Bulls n Bears Daily Market Commentary : 04 December 2020

Fri Dec 4 15:56:31 CAT 2020

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Bulls n Bears Daily Market Commentary : 04 December 2020

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

ZSE commentary

The market closed the day with an appreciation of 3.47% to close today at a
total market capitalization of ZW$202.4 billion. The All Share Index was up
1.01% to 1 686.51, while the Top 10 Index was marginally up 0.07% to 1
061.3. Top gains were recorded in BAT up 20%, Hippo  was up 19.98%, Masimba
adding 18.59%, Lafarge  up 14.29% and Fidelity adding 8.46% to close at
156.18c. Significant losses were noted in ZBFH down 12.48% and African Sun
down 11.67%. While moderate losses for the day were in Padenga 3.07%, Rio
Zim 2.93% and First Mutual Life 2.34%.

Total value traded fell by 2.82% to ZW$59.4 million dominated by trades in
Cassava, Econet, Padenga, Simbisa and Innscor. Among the counters that
participated in trading, 13 counters declined against 17 that appreciated.
Total trades were 259 with 5 counters remaining unchanged and 17 with zero
volume. -wealthaccess.co.zw

Global Currencies & Equity Markets

AFRICA-FX-Kenyan, Ugandan currencies seen stable, Zambian weaker

Kenya's and Uganda's currencies are expected to remain stable in the coming
week. Zambia's is expected to be under pressure versus the U.S. dollar.

(Reuters) - Kenya's and Uganda's currencies are expected to remain stable in
the coming week. Zambia's is expected to be under pressure versus the U.S.
dollar.

KENYA

The Kenyan shilling KES= is expected to be stable in the week ahead, with
the central bank likely to step in and pump in dollars should the currency
come under too much pressure from importers.

The shilling was trading at 110.70/90 on Thursday, down from 109.95/110.15
at the close of trading last Thursday.

It was expected to trade in a range of 109.00-111.00 against the dollar in
the week ahead, traders said, with the central bank expected to offer
support by pumping in dollars should demand pressure spark extreme
volatility.

ZAMBIA

The kwacha ZMW= is likely to continue trading down against the dollar next
week due to limited hard-currency inflows.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 21.0100 per dollar from a close of 20.9700 a week ago.

Zambia missed payment of a $42.5 million coupon on one of its
dollar-denominated sovereign bonds last month, becoming Africa's first
pandemic-era sovereign default.

UGANDA

The Uganda shilling UGX= is seen trading in a stable manner with dollar
demand ebbing as most merchandise importers have already met their hard
currency needs to pay for shipments of goods for holiday shoppers.

At 1121 GMT commercial banks quoted the shilling at 3,680/3,690, compared
with last Thursday's close of 3,695/3,705.

TANZANIA

Tanzania's shilling TZS= is likely to hold steady in the next week as
inflows from tourism are expected to match demand for the U.S. dollar from
energy and manufacturing importers.

Commercial banks quoted the shilling at 2,314/2,324 on Thursday, unchanged
from the levels recorded a week earlier.

NIGERIA

Nigerian naira is seen firmer on the black market in the coming week,
traders said, supported by a series of central bank actions to try to prop
up the currency which eased this week to a 3-1/2 year low of 500 to the
dollar on unofficial market.

The naira traded at 470 per dollar on Thursday, recovering from the low it
touched this week, after the central bank eased rules on diaspora
remittances.

On Monday, the central bank weakened the naira to 390 per dollar for
exchange bureaux mostly patronised by individuals, in an attempt to ease
pressure on the currency, which has hit new lows on the black market as
dollar scarcity squeezes the economy.

South Africa

Rand inches firmer overnight, unfazed by stricter lockdown measures

JOHANNESBURG - The South African currency traded sideways on Thursday,
holding onto the notable gains made on Tuesday according to NKC Research.

With little in the way of data releases the domestic news feed centred
around President Cyril Ramaphosa's televised speech Thursday evening.

With Covid-19 cases flaring up in the Western and Eastern Cape, the
president announced stricter containment measures for the Nelson Mandela Bay
Metro.

The national state of disaster has been extended until 15 January 2021. The
tighter lockdown restrictions are not as severe as previous measures, and do
not cover all geographies within the country.

At the close of local trade, the rand quoted slightly stronger at R15.19/$,
after trading in range of R15.18/$ - R15.37/$.

The local unit inched firmer overnight, seemingly unfazed by stricter
lockdown measures. Expected range today R15.00/$ - R15.45/$.

South African bourse

The JSE All Share (+1.1 percent) ended higher yesterday, buoyed by a 2.1
percent rise in large resource stocks. In the overall emerging market
sphere, the MSCI Emerging Market Index (+0.9 percent) traded firmer.

As earnings recover, some equity markets have far greater room to catch-up
than others. The broader MSCI All Country World index's trailing earnings
per share is currently around 15 percent below its 10-year real trend, but
this masks a wide variation at the individual market level. Earnings are
actually back to slightly above their trend in China and are only 10 percent
lower than their trend in the US.

But in parts of Europe and in Latin America, earnings are very depressed,
over 30 percent below their 10-year trend. Of course, these pre-crisis
trends are unlikely to be regained given the likelihood of long-term
economic scarring from Covid-19.

Brent crude oil

OPEC and Russia have agreed to increase oil production from January 2021 by
only 500,000 bpd, versus the 2 million bpd agreed initially. OPEC+ said it
will meet on a monthly basis to review conditions. Crude prices traded
stronger during Asian trade this morning.- BUSINESS REPORT ONLINE

 <mailto:info at bulls.co.zw> 

Global Markets

Pound Swings With Traders on Tenterhooks Over a Brexit Deal

The pound whipsawed on speculation that Britain and the European Union are
on the verge of sealing a trade deal.

Sterling rose as much as 0.3% to $1.3494 after Reuters reported an accord is
expected by the end of the weekend barring a last-minute breakdown, before
paring gains. Gilts fell as traders backed away from haven assets, driving
up 10-year government bond yields as much as two basis points.

Pound rise on report U.K.-EU trade deal imminent fades swiftly

Traders' sensitivity to Brexit-related headlines is growing as the Dec. 31
deadline -- which marks the end of the U.K.'s transition from the EU --
nears. It's boosted the cost of insuring a sudden swing in the pound to the
highest level in a month, and the euro-pound's one-week volatility is the
highest since March.

That's why traders are loading up on volatility and buying the pound on
dips. It's the "FX trading version of 'hope for the best and plan for the
worst' essentially," he said.

The pound climbed 0.1% to $1.3462 as of 11:43 a.m. in London, and the yield
on 10-year gilts rose one basis points to 0.33%.

Trade Deal

The pound could see a "knee-jerk" advance of more than 1% to $1.3650 on an
agreement, before climbing to $1.40 next year, according to Nomura
International Plc currency strategist Jordan Rochester. The currency will
surge and "then follow through into Christmas as U.K. assets outperform," he
said, adding that the pound reaching heights last seen in 2018 "is very
doable."

For Derek Halpenny, the head of global market research at MUFG, the
potential for a rally depends on the scope of the deal. He's looking for
signs the EU is willing to drop customs checks obligations from the start of
next year.

While a relief rally is expected on a deal, options signal it'll be
short-lived. The relative cost of hedging against a weaker sterling over the
coming week is the highest in seven months, according to a gauge of
positioning and sentiment.

Forex Market Jumps as Pound and Euro Strengthen Further

There were big movements higher for both the Euro and Pound pairs against
the Dollar coming to the end of the trading week. The EUR/USD finds itself
at its highest point since 2018. This almost three-year high coming on
continued market positivity and renewed expectation of a US stimulus
package. The Pound was moving higher as a long-awaited Brexit trade deal
appeared to edge closer. Meanwhile, many in the forex market are awaiting
the release of US nonfarm payroll numbers that could influence the day's
sentiment.

Brexit Deal Within Sight as Negotiations Intensify

Sterling remains buoyed today near 1.35 against the Dollar and marking
significant recent highs. This is despite the fact that the opinion emerging
from the latest UK-EU talks is not one of positivity. There seems to be a
general consensus that talks did not progress well yet the Pound continues
to rally.

As the day for the UK to leave the EU draws ever closer though, hopes have
been raised that a trade deal can be quickly agreed over this coming
weekend. This feeling has been boosted by the fact UK news report Prime
Minister Boris Johnson is due to meet French leader Emmanuel Macron over the
weekend. Several observers point to the Monday deadline set by the UK and
see this last-ditch meeting as an opportunity for both sides to get a deal
over the line.

Euro Continues Strong Run to Record Highs

The EUR/USD has continued rolling higher supported by a seemingly
everlasting positive risk sentiment in the US as vaccine hopes continue to
drive markets even though COVID-19 cases are also spiking day after day. The
potential vaccine rollout alongside new hopes of a US Stimulus package has
kept those forex trading the pair in positive mindsets.

Approaching 1.22 the pair finds itself at a 32-month high. Factors such as
Dollar weakness and both vaccine and stimulus hopes have certainly helped
the pair, though positive news domestically has contributed too. German
factory orders for October came in ahead of expectations with a 2.9%
increase month on month. Jobs figures from the US will be the latest news of
focus for forex brokers and traders alike in Europe to see if the highs can
continue.

US Unemployment Rate Drop Predicted

US nonfarm payroll numbers are due later today. Analysts forecast the
figures will show that the US economy added 440,000 jobs in the previous
month compared with more than 600,000 in October. Despite the slowdown in
new jobs the unemployment rate is expected to drop to 6.7%.

Markets have taken this news positively and futures trading on the major US
indexes is up across the board. A beat on these expectations could see
another very strong end to a week that has already been record-setting in
many markets. The Labor Department already reported a Pandemic period low on
weekly unemployment numbers yesterday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Silver Markets Struggling With 50 Day EMA

The silver markets were a bit choppy on Thursday as they were right and the
50 day EMA. The market is likely to see a lot of noise during the jobs
number.

Silver markets have gone back and forth during the trading session on
Thursday, as we continue to see the 50 day EMA start to cause a bit of
resistance. 

That being said, as we head into the Non-Farm Payroll number on Friday, that
could open up this market for a bit of volatility, as the US dollar will of
course move quite drastically due to the fact that the employment figures
are such a major component of economic strength. 

That being said, the Federal Reserve is going to be very loose for a very
long amount of time. That being said, I think it is only a matter of time
before we go higher due to the fact that the liquidity measures will
continue to support the idea of further upward pressure on precious metals
in general.

Looking at the market, it is likely that we are going to go looking towards
the $26 level, as the market is most certainly stuck in a major
consolidation area. 

Nonetheless, we are in a strong uptrend, and I think that continues to be
the way you need to look at this market. On pullbacks it should be thought
of as a buying opportunity, as silver certainly has a lot of buying pressure
underneath and ultimately this market should go back towards the $30 level.

This is not to say that you should jump into the market with both feet, just
that longer-term we should continue to see a nice move. At this point, the
200 day EMA seems to be offering significant support.

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

ART

Seed co Int.

Dairibord

Starafrica

Medtech

Turnall

Seed co

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
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for guideline purposes only and sourced from third parties.

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