, with two gainers against sixteen
laggards to register a wide negative breadth of fourteen.-EFE Securities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Zambia kwacha still under pressure, Uganda's shilling seen firming

KAMPALA, Aug 6 (Reuters) - Zambia's kwacha is next week seen coming under
pressure due to increased demand for the U.S. dollar, while Uganda's
shilling is expected to firm.

ZAMBIA

The kwacha ZMW= is likely to remain under pressure against the U.S. dollar
next week due to increasing demand for hard currency.

On Thursday, commercial banks quoted the currency of Africa's second largest
copper producer at 18.3300 per dollar from 18.2140 at the close of trading a
week ago.

KENYA

Kenya's shilling KES= is expected to be on the weaker side for the coming
week as demand for the dollar remains persistent and on a lack of foreign
currency inflows into the country.

For the coming week analysts expect the shilling to trade at 108.00/108.50
compared to last Thursday's close of 107.60/107.90.

UGANDA

The Ugandan shilling UGX= is seen trading with a firming tone in the coming
days, on the back of a generally subdued appetite for foreign currency from
retail merchandise importers.

At 0900 GMT commercial banks quoted the shilling at 3,683/3,693, unchanged
from last Thursday's close.

He said the shilling will likely hold in the 3,680-3,700 band in the coming
days.

TANZANIA

Tanzania's shilling TZS= is expected to slightly weaken next week due to
increased demand for dollars from importers in energy and manufacturing
sectors.

Commercial banks quoted the shilling at 2,320/30 on Thursday, slightly down
from 2,315/2,324 recorded a week earlier.

South Africa

Rand weaker in tentative tradeBacktracking again after a brief advance.

South Africa’s rand weakened early on Thursday, remaining near two-months
lows, as investors continued to worry about the chances of a global economic
recovery.

At 09:00, the rand was down 0.32% at 17.3850 per dollar, backtracking again
after a brief advance in the previous session, as the dollar fell amid a
stalling economic recovery in the United States.

A bleak fiscal backdrop locally has largely been overshadowed by hopes
global growth will recover, but that enthusiasm has faded this week as U.S.
lawmakers disagreed on an extended stimulus program.

The rand has failed to benefit from the dollar’s decline, though, crashing
to its lowest level since early June, with investors sitting on the fence.

The rand’s inability to capitalise on dollar weakness may, at least to some
degree, be a function of South Africa’s own risks, said market economists at
ETM Analytics in a note.

The country has Africa’s highest number of Covid-19 cases at more than
500,000 infections and was already in a three-quarter economic recession
before the pandemic struck. It’s likely to see a slower recovery than its
emerging-market peers, reducing demand for the rand.

On Wednesday, the HIS Markit Purchasing Managers’ Index showed factory
activity remained in contraction, a mark of the slow pace of the rebound
after strict lockdown was lifted in June.

Bonds gained, with the yield on the benchmark 2030 bond down 2 basis points
at 9.305%.

 <mailto:info at bulls.co.zw> 

EMERGING MARKETS

Stocks gain on stimulus hopes, all eyes on Czech cenbank rate decision

(Reuters) - Emerging market stocks rose for the third straight session on
Thursday, as investors remained hopeful of a coronavirus relief bill to be
passed in the U.S. Congress, while the Czech central bank’s decision on key
lending rates remained in focus.

The MSCI’s index for developing world stocks rose 0.4%, with investors
focussing on offshore developments, including negotiations around a new
coronavirus relief legislation in the United States heading towards an
end-of-week deadline.

Most bourses opened higher in emerging markets across Europe, Middle East
and Africa with gains between 0.4% and 0.5%. Turkish stocks were among the
few decliners on the day, falling 0.2%.

Istanbul shares have underperformed against peers since late last month,
along with the lira, on doubts over the country’s ability to stave off
another currency crisis. Analysts predicted state efforts to stabilize the
currency could fizzle, making the lira among the only emerging market
currencies to not benefit from a recent weakness in the U.S. dollar.

Also on the radar was the Czech koruna, which was flat against the euro
ahead of the Czech National Bank monetary policy decision at 1230 GMT.

Markets expect the central bank to leave its base interest rate at 0.25%.
Analysts polled by Reuters mostly expect rates to stay unchanged the rest of
2020 and through 2021.

Other central and eastern European currencies, including Hungary, Poland and
Romania, were rangebound against the euro.

A Reuters poll showed most central European currencies will firm over the
next 12 months, buoyed by improved risk sentiment as investors shrug off
worries about a rise in coronavirus cases and focus on hopes of economic
recovery.

South Africa’s rand fell, while the Russian rouble was flat. Investors in
Russia also awaited inflation data later in the day.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper drifts lower as surplus looms

(Reuters) - Copper prices drifted lower on Thursday as investors questioned
whether demand would improve enough to extend a rally beyond two-year highs
reached last month.

The metal used in power and construction rebounded from a low of $4,371 a
tonne in March to a high of $6,633 in July as China, the biggest consumer,
unwound coronavirus lockdowns.

But since then prices have moved sideways. Benchmark copper on the London
Metal Exchange (LME) was at $6,451 a tonne at 1050 GMT, down 0.7%.

The coronavirus was not disrupting supply as much as feared and the market
will be in surplus through the rest of the year, he said.

FACTORIES: Orders for German-made goods rose sharply in June but remained
far below pre-pandemic levels, according to data that fits into a wider
rebound in global manufacturing activity.

VIRUS: However, the number of coronavirus cases is rising.

WEAKNESS: “We see continued strength in Chinese copper demand failing to
offset the weakness in the rest of the world for a while yet,” said analysts
at ANZ.

CHINA DEMAND: Researchers Antaike said China would import 3.5 million tonnes
of copper this year, down from 3.55 million tonnes in 2019.

PNG: Papua New Guinea’s Ok Tedi mine suspended operations for at least 14
days, cutting its copper output by about 4,000 tonnes.

CHILE/PERU: Copper output in Chile and Peru, the biggest producers, had
bounced back from coronavirus disruption by June, government data shows.

OTHER METALS: LME aluminium was down 0.3% at $1,761 a tonne, zinc fell 0.7%
to $2,391.50, nickel rose 0.2% to $14,450, lead added 0.1% to $1,934 and tin
was unchanged at $17,880.

Antaike ups China 2020 copper import forecast, sees 400,000 T of net primary
aluminium inflows

(Reuters) - Research group Antaike made a nearly 13% upward revision to its
forecast for China’s refined copper imports in 2020, as tight raw material
supply constrains domestic output, and said it sees net primary aluminium
inflows totalling 400,000 tonnes.

Antaike, the China Nonferrous Metals Industry Association’s research arm,
said on Thursday it saw refined copper imports totalling 3.5 million tonnes
this year, analyst He Xiaohui told an industry conference in Beijing.

That is down from 3.55 million tonnes in 2019 but 12.9% higher than the 3.1
million tonnes Antaike had forecast in February. It coincides with a
downward revision in expected refined copper production from 9.3 million
tonnes to 9.1 million tonnes.

A strong recovery in demand in top consumer China after the initial novel
coronavirus outbreak helped propel copper prices to a two-year high last
month.

While China’s copper smelters cut operating rates as the coronavirus
outbreak emerged early in the year, it was not long before overseas mines
were affected, reducing ore supply.

A crackdown on scrap metal also helped lift China’s unwrought copper imports
to a record high in June.

Projected refined copper consumption is at 11.56 million tonnes, leaving the
Chinese market in a 740,000-tonne surplus this year, according to Antaike
estimates.

Separately, Antaike sees China’s aluminium consumption falling 1.7% to 36
million tonnes in 2020, analyst Wang Hongfei said, versus a previous
estimate of 36.6 million tonnes.

China is set to be a net importer of primary aluminium this year to the tune
of 400,000 tonnes, she added, versus net exports of 1,000 tonnes in 2019.

Chinese aluminium exports are mostly semi-finished products, with primary
metal exports taxed at 15%.

Imports hit an 11-year high in June, including more than 120,000 tonnes of
primary aluminium, as a rare price arbitrage opened. 

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Zimbabwe

National Heroes Day

Zimbabwe

10  August 2020

Zimbabwe

Defence Forces’ Day

Zimbabwe

11  August 2020

CBZ

AGM

Virtual

14  August 2020 | 6pm

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opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
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companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
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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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