Bulls n Bears Daily Market Commentary : 02 December 2020

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Bulls n Bears Daily Market Commentary : 02 December 2020

 

 	

 

 

 	

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

 

 	

ZSE commentary

 

Heavies spur ZSE recovery…

The market rebounded in midweek session buoyed by gains in most selected heavy capitalised stocks. The mainstream All Share Index rose 1.92% to 1,612.61pts while, the Industrial Index added 2.27% to close at 5,351.75pts. The blue chips index improved 2.86% to end at 1,008.51pts. Headlining the risers’ pack was construction group Masimba which surged 16.43% to $6.9859, followed by fast foods group Simbisa that extended 9.73% to settle at $7.4663. Zimplow advanced 8.44% to $4.8800 while, telecoms giant Econet jumped 7.93% to $5.4470. Hotelier African Sun completed the top five winners of the day on a 7.46% lift to $1.8000. Other notable gains were in CBZ (+6.35%), Innscor (+5.93%), Delta (+1.36%) and Padenga (+0.35%).

 

The Mining Index shed 10.03% to close at 2,990.09pts, weighed down by Bindura that dipped 12.26% to close at $3.0184. Banking group NMB trimmed 10.92% to $2.2270 while, retailer OKZIM let go 0.98% to $5.4453. Proplastics went down 0.85% to $5.8000 while, Art slipped 0.67% to $2.2547 capping the top five fallers of the day. Thirtyseven counters were active in the session distributed into twenty-two gainers, nine fallers and six that traded unchanged to register a positive market breadth of thirteen. Volume of shares traded dropped 79.60% to close at 12.24m, yielding a value outturn of $146.83m which was a 22.98% fall. Driving the volume aggregates were ZB, Zimre and Econet which claimed a combined 79.72% of the total. ZB contributed a huge chunk of 75.14% to the value outturn as other counters scrambled for the remaining 24.86%. –efesecurities

 

Global Currencies & Equity Markets

 

South Africa

 

South African rand dips ahead of wage dispute hearing

JOHANNESBURG (Reuters) - South Africa's rand dipped in early trade on Wednesday, ahead of a court hearing on a public sector wage dispute later in the day that could have important implications for government finances.

At 0615 GMT, the rand traded at 15.2700 against the U.S. dollar, around 0.15% weaker than its previous close.

 

The rand had gained on Tuesday, as hopes of a coronavirus vaccine and signs of economic recovery around the world kept investors interested in riskier assets.

 

Trade unions took the government to court after it failed to pay wage increases in April that were agreed under a three-year deal struck in 2018 but which officials say are no longer affordable.

 

Curbing its salary bill is a key part of the government's plan to arrest rising debt levels, and if the court sides with the unions and makes the government pay, it could jeopardise that plan.

 

The hearing will start around 0800 GMT.

 

Government bonds also dipped in early trade, as the yield on the 2030 bond rose 1 basis point to 9.02%.

 

 

 

Nigeria

 

Naira gains big at black market as CBN’s new policy improves dollar 

Forex turnover rose significantly by 379.6%, as the Naira’s exchange rate at the NAFEX window depreciated against the dollar to close at N394/$1 during intra-day trading on Tuesday, December 1.

 

Also, the Naira appreciated against the dollar, closing at N490/$1 at the parallel market on Tuesday, December 1, 2020, as the CBN’s new policy on diaspora remittances seems to be having a significant impact on the black market

 

In the amended procedures for receipt of diaspora remittances, the recipients are allowed to collect dollars and can sell at the black market in an apparent attempt to improve liquidity in the forex market and reduce the disparity between the black market and official market.

 

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N490/$1 on Tuesday.

 

This represents a N10 gain when compared to the N500/$1 that it exchanged for on Monday, November 30.

 

·         The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.

·         This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.

·         However, the gains appear to have been completely erased with the recent crash of the exchange rate.

·         The CBN has sold over $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.

·         This was expected to inject more liquidity into the retail end of the foreign exchange market and discourage hoarding and speculation.

·         However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.

·         Despite the CBN intervention, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

 

 

NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N394/$1.

 

·         This represents a N3.75 when compared to the N390.25 that it exchanged for on Monday, November 30.

·         The opening indicative rate was N391.70 to a dollar on Tuesday. This represents a N1.35 drop when compared to the N390.35 that was recorded on Monday.

·         The N396 to a dollar was the highest rate during intra-day trading before, it still closed at N394 to a dollar. It also sold for as low as N380/$1 during intra-day trading.

·         Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 379.6% on Tuesday, December 1, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $35.15 million on Monday, November 30, 2020, to $168.57 million on Tuesday, December 1, 2020.

·         The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.

·         The sharp increase in dollar supply after the previous trading day’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.

·         The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.

·         Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.

·         The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

·         Some members of MPC of the CBN have expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is an obligation of manufacturers to their foreign suppliers that continues to increase in the face of dollar shortages.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

US dollar value dropped to lowest level in 2 ½ years

(Ecofin Agency) - Yesterday, the index that measures the value of the US dollar compared to other currencies dropped to 9.75 pts, according to market data.

 

This is the lowest level since early August 2018. This decline trend that started out by mid-May 2020 as a short-lived correction seems to have become permanent. When the coronavirus crisis first broke out, the financial world was faced with a huge challenge and, in this context, all categories of investors needed the US dollar. The situation quickly led to an increase in the value of the currency but later on as market actors became aware of the extent of the problem, the U.S. currency was gradually abandoned in favor of assets such as gold, and even Bitcoin.

 

Investors are attracted by solid performances from market indexes such as S&P 500, which includes the 500 biggest companies listed on the US financial markets. However, this progression hides significant disparities, and above all a risk of a speculative bubble. The second haven securities for investors, which are Treasury bills and bonds, are now yielding low returns.

 

Despite Joe Biden's victory and the return to what can be called "more predictability in the US administration," economic indicators in the US are not reassuring. The number of Covid-19 cases has already reached 4 million in the country. This is less than 1% of the population, but considering the number of deaths recorded, this creates deep panic.

 

Sales during the Black Friday fell by 52%. There was a slowdown in activity in the manufacturing areas of Chicago and Dallas, and analysts expect the Central Bank to continue to be relatively cautious.

 

For Africa, a weak dollar is ultimately a good thing. The continent's economy has been affected, despite a low level of infections. The covid-19 has impacted the region's exports, which declined in volume, thus reducing foreign exchange earnings. If, in addition to the drop in income, a weaker dollar must be managed, this makes for a double drop that will have an impact on the money supply of African countries.

 

The good news is that a weaker dollar has a positive impact on external debt service. The constraint to mobilize resources to pay debt is lower, and the risk of inflation is also reduced.

 

Meanwhile, it is not possible to say what the effects of a prolonged decline in the U.S. currency might be. On this point, the specific economic characteristics of each country will be decisive.

 

Idriss Linge

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

 

Gold, silver hanging on to Tuesday's solid gains

(Kitco News) - Gold and silver futures prices are steady to narrowly mixed in early U.S. trading Wednesday, but are holding on to the strong gains posted Tuesday. Short covering in the futures markets and perceived bargain buying in the cash markets were featured Tuesday, possibly prompting by a slumping U.S. dollar index that has this week hit a 2.5-year low. February gold futures were last up $2.60 at $1,821.70 and March Comex silver was last down $0.10 at $23.98 an ounce.

 

Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins, on some mild profit taking after two major indexes hit record highs on Tuesday. Upbeat traders and investors continue to look at a bright light at the end of a dark Covid-19 tunnel—even though there will be a few more rough months ahead. Very successful vaccines for the pandemic virus will be rolling out to some of the general public as soon as this month.

 

Also buoying marketplace sentiment are renewed talks among U.S. congressional leaders on a financial stimulus package for Americans. U.S. Treasury Secretary Mnuchin and Federal Reserve Chairman Powell will testify today before a U.S. House committee and will likely be asked about the stimulus package and its prospects.

 

The U.S. economic data point of the day at mid-week is the November ADP national employment report, expected to show a rise of 475,000 jobs. This report is the precursor to Friday morning’s U.S. employment situation report from the Labor Department. The key non-farm payrolls number in that report is expected to come in at up 440,000 workers.

 

The U.S. dollar index is firmer early today after hitting a 2.5-year low Tuesday. The other important outside market sees January Nymex crude oil futures prices near steady and trading around $44.50 a barrel. The OPEC oil cartel is meeting this week and will be discussing keeping its present production cuts. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.92%.

 

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the ISM New York report on business, the weekly DOE liquid energy stocks report, and the Federal Reserve’s beige book.

 

Technically, the February gold futures bears still have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,860.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,767.20. First resistance is seen at the overnight high of $1,835.00 and then at $1,850.00. First support is seen at the overnight low of $1,810.50 and then at $1,800.00. Wyckoff's Market Rating: 4.0

 

March silver futures bulls and bears are back on a level overall near-term technical playing field, but bulls have some momentum on their side. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the September low of $21.93. First resistance is seen at the overnight high of $24.455 and then at $25.00. Next support is seen at the overnight low of $23.68 and then at $23.00. Wyckoff's Market Rating: 5.0.

 


 

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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