Bulls n Bears Daily Market Commentary : 07 August 2020

Sat Aug 8 07:06:48 CAT 2020

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Bulls n Bears Daily Market Commentary : 07 August 2020

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ZSE commentary

ZSE slide further in week ending session

The ZSE accumulated further losses in the week ending session to see the
mainstream All Share Index plunging 5.28% to 1498.24pts while, the
Industrials dipped 5.45pts to end at $4905.74pts. The ZSE top Ten Index was
the casualty after plunging 8.21% to settle lower at 965.79pts. Activity
aggregates improved in the session with volumes exchanged ballooning 138.81%
, yielding a value outturn of $87.59m which was 319.27% up from prior
session. . The resources Index remained unchanged at 3618.74pts with no
activity in the two counters. Delta was the most sought-after stock of the
day as it drove the volumes and values with 27.02% and 39.80% contributions,
respectively. Other notable

traded counters were Innscor and Meikles which claimed 15.56% and 15.22% of
the day’s value outturn, respectively.

Leading the laggards pack was banking group CBZ which declined 19.91% to
$0.2400 on scrappy shares while, Dairibord trailed on an 15.56% drop that
took its price to $5.7000. Econet and its former subsidiary Cassava were
among the losers that helped drag the Top Ten Index after easing 9.32% and
11.30% to close at $7.0659 and $6.9297 in that respective order. FBC
completed the top five list on an 6.38% drop to 1273.30pts as demand
continued to wane. Other losses were in Delta which was down 3.73% to
$15.5023 and Innscor that shed 0.45% to $16.9500. Mash topped the gainers of
the day on an 8.33% surge while, Zimplow was 2.72% up at $3.4300.
Conglomerate Meikles added 1.91% to $13.2485 with Axia ticking up 0.52% to
settle at $4.9438. Star Africa added 0.22% to $0.1800 and

completed the top five winners set. Overall, thirty counters were active in
the session, with six gainers against sixteen laggards to register a wide
negative breadth of ten..-EFE Securities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African Rand Crumples as "Very Fragile Three" Lead Emerging Market
Rout 

The Rand tumbled Friday as the Turkish Lira dragged emerging market
currencies lower, encouraging a risk averse turn in sentiment ahead of the
weekend that built on the back of crystalising U.S.-China hostilities. 

South Africa's Rand was trailed only by an under-pressure Lira on Friday as
an ongoing depreciation of the vulnerable Turkish currency weighed on all
supposedly fragile emerging market counterparts, leading to more-than 1%
losses that some fear might endure through the coming week.

Losses mounted as the Dollar turned higher ahead of the weekend and
following days of yet more punishing declines for the U.S. unit, with the
move in the greenback having roots in an overnight executive order from the
White House aimed at the Chinese-owned and controlled TikTok social network.

Transactions with TikTok's owner Bytedance will banned 45 days from Friday
for U.S. entities, a decision that's thought to be aimed at speeding up a
divestment of the company's U.S. social network. China's WeChat network,
which is owned and operated by a separate company, was also subjected to a
similar order.

In addition, the U.S. administration also reimposed import tariffs on
Canadian alluminium, further undermining risk appetite that was already
fragile to begin with, stoking demand for the Dollar and losses for most
other currencies. 

The Rand was lower against most rivals but its largest losses came against
the majors and India's Rupee, with USD/ZAR rising above the 17.50 level
while the Pound-to-Rand rate regained the 23.0 threshold. 

RMB looks for a third-quarter consolidation for USD/ZAR in a narrow
16.50-to-17.50 range but said Friday that weakness could continue in the
short-term. August is typically a bad month for emerging markets, although
the bank also says the local unit is unlikely to deviate too far from 17.50.

Risk aversion has denied the Rand any benefit from ongoing signs that the
coronavirus is losing momentum in Africa's second largest economy, with a
downtrend in the number of new infections detected each day having endured
into August but gone largely unrewarded by investors. 

The domestic currency has also gotten little help from rising gold prices
this week, even as what is one of the country's largest exports provides a
consolation to its troubled economy, which reflects a long-established
tendency toward risk aversion that tends to lift safe-haven assets while
weighing in risk currencies during the August month.

Gold has risen on both the good and bad days for risk appetite since the
Dollar is in a sustained downtrend but once calm returns, such higher prices
could provide the Rand a tailwind of support that again leaves it a relative
outperformer among emerging markets, given that precious metals and gems are
South Africa's top exports.

Central bankers have flooded economies with new currency to cater for
governments' simultaneous, extraordinary funding requirements that riled
bond markets before policymakers stepped up in earnest back in March. As
necessary as their actions may have been, they've also revived previously
dormant fears about what such expansionary monetary policies might mean for
inflation and the value of currencies over time. 

Precious metals have long been viewed as a safe-haven currency of last
resort although less appreciated is often the protection offered by stock
markets, which reflect the perceived future value of corporate cash flows
that can adjust along with product prices in response to future inflation.
Such qualities may explain at least a part of the speed and scale of the
rallies seen by stocks, which also began in March when central bankers
turned the money taps on. 

 <mailto:info at bulls.co.zw> 

EMERGING MARKETS

Stocks hit as Sino-U.S. tensions spike, Turkish lira in the doldrums

(Reuters) - Emerging market stocks fell on Friday, after U.S. President
Donald Trump issued bans on popular Chinese apps, further escalating
tensions with Beijing, while the Turkish lira hit a fresh record low in a
new phase of high volatility trading.

The Trump administration unveiled bans on U.S. transactions with China’s
ByteDance, owner of video-sharing app TikTok, and Tencent, operator of
messenger app WeChat, which go into effect in 45 days.

China and Hong Kong shares led declines during Asia trade, while major
European bourses opened weaker. The MSCI’s index for emerging market stocks
fell 0.9%, set to snap a three-day winning streak, with South African stocks
retreating from a recent run of gains.

Developing world stocks were set to end the week higher as investors
remained hopeful of more stimulus for the U.S. economy, while also enjoying
a recent surge in commodity prices.

Currencies, however, tracked weekly declines as the dollar found footing in
slightly improving U.S. economic data, with markets now awaiting a monthly
jobs report later in the day.

Turkey’s lira hit a record low of 7.32 against the dollar after losing
nearly 19% against the greenback so far this year, with growing concern that
state efforts to stabilize the currency could fizzle and spark bigger
problems for the Middle East’s largest economy.

The country’s central bank has started lifting some funding costs and
analysts said it could go further on Friday, tightening such backdoor policy
tools to head off more lira weakness.

The high-yielding South African rand traded 1% weaker, near its lowest in 10
weeks, while Russia’s rouble edged lower.

Most currencies in central and eastern Europe were rangebound against the
euro, with the Czech crown retreating from multi-month highs a day after the
country’s central bank held interest rates steady and signalled stability at
least until mid-2021.

 <mailto:info at bulls.co.zw> 

Commodities Markets

A look at Canada's aluminum industry as Trump reimposes tariffs

(Reuters) - President Donald Trump on Thursday reimposed 10% tariffs on some
Canadian aluminum products to protect the U.S. industry from a “surge” in
imports, prompting Ottawa to slap retaliatory duties on C$3.6 billion ($2.69
billion) worth of U.S. aluminum products.

A quick look at the Canadian aluminum industry:

* Canada is the world’s fourth-largest aluminum producer, with 2.8 million
metric tonnes produced in 2019

* Canada’s aluminum industry provides about 10,000 direct jobs in primary
aluminum production and supports tens of thousands more in related sectors

* Goods and services worth nearly $2 billion cross the Canada-U.S. border
daily, amounting to more than $721 billion in goods and services exchanged
between the countries in 2019

* The new U.S.-Mexico-Canada trade agreement ensures that 70% of the steel
and aluminum purchased by North American automakers is produced in the
region for a vehicle to be duty-free

* Combined bilateral trade between the United States and Canada in primary
and semi-finished aluminum products between 2017 and 2019 averaged C$11.1
billion on an annual basis

* The three primary producers of aluminum in Canada are Alcoa Corp ,
Aluminerie Alouette and Rio Tinto, according to The Aluminium Association of
Canada ($1 = 1.3391 Canadian dollars)

Asia Gold-Soaring prices further erode lustre in pandemic-hit retail hubs

(Reuters) - Physical gold remained out of favour in most Asian hubs this
week as a worsening pandemic kept retail buyers away with global benchmark
spot prices at historic highs, while logistical challenges plagued the
Indian market.

Spot gold scaled a record $2,072.50 per ounce on Friday.

Dealers in top buyer China offered discounts of $70-$60 per ounce against
the benchmark versus last week’s record $88-$42 range.

In Hong Kong, dealers charged anywhere between a $2 per ounce discount to a
$1.5 premium.

In India, premiums eased to about $4 an ounce over official domestic prices,
from last week’s $8.

Limited supplies due to suspension of international flights has been
allowing dealers to charge premiums, said a Mumbai-based dealer with a
bullion importing bank.

Local gold futures soared to a record 56,191 rupees per 10 grams on Friday.

In Singapore, premiums were unchanged at $0.8-$1.50, while Japan saw
premiums of $0.50.

Investors sold gold to take profits, while high net worth clients awaited a
price correction to accumulate more metal, said Brian Lan of Singapore
dealer GoldSilver.

Meanwhile, the Bangladesh Jewellers Association raised local rates to a new
record of 77,215 taka ($912.38) per Bhori, or 11.664 grams.

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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