Bulls n Bears Daily Market Commentary : 26 August 2020

Wed Aug 26 16:47:49 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 : 26 August 2020

 <mailto:info at bulls.co.zw> 

ZSE commentary

Market rebounds in mid-week session

The market rebounded in mid-week session to see all the Indices close in the
black. The mainstream All Share Index recovered 0.65% to 1261.08pts with the
Industrials putting on 0.59% to 4155.72pts. The Top Ten Index was 1.07%
higher at 805.01pts with the Minings ticking up 3.21% to close at 2442.43pts
on rebounding Bindura. Tyre manufacturer NTS topped the risers set on a 20%
surge to close $0.0924 on scrappy shares. Medtech was 11.87% higher at
$0.0782 while, crocodile skin producer Padenga rose 8.09% to $12.0456.
Innscor added 7.04% to $14.1120 having reached a high of $14.3500 on
resurgent demand. Hotelier African Sun advanced 5% to $1.1082 to complete
the top five winners. Other notable gains were registered in Seedco, OKZIM
and Hippo. The market registered a positive breath of three for the first
time since the reopening as twelve counters gained against nine fallers.

Banking group First Capital led the laggards of the day on a 15.29% loss to
$0.72000 with Star Africa following sliding 4.73% to end at $0.1711. Waning
demand in Axia saw the counter trading lower at $3.1006 after a 2.85% drop.
The duo of heavy cap in Econet and Delta were amongst the top five losers
after shedding 1.95% and 0.19% to end at $4.4106 and $14.3243 apiece. Other
losses were recorded in Cassava and Dairibord. Volumes exchanged enhanced
34.20% to 16.02m shares while, values added 32.47% to $102.95m. Delta and
Simbisa were the most sought-after stocks of the day after claiming a
combined 59.71% of the volume aggregate and 64.99% of the value total.
Foreign purchases stood at $1.77m against sales of $73.29m, leaving the
market with a net funds outflow position.-efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Zambia

Hyperinflation and Currency Collapse Fears After Zambian President Fires
Central Bank Governor

Zambian President Edgar Lungu fired the country’s central bank governor
Denny Kalyalya last week sparking fears that government wants to end the
institution’s independence. Kaylalya was immediately replaced by Christopher
Mvunga who reportedly has close ties to the President.

The abrupt decision, which sent shockwaves across Zambian financial markets,
saw the country’s currency, the Kwacha shedding 0.7% against the greenback
to reach an all-time low of 19.20 kwachas to a single U.S. dollar. Since the
start of the year, the Kwacha depreciated by more than 25%.

According to a report, the President’s decision came as Zambia, which is the
world’s second-largest producer of copper, is expecting its economy to
contract by 4.2% in 2020.

Hyperinflation and Currency Collapse Fears After Zambian President Fires
Central Bank Governor

Zambian President Edgar Lungu.

Although no official reason has been given for the sacking, many experts
believe that President Lungu wants to fight the effects of the global
pandemic Covid-19 economy with increased spending. The closure of the
economy has curbed the country’s revenue inflows.

Undoing some of the negative effects emanating from the Covid-19 pandemic
will boost the President’s chances in next year’s elections.

Before his termination, Kalyalya had “repeatedly urged the government to cut
the fiscal deficit amid ballooning debt and falling foreign-exchange
reserves.” Falling foreign exchange reserves, in turn, exert more pressure
on the Kwacha currency.

The International Monetary Fund (IMF), which is weighing the country’s
request for a financial bailout, issued a statement reacting to Kalyalya’s
sacking. In its comments, the IMF reminded Zambia that “is it imperative
that central banks’ operational independence and credibility is maintained,
particularly at this critical time when economic stability is threatened by
the Covid-19 pandemic.”

Meanwhile, in an unusual public rebuke of an African government by another,
South Africa’s Finance Minister Tito Mboweni attacked the decision on
Twitter.

Mboweni, the former governor of the South African Reserve Bank, has since
been reprimanded for his comments by the South African President, Cyril
Ramaphosa.

Hyperinflation and Currency Collapse Fears After Zambian President Fires
Central Bank Governor

In the meantime, Zambian economic commentators offered varying views on
Kalyalya’s sacking and what this possibly means for the economy. Still, many
argue the decision is ill-timed and sends the wrong signals.

Chelwa expressed fears that the appointment of “pliant” Mvunga as Kalyalya’s
replacement, means Zambia might be following the path walked by Zimbabwe
until its economy collapsed in 2008.

Zambia’s current inflation of 16 percent is likely to get worse if the
government gets its way and the central bank starts to inject more money
into the economy. The resulting high inflation levels will push Zambians to
search for alternatives that are immune to government-induced inflation such
as bitcoin.

Already, Zambians are active traders of digital assets on popular
peer-to-peer (P2P) trading platforms. According to data sourced from some of
the leading P2P bitcoin trading platforms, Zambia is one country with active
traders. However, weekly trade volumes attributed to the country are still
thin, as they do not exceed $25,000.

However, if Mvunga purses inflationary monetary policies as many experts are
predicting, traded volumes on P2P crypto trading platforms will soar as
ordinary Zambians seek refuge in digital assets.

South Africa

South African Rand Scores New August Highs against Dollar and Sterling amid
Robust Risk Appetite

The Rand scored new August highs against the Dollar and Pound Tuesday as
investors celebrated the survival of January's phase one U.S.-China deal
while revelling in elevated hope that a coronavirus treatment could soon be
available to help curtail the pandemic even in the absence of a vaccine.

The Rand rose against all major developed and emerging world counterparts
Tuesday as stock markets climbed further and the Dollar remained under
water, with USD/ZAR and GBP/ZAR falling to their lowest levels since late
July.

Risk appetite was evidently robust after U.S. Treasury Secretary Steven
Mnuchin and Trade Representative Robert Lighthizer said "Both sides see
progress and are committed to taking the steps necessary to ensure the
success of" January's phase one deal that largely ended the trade war
between the world's two largest economies.

That came after the White House has secured a regulatory blessing for the
use of blood plasma from recovered coronavirus patients as a treatment for
those struck down by the disease, given that it can be used to pass on
antibodies that can be helpful for fighting it. 

The Pound-to-Rand rate was eyeing a return to the 22.0 handle on Tuesday
while USD/ZAR was back below 17.0 and on route to 16.50, the bottom of an
anticipted third-quarter range, as almost all currencies advanced on the
Dollar in what is set to be a quiet week for economic data. 

Global macroeconomic factors dominate the agenda this week with the
highlight being eagerly awaited speeches from Federal Reserve Chairman
Jerome Powell and a range of other central bank heads, who're expected to
address poignant policy questions from Jackson Hole on Thursday and Friday. 

Price action comes as President Cyril Ramaphosa and Finance Minister Tito
Mboweni prepare to face questions from South Africa's parliament on
Wednesday, with lawmakers set to grill the pair over an International
Monetary Fund loan and alleged corruption relating to public procurement
contracts for personal protective equipment. 

South Africa became the world's fifth largest coronavirus hotspot this month
although new daily infection numbers have tailed off in recent weeks,
indicating the country could have seen its peak, although the economy
remains battered and bruised from months of 'lockdown' while the Rand had
previously been hobbled by a loss of its yield appeal to investors following
a series of interest rate cuts from the South African Reserve Bank (SARB).

 <mailto:info at bulls.co.zw> 

EMERGING MARKETS

Russian rouble drops as geopolitical tensions rise; EM stocks hit 7-month
high

(Reuters) - Russia’s rouble slid on Wednesday on mounting international
pressure to probe the suspected poisoning of a Kremlin critic and on
tensions in Belarus, while emerging market shares hit a seven-month peak
with eyes on U.S. data and the Federal Reserve.

MSCI’s index of emerging market stocks extended gains to a fourth straight
session, up 0.2%, but main indexes in individual countries were mixed ahead
of the U.S. data expected to show a slowdown in durable goods orders.

This would come hot on the heels of numbers that showed U.S. consumer
confidence dropped to a more than six-year low amid rising unemployment due
to the coronavirus pandemic.

A key speech by the U.S. Federal Reserve chairman on Thursday is likely to
give a peek into the bank’s policy stance. The dollar made narrows moves
ahead of it, helping some emerging market currencies to gain.

But, “the uncertainty about the long-term effects of corona on exchange
rates is likely to pre-occupy the market for many quarters and is likely to
keep fluctuation intensity high,” warned Ulrich Leuchtmann, an FX analyst at
Commerzbank.

Russia’s rouble declined 0.4% to stay near its lowest in almost four months
hit in the previous session. United States on Tuesday endorsed a European
Union-led investigation into the illness of Alexei Navalny after the clinic
he’s being treated at in Berlin found indications of poisoning.

In former Soviet state Belarus, the currency fell to five-month lows again
the dollar while against the euro it stayed at all-time lows amid massive
protests against President Alexander Lukashenko.

Lukashenko’s fate is widely seen as being in the hands of the Kremlin which
has stressed there should be no attempt by Western powers to “pressure”
Belarus, including via sanctions. Investors fear that would trigger a
Russian-backed crackdown which could exact a toll on Russian assets.

Turkey’s lira broke a four-day losing streak against the dollar after
Germany mediated between Turkey and Greece and said the two NATO allies were
ready for dialogue to defuse a worsening dispute over energy resources in
the Mediterranean.

Meanwhile, coronavirus cases in Turkey jumped on Tuesday to their highest
level since mid-June, prompting the government to impose measures such as
reduced personnel at workplaces to curb the spread of the pandemic.

Hungary's forint continued to decline a day after the central bank left
interest rates unchanged as expected. The government plans to finance an
increased budget deficit by boosting its forint-denominated government bond
sales, the debt management agency AKK said on Wednesday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper rises towards two-year high as inventories fall, shares gain

(Reuters) - Copper prices pushed towards a two-year high reached earlier
this month on Wednesday as inventories in the London Metal Exchange (LME)
system fell to the lowest in 14 years and stock markets rose.

Benchmark copper on the LME was up 0.8% at $6,584 a tonne in official
trading, approaching a high of $6,707 reached on Aug. 19.

Fuelling the gains were a reaffirmation by U.S. and Chinese officials of
their commitment to a Phase 1 trade deal, and hopes for more central bank
stimulus measures ahead of a major speech by the U.S. Federal Reserve
chairman.

Expectations that inflation will rise are also helping metals, which as hard
assets can serve as an inflation hedge, he said.

STOCKS: Copper inventories in LME-registered warehouses at 92,025 tonnes are
the lowest since 2006 and down from more than 280,000 tonnes in May.
MCUSTX-TOTAL

SPREAD/WARRANTS: Cash copper is at a premium to later-dated contracts,
pointing to tight nearby supply. Adding to concerns over availability, one
entity controls between 80% and 89% of LME copper warrants. MCUT-0=LX MCU0-3
<0#LME-WHL>

CHINA DEMAND: Citibank analysts said Chinese year-on-year copper demand
growth in July was the highest since February 2017.

YUAN: The yuan rose to its strongest against the dollar since January,
making metals cheaper for Chinese buyers.

PREMIUMS/STOCKS: Chinese Yangshan copper import premiums fell to $70 from a
high of $113.50 in May, while stockpiles in Shanghai Futures Exchange
warehouses and bonded warehouses have risen since June. SMM-CUYP-CN
CU-STX-SGH SMM-CUR-BON

GRASBERG: Protests at Indonesia’s Grasberg, the world’s second-largest
copper mine, continued for a third day, disrupting operations.

NICKEL: PT Vale Indonesia raised its output target for 2020 to 73,700 tonnes
of nickel matte from 71,000 tonnes.

OTHER METALS: LME aluminium was up 0.2% at $1,779 a tonne, zinc fell 0.1% to
$2,480.50, nickel gained 0.7% to $15,077, lead added 0.1% to $1,994.50, and
tin was up 0.9% at $17,517. 

S.Africa approves AngloGold's Harmony sale but with conditions

(Reuters) - South Africa’s mines ministry has given the green light for the
sale of AngloGold Ashanti’s last remaining assets in the country to Harmony
Gold on condition that it does not delist from the Johannesburg stock
Exchange.

Harmony agreed in February to buy rival AngloGold Ashanti’s assets in South
Africa, including Mponeng, the world’s deepest gold mine, for about $300
million.

Every sale in the mining industry in South Africa must be approved by the
ministry under mineral resources rules in accordance with Mineral and
Petroleum Resources Development regulations.

The ministry said the granting of the application was based on a
understanding between AngloGold Ashanti and the department that the company
would not disinvest from the South African economy by delisting from the
Johannesburg Stock Exchange (JSE) or relocate its headquarters.

AngloGold had said in February it would consider moving its primary listing
on the JSE as it streamlines its portfolio. But in August the company said
moving its listing was no longer a priority amid the pandemic.

AngloGold said on Wednesday it had not yet received all necessary approvals
and was still in talks with government.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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/20200826/0b4cc4d9/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/20200826/0b4cc4d9/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/20200826/0b4cc4d9/attachment-0007.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 30141 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200826/0b4cc4d9/attachment-0008.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 30149 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20200826/0b4cc4d9/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/20200826/0b4cc4d9/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/20200826/0b4cc4d9/attachment-0011.jpg>