Bulls n Bears Daily Market Commentary : 20 August 2020

Thu Aug 20 17:16:11 CAT 2020

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Bulls n Bears Daily Market Commentary : 20 August 2020

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ZSE commentary

ZSE bears remain in charge

The bearish sentiment on the bourse continued in Thursday’s session, taking
the losing streak to twelve consecutive sessions since the reopening.
Persistent sell-off across the board helped drive the market lower, to see
all the indices continue to trend southward. The mainstream All Share Index
lost 3.90% to end at 1276.52pts with the Industrials easing 3.93% to
4200.94pts. The Top Ten was 3.77% down to settle at $810.02 while, the less
active Minings was 2.87% down at 2602.55pts. Weighing on the market’s
session was a set of twenty-four losers led by property concern ZPI which
plunged 19.75% to $0.5775, followed by banking groups NMB and FBC that
succumbed 19.75% and 18.38% to close at $3.0500 and $8.03850 apiece.
National Foods, OKZIM and Innscor lost 12.23%, 8.67% and 8.29% as the trio
settled at $45.0000, $3.5417, and $13.4457 in that respective order.

Countering losses for the day were gains in six stocks led by NTS which
added a further 19.96% for the second consecutive session. Willdale trailed
after ticking up 8.61% to close at $0.2598 while, Padenga added 3.83% to
$10.0272 on resurgent demand. ART was 3.51% higher at $1.9667 with TSL
completing the top five set after putting on 3.5% to end at $4.2229. Volumes
exchanged ballooned 800.53% to 32.56m shares, anchored by a chunk of
Willdale shares which claimed 64.10% of the outturn. Value traded enhanced
39.05% to $52.74m from prior session. RioZim, Econet and Delta propelled the
value aggregates with a combined contribution of 48.68%. Foreign purchases
were a mere $0.57m against disposals of $12.21m, as the market registered a
negative balance of payments.-efesecurities

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Global Currencies & Equity Markets

South Sudan

South Sudan central bank says foreign exchange reserves have run out

(Reuters) - South Sudan, battered by years of conflict and corruption, has
run out of foreign exchange reserves and cannot stop the pound’s
depreciation, a senior central bank official in the oil-producing nation
said on Wednesday.

South Sudan gets almost all of its revenue from crude oil, but current
output, at around 180,000 barrels per day, has plummeted from a peak of
250,000 bpd before the outbreak of conflict in 2013, according to official
figures.

South Sudan has three exchange rates - one from the central bank, from
commercial banks, and from the unofficial market. Pouch said the rate for
the pound from the central bank is 165 per dollar, from commercial banks
around 190, and from the parallel market 400.

Corruption, not just lower oil production, is also driving the crisis, said
Brian Adeba, the deputy director of policy at U.S.-based watchdog The
Sentry, which has released several reports documenting high-level graft. The
government has denied the findings.

South Sudan ended five years of civil war in 2018 but disagreements between
President Salva Kiir and Vice President Riek Machar, who led the main rebel
group, have stalled the conclusion of the peace process.

The war - marked by ethnic cleansing, extreme sexual violence and pockets of
famine - displaced around a third of the population from their homes. The
conflict killed an estimated 400,000 people and created Africa’s biggest
refugee crisis since the 1994 genocide in Rwanda.

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.

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EMERGING MARKETS

Russian rouble firms with all eyes on Belarus; S.African rand extends rally

(Reuters) - Russia’s rouble firmed on Tuesday, after sharp declines in the
previous session spurred by political chaos in neighbouring Belarus, while
Turkey’s lira reversed a recovery early in the day to hit new lows.

A softer dollar help put a floor under most other emerging market currencies
which traded in a tight range. South Africa’s rand rose for the fifth
session in six after a coronavirus-induced lockdown in the country was
lifted over the weekend.

Emerging stocks, meanwhile, took little inspiration from Wall Street’s tech
rally overnight, with the overall index trading flat. Stocks in Turkey and
Russia gained while main indexes in South Africa and most of central and
eastern Europe lagged.

Russia’s rouble firmed 0.6% against a dollar in the doldrums. Data later on
Monday had shown Russia’s industrial output fell in July, but was in line
with the expectations.

Household income and spending data, and banking statistics due later this
week would be the next important piece of evidence to gauge an economic
recovery in Russia, he added.

The rouble had lost more than 1% on Monday as protests over disputed
presidential elections in Belarus caused increasing geopolitical tensions.

Belarusian leader Alexander Lukashenko on Monday said he would be ready to
hold new elections and hand over power after a constitutional referendum,
but insisted the offer would not be delivered on while under pressure from
protesters.

The European Union is considering imposing sanctions on Belarusian
individuals linked to violence and election fraud and will tell Russia not
to meddle in the former Soviet republic, after EU leaders discuss the
situation on Wednesday, officials said.

Belarus bonds were unchanged in early trade.

Turkey’s lira had firmed slightly on Tuesday but soon gave up gains, losing
for the ninth session in ten.

Investors looked ahead to a rate-setting meeting later this week. A Reuters
poll showed Turkey’s central bank is seen keeping the rate on hold this
week, but is expected to drive funding costs higher with more back-door
measures.

Concerns over the bank’s depleted forex reserves, costly interventions in
the forex market and Turks’ surging demand for hard currencies have weighed
on the beleaguered currency.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Oil and stocks fall as markets still rattled by Fed minutes

(Reuters) - The Federal Reserve’s doubts over the U.S. economic recovery
kept markets in the red on Thursday, even though European stock indexes
spent the morning recovering from initial losses.

Wall Street was knocked from its recent highs on Wednesday after the Fed’s
minutes from its July meeting spooked investors by showing that the swift
labour market rebound seen in May and June had likely slowed.

The S&P 500 had reached an all-time high earlier in the week as prices
recovered to their pre-pandemic levels.

The sudden bearishness spilled into Asian markets overnight and continued in
the European session, although shares started to recover as the morning
progressed.

MSCI’s broadest index of Asia-Pacific shares outside Japan had its biggest
daily decline in five weeks while the MSCI world equity index, which tracks
shares in 49 countries, was down 0.6% at 1042 GMT.

The pan-European STOXX 600 fell 0.8% and London’s FTSE 100 was down 1.14%.

Several Fed policymakers said they may need to ease monetary policy to help
get the economy through the coronavirus pandemic.

Despite the dovish minutes, U.S. Treasury yields and the dollar rose with
investors focusing on parts of the minutes that showed policymakers
downplaying the need for yield caps and targets.

The dollar index, which measures the currency against a basket of major
peers, was choppy overnight and last at 93.015, up less than 0.1% on the
day.

Spot gold rebounded overnight but fell when European markets opened.

It was down 0.2% at 1046 GMT, at $1,926.4615 per ounce .

Oil prices fell, as major producers warned of a risk to demand recovery.

OPEC and its allies pressed oil nations that are pumping above output
targets to cut more in August to September.

Brent crude was down 49 cents, or 1.1%, at $44.88 a barrel, while U.S. oil
was down 48 cents, or 1.1%, at $42.45 a barrel.

It will take at least two years for the euro zone to fully recover from its
deepest recession on record, according to a Reuters poll of economists.

Minutes from the European Central Bank’s July meeting are due at 1130 GMT.

Germany’s benchmark 10-year Bund yield fell for the fifth day in a row,
hitting its lowest in more than a week at -0.499%.

Markets also remained cautious about acrimonious U.S.-China relations.

China’s commerce ministry said the two countries have agreed to hold trade
talks “in the coming days” to evaluate their Phase 1 trade deal, struck six
months ago.

Major central banks will reduce the frequency of seven-day dollar liquidity
operations to once a week from September due to low demand and reduced
financial market tension, the Bank of England said. They are currently held
three times a week and are often met with no demand.

India's silver imports could tumble as scrap supplies surge, importers say

(Reuters) - India’s silver imports are likely to fall by more than 40
percent from a year ago to the lowest level in eight years, with investors
booking profit by selling stocks after local prices rallied to a record high
this month, leading importers said.

Lower imports by the world’s biggest silver consumer could weigh on global
prices that have risen more than 50% so far in 2020.

Their selling will reduce import requirement for 2020 to 3,000 tonnes, the
lowest since 2012, he said.

India imported 5,598 tonnes of silver in 2019, according to data compiled by
Refinitiv GFMS. The country fulfills most of its silver requirement through
imports.

Investors are sceptical whether silver will hold recent gains, said
Prithviraj Kothari, managing director of RiddiSiddhi Bullions.

Local silver futures were trading around 66,800 rupees per kg on Thursday
afternoon after hitting a record high of 77,949 rupees earlier this month.

But in the spot market silver was offered at discount of more than 5,000
rupees per kg due to weak demand, Thakkar said.

India’s silver imports in the first seven months of the year nearly halved
from a year ago to 1,900 tonnes and it is unlikely to rise again unless
prices correct sharply, said a Mumbai based dealer with a bullion importing
bank.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

RTG

AGM

Virtual

24 August 2020 | 12pm

SeedCo International

AGM

Virtual (https://eagm.creg.co.zw/eagmzim/Login.aspx#)

26 August 2020 | 9am

SeedCo

AGM

Virtual (https://eagm.creg.co.zw/eagmzim/Login.aspx#)

28 August 2020 | 9am

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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been compiled from sources believed to be reliable, but no representation or
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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
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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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