Bulls n Bears Daily Market Commentary : 30 December 2020

Wed Dec 30 15:41:14 CAT 2020

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Bulls n Bears Daily Market Commentary : 30 December 2020

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ZSE commentary

The market closed the day gaining 5.65% to close today at a total market capitalization of ZW$309.5 billion. The main stream All Share Index added 5.27% to close the day at 2588.71, the Medium Cap Index was up 6.31% to 5326.26 while the Top 10 Index was up 4.81% to 1653.64. Headlining the riser’s pack was Nampak which went up 19.99%, followed by Simbisa which was up 19.98%, while the dairy giant Dairiboard added 19.95%, Zimre holdings was up 19.84% and Seedco added 19.76% to close at 2515c. Significant losses were noted in the First Mutual Property which shaded 14.77%, Zimplow went down 8.50%. Elsewhere, losses for the day were also recorded in Ariston  (1.78%), Star Africa (0.97%) and Delta (0.67%) to close at 2666.01c.

Total turnover was at ZW$174,156,728.50 in 358 trades. Delta led the turnover contribution at ZW$56,170,150. Among the counters that participated in trading, 5 counters declined against 29 that appreciated. Total trades were 358 with 3 counters remaining unchanged and 14 with zero volume.wealthaccess

Global Currencies & Equity Markets

South Africa

Rand firms against a weaker greenback

JOHANNESBURG - The rand strengthened marginally on Wednesday as market participants weighed a slew of local and global developments and their impact on the currency.

Investors see a negative impact on the rand from stricter lockdown measures imposed Monday night, but the currency has regularly been boosted by US stimulus news.

This has seen the currency flit between negative and positive territories since the start of this week.

At 0610 GMT, the rand was 0.44 percent stronger at 14.6500 against the dollar. It lost half a percent on Tuesday on concerns about a recovery in the local economy.

The US dollar has taken a pounding in the last few days, hitting a more than two-year low early Wednesday, and continuing its steady decline since President Donald Trump signed a coronavirus aid bill on Sunday.

REUTERS

Nigeria

Naira falls across forex markets as businesses resume after public holidays

The Naira depreciated against the dollar – closing at N470/$1 at the parallel market on Tuesday.

Forex turnover rose by 31.2%, as the Naira’s exchange rate at the NAFEX window depreciated against the dollar to close at N393.50/$1 during intra-day trading on Tuesday, December 29.

Also, the Naira depreciated against the dollar – closing at N470/$1 at the parallel market on Tuesday, December 29, 2020 – as businesses resume after the long public holidays.

According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira depreciated against the Dollar to close at N470/$1 on Tuesday – a N5 drop when compared with the N465/$1 that it exchanged for on Thursday, December 24.

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’s 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 N393.50/$1.

·         This represents a N1.50 drop when compared to the N392/$1 that it exchanged for on Thursday, December 24.

·         The opening indicative rate was N392.86 to a dollar on Tuesday. This represents a 71 kobo drop when compared to the N392.15 that was recorded on last week Thursday.

·         The N396 to a dollar was the highest rate during intra-day trading before, it still closed at N393.50 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 increased by 31.2% on Tuesday, December 29, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $98.47 million on Thursday, December 24, 2020, to $129.19 million on Tuesday, December 29, 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 the previous trading day’s sharp increase 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, which continues to increase in the face of dollar shortages.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar trampled as riskier assets rally on U.S. stimulus hopes

(Reuters) - The dollar slumped to multi-year lows against many currencies on Wednesday as currency traders looked past a new delay in U.S. stimulus cheques and maintained bets that additional financial aid was still likely.

The greenback hit its weakest level in more than two years against the euro, the Australian and the New Zealand dollars.

The greenback also fell to the lowest in more than five years against the Swiss franc and fell broadly against Asian currencies.

U.S. Senate Majority Leader Mitch McConnell on Tuesday blocked immediate consideration of a measure to increase COVID-19 relief payments to $2,000, adding another twist to fractious negotiations over fiscal stimulus.

The dollar has fallen and riskier assets have risen since  President Donald Trump signed a coronavirus aid and spending bill on Sunday, because more stimulus for the world's largest economy reduces demand for the perceived safety of holding the greenback.

While the size of relief payments is still uncertain, many analysts say the dollar is likely to weaken further next year because President-elect Joe Biden is expected to push for even more economic support measures.

The dollar fell to $1.2295 per euro on Wednesday, its weakest since April 2018.  Against the Swiss franc , the dollar touched 0.8815, the weakest since January

2015.

The British pound rose to $1.3552.

The dollar fell to 103.26 yen.

Low liquidity may have exaggerated some market moves with many investors away for year-end holidays.

A light data calendar is also likely to leave traders with little incentive to take out big positions.

The dollar index against a basket of six major currencies skidded to 89.711, the lowest in more than two years.

Last-minute infighting has cast doubt on some of the details of the U.S. aid package, but many analysts say the U.S. government will keep rolling out fiscal stimulus in some form because a second wave of coronavirus infections is becoming a big threat to the economy.

In addition, many investors are already looking ahead to a new government under Biden when he is sworn in on Jan. 20.

Another negative factor for the greenback is expectations that the U.S. Federal Reserve will keep interest rates low for an extremely long time, many analysts say.

Elsewhere, both the Australian dollar and the New Zealand dollar reached their strongest levels in 2 1/2-years. The currencies are considered barometers of risk

appetite because of their ties to global commodities.

The onshore yuan edged up to 6.5251 per dollar.

The Korean won and the Malaysian ringgit also rose amid broad-based dollar selling.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Oil prices up as dollar and U.S. oil inventories fall

Brent crude futures rose 45 cents to $51.54 a barrel by 1001 GMT, having started the year above $66.

U.S. West Texas Intermediate (WTI) crude added 39 cents to trade at $48.39, down from around $62 at the beginning of 2020.

Oil gained ground on Wednesday on the back of a weaker dollar, a decline in U.S. crude oil inventories, and as Britain approved another coronavirus vaccine, but both benchmark contracts were set to end the year about 20 percent lower.

Brent crude futures rose 45 cents to $51.54 a barrel by 1001 GMT, having started the year above $66.

U.S. West Texas Intermediate (WTI) crude added 39 cents to trade at $48.39, down from around $62 at the beginning of 2020.

Continued concern about coronavirus-related restrictions weighing on fuel demand was countered by some bullish factors.

The U.S. dollar hit its lowest against a basket of currencies since 2018, making oil cheaper for holders of other currencies.

Raising hopes of a faster normalization of travel and work, Britain on Wednesday became the first country to approve a coronavirus vaccine developed by Oxford University and AstraZeneca.

Asian shares hit a record high with investors betting on a strong economic recovery next year, with little sign of policymakers winding back massive stimulus efforts and the United States on the brink of agreeing to a new package.

U.S. crude oil stockpiles fell 4.8 million barrels last week to about 492.9 million barrels, exceeding analysts' expectations in a Reuters poll for a draw of 2.6 million barrels, data from API showed.

On the supply front, a Jan. 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, looms over the market.

OPEC+ is set to boost output by 500,000 barrels per day (bpd) in January, and Russia supports another increase of the same amount in February after the group slashed its production in 2020 to support slumping oil prices.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

New Year’s Day

01/01/2021

Counters trading under cautionary

ART

Seed co Int.

Dairibord

Starafrica

Medtech

Turnall

Seed co

Invest Wisely!

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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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