Bulls n Bears Daily Market Commentary : 28 August 2020

Fri Aug 28 19:51:30 CAT 2020

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Bulls n Bears Daily Market Commentary : 28 August 2020

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ZSE commentary

Market rallies in weekending session 

Bullish sentiment prevailed on the market in the penultimate session of the
month to see all the Indices close pointing northwards. The All Share Index
ticked up 5.23% to 898.31pts with the Industrials putting on 4.89% to close
at 4442.22pts. The Top Ten Index rallied 7.25% to end at 898.31pts on
resurgent demand in heavies. The Mining Index was the best performer amongst
the indices at it surged 17.16% to 3240.09pts. Activity aggregates reflected
a mixed outcome as turnover rose 30.03% to $78.07m while, volumes exchanged
declined 26.86% to 7.81m shares. Delta was the most liquid stock as it
anchored both the volumes and value aggregates claiming 17.77% and 28.15% of
the totals, respectively. Other notable trades were registered in Innscor,
CBZ and AFDIS which claimed 21.54%,11.48% and 9.69% in that order. A net
foreign outflow position was recorded as purchases stood at $0.94m against
inflows of $57.10m.

Overall, NTS led the winners of the day after a 20.04% surge to close at
$0.1330 on firm demand. The trio of Turnall, ART and Powerspeed followed,
after surging by an identical 20% to close at $0.6725, $2.1600, and $1.3200,
respectively. Nickel miner Bindura was 19.63% firmer at $3.3575 to complete
the top five list. Other notable gains in heavies were seen in Innscor, CBZ,
Padenga, Natfoods Econet and Cassava. General Beltings was the session’s
worst performer after succumbing 20% to settle lower at $0.1200 while FML
let go 3.31% to end at $3.5000. ZHL lost 2.17% to $2.2500.-efesecurities

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Global Currencies & Equity Markets

South Africa

South Africa's rand surges as dollar slumps

(Reuters) - South Africa’s rand surged against the dollar on Friday, as the
U.S. currency fell heavily and global investors hunted for higher-yielding
assets in emerging markets.

At 1500 GMT, the rand traded at 16.6350 per dollar, roughly 2.5% firmer than
its close on Thursday.

Data this week pointed to a modest pickup in price pressures in Africa’s
most industrialised economy, adding to signs the central bank may bring a
recent series of rate cuts to a close.

The rand’s gains came despite data showing an $8 billion budget deficit in
July, and research from a science council showing 2020 had seen the worst
power cuts on record.

The stretched state of public finances and electricity constraints are among
the top concerns for investors.

South Africa’s economy was already in recession before the COVID-19
pandemic, and official forecasts are now for a GDP contraction of at least
7% this year.

Johannesburg-listed stocks fell on Friday, with the Top-40 index losing
1.58% to 51,750 points and the All-Share index falling 1.43% to 56,057
points.

Insurer Discovery was among the biggest losers, shedding more than 4% after
saying the coronavirus crisis could erase its full-year profits entirely.

Greg Davies, trader at Cratos Capital, said Discovery’s decline reflected
wider sentiment in the market.

Also dragging the index down were lender Nedbank, retailer Woolworths and
Naspers, which all lost 3% or more.

The yield on the 2030 government bond rose 2.5 basis points to 9.325%,
reflecting weaker bond prices.

Nigeria

Nigeria targets non-oil exporters to boost FX as recession looms

(Reuters) - Nigeria’s central bank is trying to force non-oil exporters to
process dollar proceeds through domestic lenders to increase dollar
liquidity and support the ailing currency, a circular seen by Reuters showed
on Thursday.

The central bank said exporters who fail to remit dollar proceeds through
the lenders will be denied access to official currency markets, the circular
said.

Exporters have cited the value of the currency on the official market, where
the naira is trading at a discount of around 20% to the black market, as a
reason for hoarding dollars or bypassing banks to take advantage of black
market rates.

Exporters also sometimes conduct trade via offshore accounts.

The central bank also directed lenders to stop processing letters of credit
for imports for third-party suppliers or brokers with immediate effect. That
could limit imports into the country.

Nigeria, which for months has sought to shore up its dwindling reserves,
posted an economic contraction of 6.1% in the second quarter and expects
further contractions in the third and fourth quarters, the presidency said
on Wednesday.

Nigeria has been rationing dollars in recent months to conserve reserves
after it moved to unify its multiple exchange rates this month to qualify
for a $1.5 billion World Bank loan, which is yet to be approved.

But dollar shortages have worsened afterwards with reserves now down 11.5%
from a year ago. The bank has now turned its spotlight on exporters.

The central bank has proposed talks with chief executives of multinational
companies in Nigeria to discuss the revamp of exports, particularly for
agricultural produce, and diversifying the country away from its reliance on
crude oil.

But plans face hurdles as weak growth and rising inflation hobble businesses
worried about consumer demand and the impact of the coronavirus on logistics
and global supply chains.

Cocoa is Nigeria’s biggest non-oil export but the sector has struggled to
compete with top producers Ivory Coast and Ghana due to low yields, poor
farm inputs and financing, which limits output.

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EMERGING MARKETS

Shares at seven-month high ahead of Powell speech; rouble recovers

(Reuters) - An index of emerging market stocks scaled seven-months highs on
Thursday before a speech from U.S. Federal Reserve Chair Jerome Powell,
while Russia’s rouble rebounded from a sharp fall, with focus on mounting
geopolitical tensions.

Investors are bracing for dovish remarks from Powell at the Kansas City
Fed’s annual economic symposium. His speech is due to begin at 9:10 a.m. EDT
(1310 GMT).

Powell is expected to provide an update on the Fed’s plans to refit its
monetary policy approach as persistently low inflation and interest rates
numb the effects of stimulus measures aimed at cushioning damage wrought by
the coronavirus pandemic.

MSCI’s index of emerging market shares rose 0.2%, extending gains to a fifth
straight session. But some caution set in after United States sanctioned
China over military action in the disputed South China Sea.

The dollar, meanwhile, lost traction against most rivals.

Russia’s rouble rose about 0.8% against the greenback and the euro. On the
Moscow exchange, the rouble had hit a 4-1/2 year low against the single
currency on Wednesday.

European Union ministers urged Russia to join a call on Thursday to discuss
how to proceed with an investigation into the suspected poisoning of Kremlin
critic Alexei Navalny earlier this month.

The Kremlin has so far declined to open an investigation, but on Wednesday
said it hoped Navalny’s illness would not damage Russia’s ties with the
West.

In Belarus, international technology companies, a source of foreign income
worth 5% of exports, threatened to quit the country as protests against the
disputed election of leader Alexander Lukashenko continued with vigour and
caused internet outages over several days.

The Belarusian rouble firmed slightly against the euro after plumbing to new
for five consecutive sessions.

Turkey’s lira jumped 0.4%. A buy recommendation on Wednesday from JP Morgan
had lifted the currency from all-time lows, but tensions with Greece
surrounding energy resources in the Mediterranean persisted.

South Africa’s rand rose 0.2% ahead of July producer price data. The
currency had weakened on Wednesday after a rise in consumer price inflation
was seen as not enough to dampen expectations of further monetary policy
easing.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold surges over 2% on waning dollar, Fed policy shift

(Reuters) - Gold rebounded over 2% on Friday, a day after a steep sell-off,
as the U.S. dollar weakened and the U.S. Federal Reserve signaled a
prolonged low interest rate strategy.

Spot gold rose 2.1% to $1,968.59 per ounce by 12:41 pm EDT (1641 GMT),
taking gains this week to about 1.5%. Prices fell as much as 2.2% on
Thursday after U.S. Treasury yields gained following Fed Chair Jerome
Powell’s speech.

U.S. gold futures rose 2.5% to $1,980.90.

The dollar fell to an more than one-week low, making gold cheaper for
holders of other currencies, and was on track to post its biggest weekly
percentage fall since end-July.

Powell said on Thursday the central bank would adopt an average inflation
target, meaning rates are likely to stay low even if inflation rises a bit
in future.

On the other hand, global central banks and governments have pumped massive
stimulus into the market to prop up their coronavirus damaged economies,
helping gold gain over 28% this year.

Low interest rates tend to support gold, which is also a hedge against
inflation and currency depreciation.

Silver rose 1.8% to $27.53 per ounce, on track for a second consecutive
weekly rise.

Platinum gained 0.1% to $929.49, while palladium rose 2.1% to $2,206.54.

Copper set for third straight weekly rise after Fed policy shift

(Reuters) - Copper prices in London were on track for their third straight
week of gains on Friday, after traders interpreted a policy shift by the
U.S. Federal Reserve as implying a weaker dollar and cheaper
dollar-denominated prices.

Three-month copper on the London Metal Exchange advanced 0.8% to $6,675.50 a
tonne by 0719 GMT, while the most-traded October copper contract on the
Shanghai Futures Exchange rose 0.9% to 51,990 yuan ($7,570.11) a tonne.

The Fed introduced a new monetary policy on Thursday likely to keep interest
rates low and pressure the dollar, which has been hovering near a two-year
low.

China’s foreign ministry said on Thursday it was unjust for the United
States to impose sanctions on Chinese companies involved in construction in
the South China Sea.

Stablum also said few LME investors were willing to put in new positions on
the last day of the month ahead of a long weekend.

The LME is closed for a public holiday on Aug. 31.

FUNDAMENTALS

* Freeport-McMoran Inc’s Indonesian unit would ease a lockdown at its
Grasberg mine after a protest by workers over movements disrupted
operations.

* Activities at Indonesia’s Weda Bay smelter complex, one of the country’s
main nickel processing hubs, resumed on Thursday after floods halted
operations earlier this week.

* LME lead rose 1.1% to $2,004 a tonne, while zinc rose 1.7% to $2,528 a
tonne. In Shanghai, nickel rose 0.6% to 120,350 yuan a tonne and zinc
advanced 1.1% to 20,060 yuan a tonne.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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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