Bulls n Bears Daily Market Commentary : 17 December 2020

Thu Dec 17 15:35:01 CAT 2020

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Bulls n Bears Daily Market Commentary : 17 December 2020

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

ZSE commentary

The market closed the day in the positive territory gaining 3.07% to close today at a total market capitalization of ZW$255.1 billion. The main stream All Share Index put on 3.23% to close the day at 2139.12, the Medium Cap Index was 2.1% up to 4259.27 while the Top 10 Index was up 4.13% to 1391.42. Headlining the riser’s pack was First Mutual Life which went up 18.18%, followed by NMB Bank which was up 18.04%, while the biggest commercial bank CBZ added 14.51%, Bindura was up 9.40% and Axia  added 7.98% to close at 600.11c. Significant losses were noted in Mash holdings which shaded 11.68% and Masimba went down by 9.73%. Elsewhere, losses for the day were also recorded in Truworths (6.98%), Padenga (4.23%) and First Capital Bank (2.20%).

Total turnover was at ZW$125,627,638.90 in 308 trades. CBZ led the turnover contribution at ZW$60,734,800. Among the counters that participated in trading, 11 counters declined against 17 that appreciated. Total trades were 308 with 7 counters remaining unchanged and 17 with zero volume.-wealthaccess

Global Currencies & Equity Markets

South Africa

Rand hits 10-month high as risk appetite nudges upIn early trade the rand was at R14.79 against the US dollar, 0.15% firmer than its previous close.

The rand hit a fresh 10-month high on Thursday as progress on a US fiscal stimulus deal and a pledge by the Federal Reserve to keep rates low until an economic recovery is secure boosted risk appetite.

At 0600 GMT, the rand traded at R14.79 against the US dollar, 0.15% firmer than its previous close. It was trading at its strongest since February 12.

US congressional negotiators haggled on Wednesday over details of a $900 billion Covid-19 aid bill that is expected to include $600-$700 stimulus checks and extended unemployment benefits, causing the dollar to languish near a more than two-year trough.[FRX/]

The Federal Reserve on Wednesday vowed to keep funnelling cash into financial markets until the US economic recovery is secure, a promise of long-term help that fell short of some investors’ hopes for an immediate move to shore up a recent pandemic-related slide.

Lower interest rates in the United States typically lift demand for higher-yielding assets in emerging markets like South Africa.

In fixed income, the yield on the long-dated 2030 government bond dipped 2.5 basis points to 8.74%.

Nigeria

Naira falls across forex markets as Nigeria’s external reserve loses $838 million in 6 weeks

The Naira’s exchange rate at the NAFEX window depreciated against the dollar to close at N394.67/$1.

Forex turnover rose by 78.7%, as the Naira’s exchange rate at the NAFEX window depreciated against the dollar to close at N394.67/$1 during intra-day trading on Wednesday, December 16.

Also, the Naira depreciated marginally against the dollar, closing at N476/$1 at the parallel market on Wednesday, December 16, 2020, as Nigeria’s external reserve falls to $34.851 billion as at December 14, 2020, losing $838 million in about 6 weeks.

This puts further pressure on the country’s external reserve and gradually affects CBN’s capacity to intervene in the foreign exchange market.

Nigeria’s foreign exchange market received a boost with the approval of the $1.5 billion loan request by the World Bank.

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 N476/$1 on Wednesday.

This represents a N1 drop when compared to the N475/$1 that it exchanged for on Tuesday, December 15.

·         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 Wednesday, closing at N394.67/$1.

·         This represents a 67 kobo drop when compared to the N475/$1 that it exchanged for on Tuesday, December 15

·         The opening indicative rate was N392.73 to a dollar on Wednesday. This represents a 5 kobo gain when compared to the N392.78 that was recorded on Tuesday.

·         The N407.68 to a dollar was the highest rate during intra-day trading before, it still closed at N394.67 to a dollar. It also sold for as low as N388/$1 during intra-day trading.

·         Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 78.7% on Wednesday, December 16, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $112.08 million on Tuesday, December 15, 2020, to $200.34 million on Wednesday, December 16, 2020.

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

·         The rise 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 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> 

India

Rupee appreciates 6 paise to 73.52 against US dollar in early trade

The rupee appreciated 6 paise to 73.52 against the US dollar in opening trade on Thursday as sustained foreign fund inflows and positive domestic equities strengthened investor sentiment.

Traders said the weakness of the American currency in the overseas market and optimism surrounding the US stimulus aid package also supported the domestic unit.

At the interbank forex market, the domestic unit opened at 73.52 against the greenback registering a rise of 6 paise over its previous close.

On Wednesday, the rupee appreciated 5 paise to close at 73.58 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.44 per cent lower at 90.05.

The US Federal Reserve pledged to keep its benchmark interest rate near zero until an economic recovery is complete.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 84.80 points higher at 46,751.26, and the broader NSE Nifty advanced 34.50 points to 13,717.20.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,981.77 crore on a net basis on Wednesday, according to exchange data.

Brent crude futures, the global oil benchmark, were trading at USD 51.52 per barrel, higher by 0.86 per cent.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hovers near one-week high as US relief talks weigh on dollar

Bengaluru — Gold held firm near a one-week high on Thursday as progress on a US fiscal stimulus deal weighed on the dollar, while a pledge by the Federal Reserve to keep rates low until an economic recovery is secure lent further support.

Spot gold was little changed at $1,863.89/oz by 3.42am GMT, having hit a one-week high of $1,867.19 earlier in the session. US gold futures rose 0.5% to $1,868.20.

US legislators inching closer to agreement on a fiscal stimulus is supporting gold, but markets are likely to be disappointed by the package size and it is unlikely to reverse gold’s downward trend seen over the past few months, said DailyFx currency strategist Ilya Spivak.

US congressional negotiators haggled on Wednesday over details of a $900bn Covid-19 aid bill that is expected to include $600-$700 stimulus cheques and extended unemployment benefits, causing the dollar to languish near a more than two-year trough.

Investors now await the Bank of England’s policy decision, due at 12pm GMT, where it is expected to refrain from further stimulus ahead of a possible no-deal Brexit.

Silver fell 0.4% to $25.25/oz. Platinum rose 0.3% to $1,036.94 and palladium gained 0.1% to $2,329.30.- Reuters

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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