Bulls n Bears Daily Market Commentary : 27 February 2020

Fri Feb 28 10:05:48 CAT 2020

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Bulls n Bears Daily Market Commentary : 27 February 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$16,610,932.04 with foreign buys at ZWL$159,392.92 and
foreign sales were ZWL$1,994,480.10 Total trades were 225

The All Share index went up by 1.20 points to close at 479.92 points. BAT
added $7.5451 points to $73.5451, HIPO VALLEY LIMITED  rose by $1.1500 to
$6.9100 and OLD

MUTUAL LIMITED was $0.5620 firmer at $48.0124.Two more counters to gain were
SEEDCO LIMITED  which traded $0.1000 stronger at $4.1500 and INNSCOR AFRICA
LIMITED  which advanced by $0.0885 stronger at $7.1376

Gains were offset by losses in DELTA CORPORATION which eased $0.1489 to
$6.9783, FIRST MUTUAL LIMITED which dropped $0.1177 to $0.9023 and ZB
FINANCIAL HOLDINGS   which was $0.1000 weaker at $1.5000. ECONET WIRELESS
also decreased by $0.0996 to $2.8005 and OK ZIMBABWE LIMITED traded $0.0332
lower at $1.8989.

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  Global Currencies & Equity Markets

South Africa

S.African rand weakens to 18-month low as virus, rating downgrade fears
weigh

(Reuters) - South African rand slumped to its weakest in 18 months on Friday
as deepening worries about the coronavirus sent global financial markets
into a tailspin, while fears over a possible sovereign rating downgrade by
Moody’s added to the pressure.

At 0627 GMT, the rand traded at 15.6350 per dollar, 0.96% weaker than its
close on Thursday. The currency was at its weakest since Sept. 5, 2018.

Government bonds also weakened, with the yield on the instrument due in 2026
rising by 17.5 basis points to 8.04%.

Hopes that the coronavirus outbreak could be contained in China have
vanished this week as infections spread across the globe.

The rand has also come under pressure as some analysts predicted that
proposed cuts to the public sector wage bill would not be enough to save the
country’s investment-grade credit rating.

Finance Minister Tito Mboweni unveiled the plan to cut the public sector
wage bill by 160 billion rand ($10.50 billion) in his budget speech on
Wednesday.

Moody’s said on Thursday it sees “elevated” risks to the budget forecasts
due to doubts over whether trade unions would agree to cutting the public
sector wage bill and potential liabilities from struggling state companies.

Moody’s is the last of the big three ratings agencies to have South Africa
in investment grade, and is scheduled to review that rating next month.

Zambia, Uganda currencies seen softening, Kenya’s to firm

(Reuters) - Zambia’s and Uganda’s currencies are expected to fall next week,
while Kenya’s is expected to rise, traders say.

ZAMBIA The kwacha is likely to come under pressure in the coming week,
weighed down by the country’s debt service obligations. On Thursday,
commercial banks quoted the currency of Africa’s second-largest copper
producer down at 14.9 per dollar from a close of 14.556 a week ago. “The
economic fundamentals, particularly the debt position, suggest a weakening
currency,” independent financial analyst Maambo Hamaundu said.

UGANDA

The Uganda shilling is seen trading with a weakening bias on the back of
elevated demand from foreign-owned firms looking to pay last year’s
dividends.

At 1029 GMT, commercial banks quoted the shilling at 3,695/3,705, compared
to last Thursday’s close of 3,670/3,680. “The dividends payment season
should be getting underway next month which will push demand up,” a trader
at a leading commercial bank said, referring to demand for hard currency.

He said the shilling will likely weaken past the key psychological level of
3,700 as dividend-driven demand picks up. KENYA The Kenyan shilling could
strengthen in the coming week due to easing month-end dollar demand from
merchant importers amid inflows from horticulture exports, traders said. At
1020 GMT, commercial banks quoted the shilling at 100.85/101.05 per dollar,
compared with 101.00/20 at last Thursday’s close. “The new month should be
more stable... horticulture flows could come in to support a slight
strengthening of the shilling,” said a senior trader from one commercial
bank. TANZANIA Tanzania’s shilling is expected to hold steady next week due
to the slowing demand for dollars from importers whose trade activities have
been hurt by the coronavirus outbreak.

Commercial banks quoted the shilling at 2,304/2,309 on Thursday, up from the
2,310/2,315 recorded a week earlier. “The shilling will remain stable next
week because it will be the beginning of the month where activities always
slow down slightly and also coronavirus has slowed importation thereby
reducing the demand of dollars,” a trader in one of the commercial banks in
Dar es Salaam said.

NIGERIA

Nigeria’s naira is seen unchanged next week as liquidity shortages in the
currency market persist after lower yields on the debt market keep foreign
investors on the sidelines, traders said.

The currency was quoted weaker at around of 364.75 naira to 365 naira per
dollar on Thursday on the over-the-counter market, the same level it traded
last week.

The central bank has been helping to meet some dollar demand, keeping the
naira stable on the official market at 306.45.

Traders said importers preferred to wait to fill their order for the U.S.
dollar rather than weakening the naira since foreign inflows have dried up
amidst dwindling government reserves and lower oil prices.

GLOBAL MARKETS

Stocks, oil fall further on accelerating coronavirus concerns

(Reuters) - Stocks and oil prices tumbled again on Tuesday and the benchmark
U.S. debt yield hit a record low on growing concern about the effects of the
spread of coronavirus on the global economy.

The market sell-off followed the largest losses in stocks in over two years
on Monday and accelerated after the U.S. Centers for Disease Control and
Prevention said Americans should begin to prepare for community spread of
the disease.

The Japanese yen strengthened against the dollar for a third session
running, in a sign that traders are in search of relatively safer assets.

The flu-like virus has now infected more than 80,000 people, 10 times more
cases than the SARS epidemic in 2003. Several European countries were
dealing with their first infections, feeding worries about a pandemic.

The World Health Organization, however, has said the epidemic in China,
where it began in December, peaked between Jan. 23 and Feb. 2 and has been
declining since.

On Wall Street, where stocks fell the most in two years on Monday, the S&P
500 posted its largest back-to-back drop since August 2015.

The Dow Jones Industrial Average fell 879.44 points, or 3.15%, to 27,081.36;
the S&P 500 lost 97.68 points, or 3.03%, to 3,128.21; and the Nasdaq
Composite dropped 255.67 points, or 2.77%, to 8,965.61.

The pan-European STOXX 600 index lost 1.76% and MSCI’s gauge of stocks
across the globe shed 2.31%.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.14%
higher, while Japan’s Nikkei futures lost 0.34%.

BET ON RATE CUTS

The risks are such that bond markets are betting that central banks will
have to ride to the rescue with new stimulus.

Futures for the Federal Reserve funds rate have surged in the last few days
to price in a 50-50 chance of a quarter-point interest rate cut as early as
April. In all, they imply more than 50 basis points of reductions by year
end.

The indication of falling U.S. rates hit the dollar against a basket of its
peers.

The dollar index fell 0.361%, with the euro up 0.27% at $1.0881.

The yen strengthened 0.54% versus the greenback to 110.15 per dollar.
Sterling was last trading at $1.3002, up 0.58% on the day.

The rush to bonds dragged yields on 10-year U.S. Treasury notes to a record
low of 1.307%. The U.S. benchmark last rose 11/32 in price to yield 1.3421%,
down from 1.377% late on Monday.

The 30-year bond set a fresh record low at 1.786 and last rose 17/32 in
price to yield 1.8135%.

For the first time, the 10-year yield on Municipal Market Data’s benchmark
scale for top-rated, tax-exempt municipal bonds fell under 1% to .98%.

Gold ran into profit-taking after hitting a seven-year peak overnight, and
last dropped 1.6% to $1,634.59 an ounce.

Oil prices continued to fall as demand concerns linked to the virus’ spread
outweighed supply cuts.

U.S. crude fell 3.11% to $49.83 per barrel and Brent was last at $54.76,
down 2.74% on the day.

 <mailto:info at bulls.co.zw> 

Commodities Markets

London aluminium falls to 40-month low as coronavirus hits demand

(Reuters) - Aluminium prices fell on Friday, with the London benchmark
hitting a 40-month low, as the rapid spread of the coronavirus outbreak
stoked concerns of slowing demand.

Benchmark three-month aluminium on the London Metal Exchange (LME) fell as
much as 0.8% to $1,676 a tonne, its lowest since October 2016.

The most traded aluminium contract on the Shanghai Futures Exchange (ShFE)
fell as much as 1.8% to 13,160 yuan ($1,876.57) a tonne, its lowest since
Jan. 16, 2019.

The coronavirus epidemic, which started in China, has spread to nearly 50
countries and disrupted global economic activities.

“Sentiment is weak across the board. Everyone is afraid,” said a base metals
trader.

Russian aluminium group United Company Rusal said the virus would hit the
Chinese market in the first half of this year, with weak demand and a bigger
supply surplus.

FUNDAMENTALS

* PRICES: LME nickel fell 1.1% to $12,240 a tonne by 0434 GMT, zinc declined
0.8% to $1,997 a tonne, copper decreased 0.7% to $5,578.50 a tonne while
lead was almost unchanged at $1,808 a tonne.

* SHFE PRICES: ShFE copper declined 1.7% to 44,590 yuan a tonne, zinc
decreased 2.4% to 16,025 yuan a tonne and nickel dropped 2.2% to 98,830 yuan
a tonne, a seven-month low.

* CHINA: China should stockpile some non-ferrous metals to take the pressure
off producers whose sales have been drying up because of the outbreak, the
China Nonferrous Metals Industry Association said.

* IMF: The virus will have an impact on global economic growth and the
International Monetary Fund is likely to downgrade its growth forecast as a
result, its spokesman said.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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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
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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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whatsoever for any loss howsoever arising from any use of this report or its
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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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