Bulls n Bears Daily Market Commentary : 15 December 2020

Tue Dec 15 15:30:12 CAT 2020

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Bulls n Bears Daily Market Commentary : 15 December 2020

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

ZSE commentary

The market closed the day in the positive territory gaining 1.44% to close today at a total market capitalization of ZW$244.2 billion. The main stream All Share Index put on 1.48% to close the day at 2046.7, the Medium Cap Index was 0.04% lower to 4073.78 while the Top 10 Index was up 2.25% to 1327.24. Headlining the riser’s pack was First Mutual Life which was up 20.00%, followed by National Tyre Service which was up 19.87%, the biggest commercial bank CBZ added 12.66%, Masimba up 10.72% and AFDS added 6.96% to close at 2299.70c.

Significant losses were noted in tobacco industry giant BAT which shaded 8.07% and AXIA  went down by 6.94%. Elsewhere, losses for the day were also recorded in Cassava (5.89%), Padenga (3.89%) and Simbisa (2.56%). Total turnover was at ZW$60,959,047.10 million in 280 trades. CBZ led the turnover contribution at ZW$33,057,250. Among the counters that participated in trading, 17 counters declined against 16 that appreciated. Total trades were 280 with 7 counters remaining unchanged and 12 with zero volume.–wealthaccess

Global Currencies & Equity Markets

South Africa

Rand and stocks stronger as dollar weakens

JOHANNESBURG - THE RAND and stocks firmed slightly yesterday, as the dollar weakened.

At 5pm, the rand bid at R15.03 to the dollar, 7 cents stronger than at the same time on Friday.

On the JSE, the all share index gained 0.16 percent to 59508.8 percent, while the Top40 index was up 0.11 percent to 54520.69 points.

Meanwhile, Russian stocks hit new record highs yesterday, supported by rising oil prices, while the rouble held near its mid-August peak as the dollar weakened broadly ahead of a US Federal Reserve meeting this week.

The rouble gained 0.4 percent to trade at 72.99 to the dollar, while Moscow stocks jumped almost 1 percent as oil prices climbed, pushing Brent back above $50 (about R755) a barrel, buoyed by hopes that a rollout of coronavirus vaccines will lift global fuel demand.

The first shipments of vaccines were speeding across the US as part of a mission to inoculate more than 100 million people by the end of March.

Riskier emerging market currencies got a boost as the dollar traded near a 2 1/2-year low against major peers ahead of a Fed meeting ending tomorrow where policymakers are expected to increase purchases of longer-dated Treasuries to contain a rise in yields.

Still, Turkey’s lira weakened 0.7 percent as the threat of US and EU sanctions coupled with worries around record coronavirus-related deaths offset data that showed a 10.2 percent jump in the country’s industrial production in October.

The Hungarian forint held near a one-month high against the euro.-REUTERS

Nigeria

Naira stabilizes across forex markets despite drop in dollar supply

The Naira’s exchange rate at the NAFEX window remained stable against the dollar to close at N394/$1.

Published 7 hours ago on December 15, 2020By Chike Olisah Naira, dollar, CBN, Exchange rate falls across forex markets despite improved dollar supply

Forex turnover dropped by 72.4%, as the Naira’s exchange rate at the NAFEX window remained stable against the dollar to close at N394/$1 during intra-day trading on Monday, December 14.

Also, the Naira remained stable against the dollar, closing at N475/$1 at the parallel market on Monday, December 14, 2020, as the CBN’s intervention continues on a record dollar supply.

The World Bank had said that steps taken by Nigeria to unify its multiple exchange rates have not been enough according to Bloomberg

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N475/$1 on Monday.

This was the same rate that it exchanged for on Friday, December 11.

·         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 remained stable against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N394/$1.

·         This was the same rate that it exchanged for on Friday, December 10

·         The opening indicative rate was N392.55 to a dollar on Monday. This represents an 11 kobo gain when compared to the N392.66 that was recorded on Friday.

·         The N408.34 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 N385/$1 during intra-day trading.

·         Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 72.4% on Monday, December 14, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover declined from $392.99 million on Friday, December 11, 2020, to $108.40 million on Monday, December 14, 2020.

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

·         The drop in dollar supply after previous trading day’s record increases 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 had 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

Euro holds firm as U.S. stimulus hopes weigh on dollar

LONDON (Reuters) - The euro hovered near a 2-1/2 year peak on Tuesday as investors looked past new restrictions to fight COVID-19 and focused on the likelihood of more U.S. stimulus that would weigh on the dollar.

The single currency has rocketed 4% since early November to its highest level since April 2018, in part because of broad-based selling of the U.S. dollar and as investors bet a vast European recovery fund package will lift the regions’ economies.

Commerzbank analyst Esther Reichelt said that new restrictions in Germany to address the spread of COVID-19, rather than weigh on the euro were actually boosting its allure versus the dollar.

The euro was last at $1.2155, 0.1% higher on the day.

The dollar index, which measures the greenback against a basket of currencies, dipped slightly to 90.626.

On Monday the dollar sunk as low as 90.419, a level unseen since April 2018.

The dollar has been weakened by hopes that U.S. lawmakers can agree $1.4 trillion in spending.

Trading across G10 currencies was relatively quiet ahead of the Federal Reserve’s policy meeting.

In its final policy meeting of the year, the U.S. central bank is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come; many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program.

Elsewhere, sterling’s Monday surge -- triggered by news Britain and the European Union would keep on talking to try and seal a Brexit trade deal -- fizzled and the pound hovered below $1.34. [GBP/]

The Aussie slipped 0.1% to $0.7526 after touching the highest since June 2018 at $0.7578 on Monday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Oil prices drop slightly over lingering demand fears

Oil prices on Tuesday recorded slight falls, as the recent vaccine euphoria was overshadowed by more restrictions and lockdowns in Europe.

International benchmark Brent crude was trading at $50 per barrel at 0658 GMT for a 0.58% decline after closing Monday at $50.29 a barrel.

American benchmark West Texas Intermediate (WTI) was at $46.75 per barrel at the same time for a 0.51% drop after it ended the previous session at $46.99 a barrel.

European countries, including the Netherlands, Germany, France, Greece, and the UK tightened restrictions while some announced long-term lockdowns to prevent the spread of the coronavirus.

Investors fear that renewed lockdowns and tighter restrictions will continue to keep demand weak although the UK, Canada and the US have already started mass vaccination campaigns.

Adding to the price declines, OPEC in its monthly oil report on Monday trimmed its oil demand for 2021 by 350,000 barrels per day, citing the persistent negative impact of the pandemic.

Political Risk and Oil Analyst Jose Chalhoub told Anadolu Agency that Brent oil started the week at over $50 a barrel, reflecting a slower but upward oil price push despite the many geopolitical risks at present, including the recent attack on an oil tanker, docked at the Saudi port city of Jeddah.

China data and vaccine optimism lifts copper price

(Reuters) - Copper prices on Thursday were supported by factory data from China showing economic growth in the metal’s top consumer and helped by the rollout in major economies of the COVID-19 vaccine.

Benchmark three-month copper on the London Metal Exchange (LME) added 0.3% to $7,777 per tonne by 1210 GMT.

The metal, seen as a bellwether of global economic health, has gained over 80% since March lows, mainly on the back of a rebound in the Chinese economy.

Data showed on Tuesday that China’s factory output grew at the fastest pace in 20 months in November driven by revived consumer spending and a gradual easing of COVID-19 restrictions in major trading partners.

China accounts for nearly half of global copper consumption estimated at 24 million tonnes.

LOCKDOWN RISK: Markets were supported by a vaccine roll-out in the United States and Britain but the risk of a resurgence in coronavirus cases has prompted some European countries to impose strict lockdowns.

POSITIONING: Bullish bets on copper by funds showed no signs of abating, with positioning on LME and COMEX at high levels, according to estimates by Marex Spectron and data from the U.S. Commodity Futures Trading Commission.

ALUMINIUM: China’s primary aluminium production hit a daily record in November, as more smelting capacity came onstream to take advantage of strong demand and high prices for the metal.

OTHER METALS: LME aluminium slipped 0.3% to $2,042 a tonne, zinc rose 0.4% to $2,848, lead dropped 0.3% to $2,034, tin dropped 0.4% to $19,670, and nickel gained 0.6% to $17,700.

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 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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