Bulls n Bears Daily Market Commentary : 21 August 2020

Fri Aug 21 16:28:59 CAT 2020

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Bulls n Bears Daily Market Commentary : 21 August 2020

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ZSE commentary

Market Turnover ZWL$35,626,144.00 with foreign buys at ZWL$1,446,942.00 and
foreign sales were ZWL $15,125,240.00 Total trades were 228.

The ZSE All Share Index ended its losing streak after gaining 8.87 points
to close at 1.285.39 points. HIPPO VALLEY LIMITED led the movers after
advancing by $1.7000 closing at $12.5000, CBZ HOLDINGS LIMITED gained
$1.6333 to $24.0000 and PADENGA HOLDINGS LIMITED was $0.7904 higher at
$10.8176. DAIRIBOARD ZIMBABWE LIMITED also traded $0.6000 firmer at $5.3000
and AFRICAN SUN LIMITED traded $0.1909 stronger at $1.1909.

Gains were offset by losses in AFRICAN DISTILLERS LIMITED  which eased
$1.3000 closing at $17.0000, SIMBISA BRANDS LIMITED lost $0.5470 to $4.5047
and SEEDCO LIMITED   was $0.5002 weaker at $14.4498. Other losers were DELTA
CORPORATIONS LIMITED  which eased  $0.3963 to close at $14.7281 and BINDURA
LIMITED was down by $0.1938 ending at $2.4062.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Sudan

South Sudan’s currency in free fall as forex reserve is depleted

The deputy governor of South Sudan’s central bank warned that the nation’s
currency, the South Sudanese pound, was devaluing very quickly amid a host
of problems facing its economy.

According to Daniel Kech Pouch, there was little the authorities could do to
arrest the dramatic slide in value of the currency.

Pouch added that the nation’s foreign exchange reserves had been depleted as
oil revenues, which the country is heavily reliant on, have dropped sharply
exacerbating the situation.

He told the Voice of America that the country’s underground economy was
awash with U.S. dollars which, however, did not end up in the central bank.

As of Thursday, a U.S. dollar on the black market would exchange for 400
South Sudanese pounds while the dollar would exchange for 165 South Sudanese
pounds at the central bank.

South Sudan’s economy has been ravaged by years of instability, high
inflation, drops in oil production and global prices and, most recently, the
COVID-19 pandemic.

Despite this precarious situation, South Sudan plans to increase its budget
by 29 percent to fund the expanded government under the peace deal, a report
by Bloomberg said.africa.cgtn

Zambia

Bank of Zambia cuts lending rate

Lusaka – The Bank of Zambia has prescribed urgent macroeconomic adjustment
measures underpinned by fiscal consolidation and restoration of debt
sustainability to promote sustainable development during the COVID-19
pandemic.

Bank of Zambia Governor Denny Kalyalya this week also announced a decision
by the Monetary Policy Committee to slash the landing rate from 8,5 percent
to eight percent as a means of protecting individual and corporate borrowers
during the downturn caused by the pandemic.

Dr Kalyalya said the government was under a lot of pressure to spend money
on health-related interventions, and this had both the domestic and external
debt and internal debt.

At the end of June 2020, Zambia’s gross international reserves had risen
from US%1,4 billion to US$1,43 billion, representing  slightly more than two
months import cover.

However, overall economic performance – as in much of the rest of the world
- is forecast to be down for the rest of 2020.

Former Secretary for Finance Mr Felix Nkulukusa said the government should
instil fiscal discipline and reduce borrowing.

Professor Oliver Saasa, an economist, concurred and pointed out that the
government should suspend infrastructure financing, control expenditure
patterns and avoid excess borrowing.

Zambia mulls holding Chinese yuan in reserves

(Xinhua) -- Zambia's central bank said on Thursday that it was considering
holding the Chinese currency renminbi, or the yuan, as one of the currencies
in reserves.

Bank of Zambia Governor Denny Kalyalya said the central bank was currently
considering holding the reserves in other currencies such as the renminbi
apart from the U.S. dollar which was the major currency in which the
reserves are held.

He told reporters during a press briefing that the central bank was
currently considering gold as well as renminbi for the Chinese obligations.

He added that holding of reserves was dictated by obligations as the central
bank wanted to be in a position to meet the obligations as they fall due.
Enditem

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GLOBAL MARKETS

Waning European recovery saps stocks momentum, knocks euro

(Reuters) - Sombre economic numbers including euro zone data pointing to a
faltering recovery doused global stock market gains on Friday and saw the
euro recoil further from recent peaks.

Global equities dipped into the red and the pan-European STOXX 600 gave away
early gains to fall 0.6%, while U.S. futures pointed to a 0.4% drop at the
open.

The loss of momentum came after fresh numbers painting a muted economic
outlook, with purchasing managers’ index releases from France and Germany as
well as the wider euro zone falling short of expectations, flagging slowing
momentum in the recovery.

Analysts pointed to rising infection numbers having tempered economic
activity. On Thursday, France saw a post-lockdown record in new infections,
while countries across the region imposed fresh travel restrictions.

News that Pfizer reported positive early data from a potential COVID-19
vaccine and could be on track to seek regulatory review by October did
little to brighten the mood.

FISCAL STIMULUS

European bourses had started the day on a brighter note, following gains in
Asia after U.S. tech shares closed higher on Thursday. The S&P 500 has
rallied 54% from its March low in a world awash with monetary and fiscal
stimulus, but money managers are questioning the future trajectory.

But it wasn’t just European data which delivered a dampener.

Overnight, clouds returned to the U.S. labour market outlook, with weekly
jobless claims back over a million to put the total number of Americans on
unemployment benefits at 28 million.

The Philadelphia Federal Reserve’s business index also missed expectations
and together the weak readings pushed down nominal U.S. yields and dragged
on the dollar. Benchmark U.S. 10-year debt yields were creeping lower to
stand at 0.6347%.

In currency markets, the dollar index jumped 0.8%, on track to end what
would have been a ninth consecutive weekly decline. Meanwhile the euro
extended losses to drop as much as 0.8% to $1.1768, its lowest level in
nearly 10 days.

The Japanese yen hovered at 105.53 after an inflation miss supported real
yields, while China’s yuan surged to a seven-month high as traders bet on
Chinese growth.

Sterling weakened and was last down 0.8% at $1.3108 amid scant progress in
Brexit talks between Brussels and London ahead of a year-end deadline to
reach a deal.

In commodity markets, oil prices were on track for a small weekly loss, with
Brent crude futures slipping to $44.29 a barrel and U.S. crude future to
$42.24 a barrel.

Gold was a touch softer at $1,918.3 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Price Today: Yellow metal rises to more than Rs 52,500 per 10 gram;
silver hikes too

New Delhi | Jagran Business Desk: The Gold and silver were trading higher in
India on August 21 after a consecutive decline on August 19 and August 20.
The yellow and silver metal also tracked positive trends in the
international market. The futures market sees the gold delivery price on MCX
is expected to hold 51,550 on a closing basis. The experts said that if the
price of the yellow metal will survive above 52,100,  then it can test
52,330-52,660 levels.

The October gold price was trading higher at Rs 52,355 per 10 gm at 9:20 am
which is a 0.4 per cent hike. However, on average, gold has been recorded on
the marginals rate in the second week of August and shed it to 4.5 per cent.
According to a report, it has been the worst recorded trading of gold prices
in the five months. The gold trading was spotted at around $1,945.45 per
ounce.

However, silver prices continuously increased, it has also seen growth in
the international market in the last week. According to the reports,
September Silver was trading at Rs 68,540 per kg in the futures market and
it holds up to 1.4 per cent.

However, it has been reported that the international price of yellow and
silver metal triggered because of the US unemployment index claimed to reach
1 million.-english.jagran

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.

“The key question for investors is whether the policy responses are enough
to mitigate the economic damage,” BH Global, a fund managed by Brevan
Howard, said in an interim report published on Thursday.

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.

Copper tracks equities, other risky assets lower on dovish Fed

(Reuters) - London copper fell on Thursday following a sell-off in equities
and risky assets after the U.S. Federal Reserve expressed worries about an
uncertain economic recovery, although some traders expect the weakness to be
short-lived.

Three-month copper on the London Metal Exchange declined 1.3% to $6,587 a
tonne by 0705 GMT. The contract hit its highest since June 2018 at $6,707 a
tonne on Wednesday.

Several Fed policymakers say the U.S. central bank may need to ease monetary
policy further to help nurse the economy through the coronavirus outbreak,
minutes from their policy meeting last month showed on Wednesday.

Copper is often viewed as a gauge of the global economic health.

The most-traded September copper contract on the Shanghai Futures Exchange
closed up 0.1% to 51,980 yuan ($7,509.72) a tonne, tracking overnight gains
in London.

FUNDAMENTALS

* LME nickel dropped 0.3% to $14,675 a tonne, lead fell 1.2% to $1,988 a
tonne and in Shanghai, nickel declined 0.5% to 116,130 yuan a tonne while
aluminium advanced 0.8% to 14,675 yuan a tonne.

* China kept its benchmark lending rate for corporate and household loans
steady as expected for the fourth straight month at its August fixing.

* Australia-based copper miner MMG Ltd said its half-yearly loss nearly
doubled, while Australian miner South32 Ltd reported an 80.5% slump in
full-year underlying profit.

* Chinese state-backed metal research house Antaike said it had advised
Beijing to stockpile cobalt but the timing of any state plans to purchase
the metal was uncertain.

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

Invest Wisely!

Bulls n Bears 

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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
constitute an offer to sell or the solicitation of an offer to buy or
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
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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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