Bulls n Bears Daily Market Commentary : 01 December 2020

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Bulls n Bears Daily Market Commentary : 01 December 2020

 

 	

 

 

 	

 <http://www.zb.co.zw/> 

 

 	

ZSE commentary

 

Market falters in month opener.

ZSE commenced the month of December in losses as CBZ weighed down the
market. The All Share Index let go 0.84% to 1,582.21pts while, the
Industrial Index shed 0.86% to 5,232.78pts. The ZSE Top Ten Index slipped
2.08% to end at 980.42pts while, the resources index added 0.04% to close at
3,233.54pts. Banking group CBZ topped the fallers' list after succumbing
10.42% to $33.0991 while, brick manufacturers Willdale trimmed 10.09% to
$0.2450. Ariston fell 4.87% to $1.2842 while, Zimre Holdings lost 2.50% to
settle at $2.8250. Fast foods group Simbisa completed the top five losers of
the day on a 1.93% slide to $6.8045.

 

Leading the winners of the day was banking group ZB which garnered 19.59% to
end at $23.9179, trailed by NMB which jumped 19.02% to $2.5000. Zimpapers
put on 14.71% to $0.7800 while, First Capital advanced 10.89% to $0.6914.
Cement manufacturer Lafarge capped the day's risers on a 6.56% lift to
$6.5000. A market breadth of four was registered in today's session as
fifteen counters gained against eleven losers. Activity aggregates weakened
in the session as seen in volumes traded that dipped 46.08% to 59.98m while,
turnover dropped 92.24% to $190.65m. The top volume and value driver of the
day was Zimre Holdings which contributed 88.79% to the former and 78.92% of
the latter. Elsewhere, logistics group Unifreight declared a dividend of
$0.0704 for the year ended 31 December 2019. Telecoms giant Econet went down
0.15% to $5.0469 post the release of its HY21 results in which a loss after
tax of $84,98m was reported. -efesecurities

 

Global Currencies & Equity Markets

 



South Africa

 

Rand trades on the back foot

JOHANNESBURG - The local currency retreated ahead of trade data despite
weakness in the trade-weighted greenback according to NKC Research.

 

News that another Covid vaccine has proven successful in trials has raised
the chances of a more rapid lifting of activity restrictions in some
advanced economies, and potentially better economic performance from
mid-2021.

 

However, most emerging markets are unlikely to get as quick access to the
three most promising vaccines, resulting in slower normalisation. What's
more, the speed of the rollout of vaccination programs is uncertain.

 

At the close of local trade, the rand quoted 0.92 percent weaker at
R15.41/$, after trading in range of R15.23/$ - R15.42/$.

 

Households reluctant to take on credit in Q4

 

Seasonally adjusted claims on the domestic private sector rose by 1.1
percent m-o-m in October.

 

This follows two consecutive m-o-m declines in private sector credit claims.
In fact, this is the strongest m-o-m growth rate in credit since April, with
claims having fallen in four out of the five months leading to October.

 

Growth in claims on households dropped further from 3.2 percent y-o-y in
September to 2.9 percent y-o-y in October.

 

Corporations, in turn, saw a slight increase in credit growth, with the
y-o-y expansion increasing from 3.1 percent y-o-y to 3.5 percent y-o-y.

 

This brought the annual growth rate for total private sector credit to 3.2
percent, slightly higher than the 3.1 percent y-o-y figure recorded in
September - the latter representing a multi-year low.

 

The primary driver behind the 1.1 percent m-o-m increase in claims on the
private sector in October was the 'other loans and advances' category, the
latter rising by 2.7 percent m-o-m, accompanied by a 0.3 percent m-o-m
increase in mortgage advances.

 

BUSINESS REPORT ONLINE

 

 

 

Nigeria

 

Nigeria's defense of a spiraling naira and its multiple exchange rates isn't
working

At any point in the last few years, Nigeria's naira has always had multiple
exchange rates.

 

As of Friday (Nov. 27), the parallel market rate was 24% higher than the
investors window rate provided by the country's central bank and that was,
in turn, 2% higher than the Central Bank of Nigeria's official rate.

 

The divergent rates have long been a striking feature of Nigeria's economy
but more so in the last half decade as the country's financial authorities
have attempted to micro-manage the supply of foreign exchange and "defend"
the naira.

 

 

The recent push stems from monetary policy trends in 2016 when, amid a
recession, Nigeria's government stubbornly refused to devalue the naira
despite a widening gap between official and black market rates. And, when it
eventually did, it turned out to be a managed float as it simply moved the
currency's value from one peg to another.

 

But with the proverbial genie out of the bottle, the past five years have
been a never-ending experiment on how to manage a currency crisis of varying
proportions. Things reached a head last week when Godwin Emefiele, Nigeria's
central bank governor claimed the parallel market rate "cannot be the basis"
to determine the naira's real value. Emefiele's argument included describing
parallel markets as "illegitimate" and "shallow."

 

Yet, with the parallel market rates not fixed by the central bank unlike
others, black market operators often deliver a more accurate verdict on the
levels of the supply, demand, and prices of the dollar.  While it's
difficult to capture the exact size of the parallel market, what's clear is
that "it plays a significant role that interprets the true value of the
greenback to the common person in the economy," says Oghenefejiro Eduviere,
Lagos-based foreign exchange trading associate at African currency broker,
AZA.

 

 

The naira, which started the year at around 360 naira to the dollar on
parallel markets, is now on the verge of crossing the psychologically
important "red line"  of 500 naira.

 

 

To be clear, a high black market exchange rate is terrible for
import-dependent businesses that cannot access foreign exchange from
official government channels given existing restrictions. As such, a
recourse to black market operators is done only out of necessity on the back
of the government's ongoing currency policies.

 

It's a curious situation that continues to stump analysts who advocate for
more flexibility on the part of the government to mitigate the ongoing
effects of its currency policies. But, as many have found, in government
circles, conversations about the naira's exchange rate appear to be more
focused on political optics than economic expediency.

 

Given its obvious utility amid the central bank's policies, Eduviere says
Emefiele's comments disparaging the parallel market may have been in a bid
to discourage speculative buying as well as "restore confidence in the
market and reassure foreign investors that their assets are safe."

 

Yet those comments are unlikely to reduce pressure on the naira. "It will
not be surprising to see further depreciation in the parallel market as we
approach the festive season," says Janet Ogunkoya, senior research analyst
at Tellimer Research.

 

As it turns out, increased dollar demand through the Christmas season is a
prospect that could yet bring an even more unpalatable economic reality for
the Nigerian government. A 7% increase in current black market exchange
rates will mean Nigeria's monthly minimum wage amounts to $58 or $1.87 per
day-a figure that's below the current United Nations international poverty
line.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

Euro near three-month high as dollar takes a hit; Bitcoin at new high

LONDON (Reuters) - The euro was close to a three-month high on Tuesday as
the U.S. dollar fell on expectations of more monetary stimulus from the
United States and a strengthening recovery elsewhere pushed up riskier
currencies.

 

One of the currencies to watch was the New Zealand dollar, which was on
course to reach its highest since June 2018.

 

Bitcoin reached a record high of $19,918. Traders were watching for the next
hurdle of $20,000 for the cryptocurrency.

 

Investors are short dollars as optimism about promising vaccine trials
drives buying of riskier currencies and higher- yielding assets outside the
United States.

 

Worries about rising coronavirus cases have not provided the dollar with
much support. Speculation is growing that the Federal Reserve will act to
support the economy through a tough winter before vaccinations become
available.

 

The Fed meets to set policy on Dec. 15 and 16. Before then - on Tuesday and
Wednesday - Fed Chair Jerome Powell will appear before Congress, and his
remarks will be closely watched for any clues as to the Fed's next moves.

 

Powell and Treasury Secretary Steven Mnuchin will testify on the CARES Act,
under which Congress made $2 trillion available to the Treasury as
coronavirus aid, a large portion of which was aimed to support the FOMC's
lending programs.

 

Less than two weeks ago, Mnuchin cut off the programs, requesting that the
Fed return unused funds and declined any extension.

 

Euro/dollar was up 0.3% at $1.1964, close to $1.2004, its highest since
Sept. 1. An index that tracks the dollar against a basket of currencies was
down 0.2% at 91.79.

 

Euro zone inflation remained in negative territory for the fourth straight
month in November, reinforcing European Central Bank concerns that the drop
in prices may persist as deflationary forces intensify amid a deep
recession.

 

The Norwegian crown rose 0.4% against the dollar to trade at 8.8590. The
Swedish crown rose 0.5% at 8.5345. Both gained versus the euro, too, albeit
by a smaller amount.

 

The British pound rose 0.2% against the dollar to $1.3347, after reaching a
three-month high of $1.3409 earlier in the session.

 

The Australian dollar inched up 0.1% at 0.7349. The New Zealand dollar was
close to breaking a more than two-year high above 0.7051, last rising 0.3%
at 0.7029.

 

The Canadian dollar rose 0.3% at 1.2971 against its U.S. counterpart, shy of
a two-year high.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

 

Oil prices down as OPEC postpones meetings

Oil prices fell on Tuesday after an OPEC meeting to decide on production
policy failed to reach a consensus and was delayed amid concerns about
oversupply and weak demand.

 

International benchmark Brent crude oil was trading at $47.49 per barrel at
0648 GMT for a 0.81% drop after closing Monday at $47.88 a barrel.

 

American benchmark West Texas Intermediate was at $44.98 per barrel at the
same time for a 0.79% fall after it ended the previous session at $45.34 a
barrel.

 

Oil prices have gained more than 27% in November with rising hopes for a
quicker economic and oil demand recovery instilled by the successful
coronavirus vaccines. Investors were also waiting for the outcome of the
OPEC+ meetings expecting for at least three-month extension of the current
production cuts of 7.7 million barrels per day (bpd).

 

Convened on Monday, the 180th ordinary meeting by OPEC countries failed to
reach a consensus and the group agreed to meet again one day later.

 

Production cuts are supposed to be lowered by around 2 million bpd to 5.8
million bpd as of Jan. 1, 2021 in line with an agreement in April. But
experts say OPEC+ meeting on Tuesday was postponed due to some dissenting
voices from OPEC ranks. These countries, including the ones with strained
economies, are in favor of a higher production level.

 

Speaking at the opening session of the 180th ordinary meeting by OPEC on
Monday, Algerian Energy Minister Abdelmadjid Attar recalled positive
COVID-19 vaccine developments and said the effects of the vaccines will
likely begin to be significantly apparent in the second half of 2021 as the
global deployment of vaccines will take time.

 

 

Copper hits 7-year high as Goldman calls bull market

Copper rallied on Tuesday to a seven-year peak after strong economic data
from Asia as Goldman Sachs said the world's most important industrial metal
was in the first leg of a bull market that could carry prices to record
highs.

 

Benchmark copper prices on the London Metal Exchange hit $7,719 a tonne in
afternoon trading, the highest level since March 2013, after readings on
manufacturing activity in China and South Korea surpassed market
expectations.

 

Copper is used in almost all construction projects and major appliances. The
metal has risen 25 per cent this year, boosted by supply disruptions, hopes
for a wave of "green" economic stimulus and China's rapid recovery from the
pandemic.

 

China, the world's second-biggest economy, has imported a record amount of
refined copper this year due to voracious commercial demand and government
stockpiling. 

 

A weaker US dollar, which makes commodities cheaper for holders of other
currencies, and optimism that a vaccine will sharply slow the spread of
coronavirus has lent further support. Copper slumped to $4,600 at the height
of the Covid-19 crisis in March. 

 

Its breathtaking rally has put a rocket under the share prices of major
copper producers including Glencore, which has doubled from its March low,
and Freeport-McMoRan, which is up almost 400 per cent from its trough.

 

Mr Snowdon said the 23m-tonne-a-year refined copper market was facing its
tightest conditions in a decade, with demand projected to exceed supply by
327,000 tonnes next year, followed by 153,000 tonnes in 2022. 

 

Against a backdrop of low inventories and net zero carbon pledges from
countries including China, Japan and South Korea, Mr Snowdon believes
significantly higher copper prices will be needed to incentivise new supply
and balance the market.

 

For an increasing number of investors copper is emerging as one of the best
ways to gain exposure to a rollout of more wind, solar, batteries and
electric cars, owing to the metal's use in electric wiring.

 

On average, an electric car contains more than three times as much copper as
an internal combustion car. Copper is also used in wind turbines and to
connect renewable sources of generation to the grid.

 

In a recent report, investment bank Jefferies estimated cumulative copper
demand from wind, solar and EV's over the next 10 years could equal more
than half of global demand in 2020 even in a "bear" case scenario.

 

At the same time, large high-grade copper deposits in mining-friendly
jurisdictions are becoming more difficult to find. According to S&P Global
Markets there has been only one major copper discovery since 2015. New
copper projects also take at least seven to 10 years to develop.

 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 

 	

Zimbabwe

National Unity Day

Zimbabwe

22/12/2020

 

 	

 

Christmas Day

 

25/12/2020

 

 	

 

Boxing Day

 

26/12/2020

 

 	

 

New Year's Day

 

01/01/2021

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

Counters trading under cautionary

 

 

 

 	

 

 

 

 

 	

Dairibord

Starafrica

MedTech

 

 	

Turnall

Seed Co

Seed Co Int.

 

 	

 

 

 

 

 	

 

 

 

 

 	

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
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.

 

 	

 

 

 	

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344 1674

 

 	

 

 

 	
							

 

 

 

 

 

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