Bulls n Bears Daily Market Commentary : 19 August 2020

Wed Aug 19 17:13:56 CAT 2020

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Bulls n Bears Daily Market Commentary : 19 August 2020

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ZSE commentary

Losses persist on the ZSE

Bears continued to drag the market in midweek trades as all four benchmark
indices we review closed in the red. Top capitalised stocks continued to
suffer from a mostly foreign sell off culminating in the Top Ten Index
swinging into the red with a 2.25% drop to 841.79pts and with it pushed the
All Share Index to a 1.42% drop to 1328.35pts. The Mining Index was also
trending south shedding 2.40% to 2679.54pts while, the Industrial Index
succumbed 1.39% and settled at 4372.63pts. The market saw a slump in spend
to $37.59m anchored by CBZH and DELTA that accounted for a combined 53.28%
of the day’s outturn. Volume wise, ECONET, CBZ and DELTA dominated the
aggregate with respective contributions of 18.85%, 14.52% and 13.89%. The
aggregate volume for the day was however little changed on a 4.19% drop to
3.6m.

Meanwhile, the market losses were led by apparel retailers Edgars that
succumbed 17.76% to $0.5000 in the wake of the conclusion of its rights
issue whose results the market awaits. Fast foods group Simbisa brands
followed on a 11.82% slide that took it to $5.2909 while, banking group CBZ
reversed yesterday’s gains closed 7.23% softer at $23.0729. Truworths and
African Sun completed the top five daily shakers on losses of 5.56% and
5.24% as they closed at respective levels of $0.1700 and $1.0183. Loss
mitigation was headlined by National Tyre Services that surged 19.89% and
closed at $0.0446 while, Wildale followed on an 11.98% climb that took it to
$0.2300. Padenga added 7.06 % on resurgent demand and closed at $9.6571 as
hardware retail group Power speed added 6.16% $1.1000. Completing the top
gainers for the day was ART that went up 5.56% and closed the day at
$1.9000. efesecurities

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Global Currencies & Equity Markets

Nigeria

Nigeria's central bank to set up $39 bln infrastructure firm with sovereign
fund

(Reuters) - Nigeria’s central bank has secured government approval to set up
a 15-trillion naira ($39.4 billion) infrastructure development company with
the sovereign wealth fund to invest in the country’s transport network, the
bank said.

The sum is projected to cover an initial five-year period, Central Bank
Governor Godwin Emefiele said in a statement on the central bank’s website.

The current poor state of infrastructure puts the plans of President
Muhammadu Buhari’s government - including ambitions to turn Nigeria into a
manufacturing hub and for the agriculture sector to fuel economic growth -
at risk, economists say.

The development company will be co-owned by the central bank, the sovereign
wealth fund and the African Finance Corporation (AFC) and will be managed
independently.

In 2017, the government set up the Development Bank of Nigeria to boost
credit to small-scale businesses that make up almost of half of the economy.

Now, the government wants to fix its crumbling roads and rail network to
tackle decades of decay that has limited economic growth and made it hard to
move agricultural and finished goods to markets.

Buhari has pledged to strengthen the agricultural sector, to reduce
Nigeria’s costly food imports and diversify the economy away from an
over-reliance on oil. But access to long-term funds in local currency has
been a major hurdle.

South Africa

South African rand stronger as dollar slips, stocks down

(Reuters) - The South African rand firmed against the dollar on Tuesday, as
market sentiment improved after a coronavirus-induced lockdown was lifted
over the weekend, while a weaker U.S. currency also helped the local unit.

At 1500 GMT, the rand traded at 17.3350 per dollar, 0.97% stronger than its
previous close.

The U.S. dollar fell against a basket of major currencies for a fifth
consecutive trading day on Tuesday, reaching its lowest level in over two
years, under pressure from low yields and bleak economic data in the United
States.

In South Africa, President Cyril Ramaphosa on Saturday announced a further
easing of the country’s strict coronavirus lockdown.

Official forecasts predict gross domestic product will contract by at least
7% this year, extending the pain for an economy that was already in
recession before the COVID-19 pandemic struck.

Stocks dipped, as petrochemicals major Sasol extended its losses after it
said on Monday it will issue up to $2 billion of shares as it battles high
debt, lower oil and chemicals prices, and the coronavirus crisis.

Sasol shares were down 5% at 131.95 rand.

The benchmark FTSE/JSE all share index closed down 0.71% at 57,025 points,
while the FTSE/JSE top 40 companies index ended lower 0.76% at 52,738
points.

In fixed income, the yield on the 2030 bond was flat at 9.28%. 

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GLOBAL MARKETS

Shares gain as Wall Street record outweighs jitters over growth

(Reuters) - European shares gained ground on Wednesday as a record high on
Wall Street outweighed simmering worries over a resurgence in coronavirus
cases that could undermine a nascent recovery.

The broad Euro STOXX 600 added 0.3% in choppy trading, with indexes in
Frankfurt and London gaining similar amounts.

Among the bright spots were travel and leisure shares, with British
Airways-owner up 2.4% on a British plan to use COVID-19 testing at London’s
Heathrow Airport to help cut the number of days travellers have to spend in
quarantine.

But oil and gas and utilities shares weighed, with BP and Royal Dutch Shell
losing around 0.7% as crude prices fell on worries over demand and rising
COVID-19 cases in Europe.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside of Japan fell
0.2%, retreating from a seven-month high reached after the S&P 500’s record,
powered by looser monetary policy and charging tech stocks.

Wall Street futures pointed to slim gains.

Strategists said the jittery mood in both Europe and Asia was symptomatic of
a growing focus for investors on where to put money before a coronavirus
vaccine is found.

Money has poured into U.S. growth stocks - the tech giants and retail titans
that have benefited most from the recovery - as investors worry that, in the
absence of a vaccine, a rise in coronavirus cases could further hurt “value”
shares.

Overnight, U.S. stocks set records as investors gravitated to the
stay-at-home winners from COVID-19 lockdowns, such as Amazon and Netflix.

The benchmark S&P 500 surpassed its February all-time high, hit just before
the onset of the COVID-19 pandemic pummelled stocks to lows on March 23.

It has surged about 55% since those lows, fuelled by monetary stimulus
packages even as alarm bells ring over the underlying health of the economy
and as negotiations over fiscal stimulus in Washington drag on.

The MSCI world equity index, which tracks shares in 49 countries, gained
0.1%.

DOLLAR FLOORED

The U.S. Federal Reserve’s intervention in financial markets to maintain
liquidity has pushed riskier assets to all-time highs and reduced demand for
safe-havens, battering the U.S. dollar.

The greenback clawed away from a 27-month low touched overnight, gaining
0.1% against a basket of currencies to 92.259.

Markets were also awaiting minutes from the Fed’s recent meeting due later
in the day for any hints on what the Fed could announce in September.

Brent crude futures fell 35 cents, or 0.8%, to $45.11 a barrel, on concerns
that U.S. fuel demand may not recover as quickly as expected amid stalled
talks on an economic stimulus package.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper rallies to highest in over two years on weak dollar and falling
output

(Reuters) - Copper prices rallied to their highest in over two years on
Tuesday, boosted by a weaker dollar, low stocks and falling output.

Benchmark copper on the London Metal Exchange rose 1.2% to $6,648 a tonne in
official rings, after touching its highest since June 2018 at $6,686.

China’s refined copper output in July fell 5.3% from the previous month to
814,000 tonnes, according to official data.

Globally, copper smelting activity tumbled to its lowest level in more than
two years in July, data from satellite surveillance of copper plants showed.

Meanwhile, the U.S. dollar hovered around a 27-month low on uncertainties
about an economic recovery and the U.S. fiscal stimulus package.

A weaker U.S. dollar makes LME metals priced in the greenback cheaper for
holders of other currencies.

REDUCED OUTPUT: Rio Tinto cut its refined copper outlook for the year to
135,000 tonnes-175,000 tonnes from 165,000-205,000 tonnes.

INVENTORIES: Total copper stocks in warehouses monitored by the LME were at
their lowest since 2007, supporting prices MCUSTX-TOTAL.

This is reflected in the $18 a tonne premium of the LME cash contract over
the three-month contract and compares to a discount of about $5 last week.
CMCU0-3

TRADE: No new high-level U.S.-China trade talks are scheduled but the two
sides remain in touch about implementing a Phase 1 deal, White House Chief
of Staff Mark Meadows said.

PRICES: LME aluminium advanced 0.5% to $1,783 a tonne, zinc climbed 1.1% to
$2,486, lead added 1.3% to $2,014.50, tin eased 0.1% to $17,575 while nickel
rose 0.6% to $14,758. 

Gold falls below $2,000/oz as dollar steadies

(Reuters) - Gold fell below a $2,000 an ounce on Wednesday partly in
response to a pause in the dollar’s slide as investors awaited more details
on the U.S. Federal Reserve’s strategy to revive the pandemic-hit U.S.
economy.

Spot gold fell 0.7% to $1,986.78 per ounce by 1007 GMT, after hitting a
one-week high of $2,014.97 on Tuesday.

U.S. gold futures were down 0.9% at $1,994.70.

The dollar was mostly flat around the 92 level versus major currencies,
pausing its slide that has pushed the currency to a more than two-year low
on Tuesday.

While gold dipped on the steadier dollar, expectations of further dollar
weakness could prompt gold to “carve out a more sustained presence above
$2,000 and reach new record highs,” said FXTM market analyst Han Tan.

Minutes from the Fed’s last meeting are due at 1800 GMT, with investors
looking out for any hints on further action it could take in September. But
no change in policy rates is expected until end-2021.

Commerzbank analyst Daniel Briesemann attributed the latest retreat in gold
to profit taking, given the about $80 gains in bullion this week.

Money-printing by central banks amid near-zero interest rates to ease the
economic fallout from the pandemic have bolstered gold’s appeal as a hedge
against inflation and currency debasement, driving its gains of more than
30% so far this year. Gold touched an all-time peak of $2,072.50 on Aug. 7.

Elsewhere, silver was 0.8% lower at $27.44 per ounce. Platinum dropped 1.3%
to $943.86 and palladium fell 0.6% to $2,176.02. 

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
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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
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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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