Bulls n Bears Daily Market Commentary : 24 August 2020

Mon Aug 24 16:05:49 CAT 2020

 <http://www.bulls.co.zw/> Bulls.co.zw        <mailto:bulls at bulls.co.zw>
Views & Comments        <http://www.bulls.co.zw/blog> Bullish Thoughts
<http://www.twitter.com/BullsBears2010> Twitter
<https://www.facebook.com/BullsBearsZimbabwe> Facebook
<http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn
<mailto:info at bulls.co.zw?subject=Unsubscribe> Unsubscribe

Bulls n Bears Daily Market Commentary : 24 August 2020

 <mailto:info at bulls.co.zw> 

ZSE commentary

Market swings back into the red

The market swung back into the red in week opening session as weakness
persisted across the board. The mainstream All Share Index lost 1.33% to
1268.32pts while, the Industrials went down 1.35% to end at 4180.15pts. The
Top Ten Index was 1.07% lower at 810.97pts with the Minings letting go 0.28%
to 2442.84pts. Eighteen counters traded in the negative territory against
six risers as five remained unchanged, leaving the market with a wide
negative breadth. Art Corporation was the session’s worst performer after
plunging 19.84% to see it closing at 1.5200 while, apparel retailers
Truworths reversed previous gains with a 17.65% fall to settle at $0.1400.
Hotelier African Sun eased 11.83% with Willdale shedding 16.25% to $0.2010.
Milk processor Dairibord was 10.19% softer at $4.7600 and completed the top
five losers of the day. Other losses were registered in Cassava (-4.48% to
$4.5850), Innscor (-2.01% to $13.1446), Delta (-1.79% to $14.4648) and
Econet (-0.87% to $4.5000), that dragged the Indices lower.

Retailer OKZIM led the risers of the day on an 9.67% rebound to see it
closing at $3.9000. Padenga trailed after adding 2.15% to settle at $11.0500
while, conglomerate Meikles put on 1.67% to end at $12.2000. Banking group
NMBZ was 1.64% firmer at $3.1000 on scrappy shares while, Lafarge advanced
1.01% to $5.0000. Activity aggregates slightly improved in week opener with
turnover enhancing 12.47% to $32.17m while, volumes exchanged were 9.58m
shares which was 93.86% up from prior session. Mash drove the volumes
outturn claiming 50.99% while, Econet, Innscor and

Delta propelled the value totals with respective contributions of 21.71%,
19.76% and 17.25%. The capital flight on the market continued as a mere
$1.4m worth of foreign purchases were registered against disposals of
$21.56m. Foreign sales accounted for 67.04% of the day’s turnover while,
sales claimed 4.39% of the same.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South Africa's rand firms, stocks rise in early trade

JOHANNESBURG (Reuters) - The South African rand started the week on a firmer
footing on Monday, as traders looked to the Federal Reserve’s annual Jackson
Hole retreat for guidance on the outlook for U.S. monetary policy.

At 0737 GMT, the rand traded at 17.0475 per dollar, 0.57% firmer than its
close on Friday.

The trend in U.S. interest rates will have a key influence on global
prospects and investors’ appetite for risk, including for emerging market
assets such as South Africa.

Federal Reserve Chairman Jerome Powell will discuss monetary policy on
Thursday at the opening day of the Kansas City Fed’s annual symposium.

Locally, traders await consumer price inflation figures on Wednesday as well
as producer price inflation data on Thursday.

On the stock market, both the Top-40 index and the broader all-share were up
more than 1% in early trade.

In fixed income, the yield on the benchmark government bond due in 2030 was
flat at 9.265%.

Zambia

Zambia Bonds, Kwacha Slump After Central Bank Governor Fired

Zambia’s currency and Eurobonds plunged after President Edgar Lungu’s shock
dismissal of central bank Governor Denny Kalyalya that raised questions
about the independence of the institution.

The move comes at a critical time for the economy of Africa’s second-biggest
copper producer, which is forecast to contract by 4.2% this year with annual
inflation lingering near 16%. Debt is soaring and the fiscal deficit rapidly
increasing as the coronavirus pandemic curbs revenue. Lungu’s decision drew
criticism from economists and even South African Finance Minister Tito
Mboweni.

Zambia’s kwacha fell 0.7% by 2:25 p.m. in Lusaka to a record low 19.20 per
dollar. The yield on the nation’s $1 billion of Eurobonds due 2024 surged
190 basis points to 30.34%, the biggest jump since April.

Lungu on Saturday named Christopher Mvunga as Kalyalya’s replacement. The
former deputy secretary to the cabinet and deputy finance minister will have
to contend with the world’s second-worst performing currency, which has lost
more than a quarter of its value against the dollar this year. He’ll also
need to limit the government’s growing dependence on the central bank to
cover funding shortfalls.

Spendthrift Government

Lungu didn’t give a reason for removing Kalyalya, who repeatedly urged the
government to cut the fiscal deficit amid ballooning debt and falling
foreign-exchange reserves. His dismissal could raise concerns among
investors who saw him as a credible governor trying to keep a spendthrift
government in check.

Isaac Chipampe, Lungu’s spokesman, didn’t respond directly on the decision,
saying “let’s allow people to debate,” and re-iterating that Mvunga’s
appointment is subject to parliament’s ratification. Kalyalya didn’t respond
to a text message seeking comment.

The move might be a response to the government’s failure to push through a
constitutional amendment that would remove the responsibility of printing
currency from the Bank of Zambia, according to Grieve Chelwa, an economics
lecturer at the University of Cape Town’s Graduate School of Business.

Inflation Fears

The government had been increasingly relying on the Bank of Zambia for
financing, even before the pandemic struck. Central bank holdings of
government bonds increased to nearly 20 billion kwacha ($1 billion) in July
from 2 billion kwacha at the start of last year. There are fears that
Kalyalya’s removal could push Zambia toward the soaring inflation seen in
Zimbabwe in the 2000s, according to Chelwa.

Mvunga declined to comment in a text message to suggestions from economists
that he isn’t qualified for the position or has too close a relationship
with Lungu to be independent.

Kalyalya previously served as deputy governor and spent years at the World
Bank. Mvunga is an accountant who has worked for lenders including Standard
Chartered Plc and Standard Bank Group Ltd. He doesn’t have the necessary
experience in central banking, Simumba said.

 <mailto:info at bulls.co.zw> 

EMERGING MARKETS

Oil prices lift Russian rouble as chaos in Belarus intensifies; Lira down

Aug 24 (Reuters) - Turkey’s lira extended losses on Monday after ratings
agency Fitch lowered the country’s outlook to ‘negative’, while Belarus
bonds fell as protests demanding leader Alexander Lukashenko step down
intensified.

Emerging market stocks jumped 1% after the U.S. Food and Drug Administration
approved the use of a recovered COVID-19 patent’s blood plasma as a
treatment option, while upbeat business surveys from the United States kept
hopes for an economic recovery alive.

The dollar weakened against most rivals ahead of the U.S. Federal Reserve’s
annual Jackson Hole gathering on Thursday, where Fed Chair Jerome Powell is
expected to talk about the bank’s monetary policy framework review.

In Turkey, Fitch changed its outlook to ‘negative’ from ‘stable’ on Friday,
citing depleting foreign exchange reserves, weak monetary policy credibility
and a sizeable current account deficit among factors exacerbating external
financing risks.

The lira fell 0.2%. The currency, down 19% this year, has been plumbing new
lows recently, but found some footing last week after a significant gas find
in the Black Sea.

The news, which was later confirmed by President Tayyip Erdogan, would
lessen the country’s energy imports and help narrow its current account
deficit.

South Africa’s rand rose 1.1% to hit a three-week high, extending gains to a
fifth straight session, while higher oil prices lifted Russia’s rouble from
over three-month lows even as chaos in neighbouring Belarus rose.

Tens of thousands of citizens flooded into Minsk to protest a disputed
presidential election earlier this month. Russia on Friday had said it was
ready to help Belarus if asked.

Yields on Belarus 2030 dollar-denominated bonds rose, while prices of
Belarussian dollar-denominated debt broadly fell, across different
maturities. ,.

Poland’s government will discuss the situation in its eastern neighbour as
it sees no quick end to the situation, the Prime Minster said. Against a
stronger euro, the Polish zloty rose 0.2%.

Hungary’s forint was flat against the single currency ahead of a central
bank interest rate meeting on Tuesday. After 15-basis-point cuts in the last
two months, the bank is expected to stand pat, a Reuters poll showed.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper rises as LME inventories dwindle to 13-year low

(Reuters) - Copper prices rose on Monday as stockpiles in the London Metal
Exchange (LME) warehouse system fell below 100,000 tonnes for the first time
since 2007 and the approval of a coronavirus treatment in the United States
boosted equities.

Benchmark copper on the LME traded up 1.1% at $6,559.50 a tonne in official
rings, near last week’s two-year high of $6,707.

Rebounding demand in China has pushed prices higher, but a surge of
speculative buying means the market is vulnerable to a correction, said
Commerzbank analyst Daniel Briesemann

STOCKS/SPREAD: Low stocks and a $16.75 premium for cash copper over the
three-month contract point to tight nearby supply on the LME market.
MCUSTX-TOTAL MCU0-3

Inventories in Shanghai Futures Exchange warehouses, however, have risen
since June to 172,266 tonnes. CU-STX-SGH

MARKETS: Equities rose after the U.S. Food & Drug Administration (FDA)
authorised the use of blood plasma from patients who have recovered from
COVID-19 as a treatment for the disease.

DOLLAR: With investors in the mood for riskier assets, the dollar weakened,
making metals cheaper for buyers with other currencies.

POSITIONING: Speculators ramped up bets on higher copper prices on the Comex
exchange, building their net long position to its highest since June 2018.

On the LME, the net long in copper was equal to 6.2% of open contracts by
Wednesday, down from 18% in July, according to brokers Marex Spectron.

GRASBERG: More than a thousand mine workers in Indonesia blocked access to
the huge Grasberg gold and copper mine on Monday to protest against
coronavirus lockdown policy.

ALUMINIUM: China’s July aluminium imports made a close to sevenfold leap
year on year to their second-highest level on record.

JAPAN PREMIUMS: Trader Sumitomo Corp expects the Japanese aluminium premium
to rise to $90 a tonne in the October-December quarter, up from $79 this
quarter.

OTHER METALS: Aluminium was up 0.6% at $1,776 a tonne, zinc was flat at
$2,456, nickel gained 1.5% to $14,906, lead firmed by 0.5% to $1,982.5 and
tin dropped 2.1% to $17,205.

China turns net aluminium importer in July for 1st time since 2009

(Reuters) - China’s July aluminium imports leapt nearly sevenfold
year-on-year to their second-highest level on record, customs data showed,
as a rare price phenomenon saw the world’s top exporter of the metal turn
net importer for the first time since 2009.

Arrivals of unwrought aluminium and aluminium products into China came to
391,297 tonnes last month, the General Administration of Customs said on
Sunday.

That is the highest monthly total since April 2009, when China imported
almost 440,000 tonnes. It was up 570% from July 2019 and up 35.5% from
288,783 tonnes in June this year.

The import volume beat China’s July export total of 373,402.3 tonnes
reported by customs earlier this month.

That means China, by far the world’s biggest producer of aluminium, was a
net importer of unwrought aluminium and aluminium products last month for
the first time since September 2009, according to Refinitiv Eikon data.

The bumper imports came amid a wide disparity between aluminium prices in
China, where demand has rapidly recovered since the coronavirus outbreak
earlier this year, and lower international prices on the London Metal
Exchange.

The spread between the two prices, known as an arbitrage, meant Chinese
consumers - who usually have little need for foreign aluminium - were able
to source metal more cheaply from overseas.

With London aluminium prices rising by 5.8% in July, this arbitrage window
has now shut, but large volumes were still coming into China because
contracts to ship the metal were signed earlier when the arb window was
open, said CRU analyst Wan Ling.

Customs is due to release a breakdown of imports by origin and type of
aluminium and other commodities on Tuesday.

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 

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw&sa=D&sntz=1&usg=AF
QjCNH8LYgdY55h-XKseuM8Kpr-JKdfhQ> www.bulls.co.zw 

Blog:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1
&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bulls.co.zw/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:
<http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimba
bwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA>
www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

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
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
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
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.

(c) 2020 Web: <http:// www.bulls.co.zw >  www.bulls.co.zw Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
344 1674

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.jpg
Type: image/jpeg
Size: 3653 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0006.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.jpg
Type: image/jpeg
Size: 30155 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0007.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 30154 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0008.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 30152 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0009.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image005.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0010.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image006.jpg
Type: image/jpeg
Size: 4846 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200824/e05bb2d1/attachment-0011.jpg>