Bulls n Bears Daily Market Commentary : 22 January 2020

Wed Jan 22 22:58:24 CAT 2020

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Bulls n Bears Daily Market Commentary : 22 January 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$9,215,697.20 with foreign buys at ZWL$4,297,156.00 and
foreign sales were ZWL$1,169,672.25 Total trades were 116

Bullish sentiment prevails on the ZSE

Seventeen bulls charged against four bears to leave the market with a
positive breadth of thirteen.

Heavy capitalised stocks pushed the market upwards with the mainstream All
Share gaining 1.37% to 245.54pts while, the Industrials put on 1.45% to
close at 818.02pts. The ZSE Top Ten Index rose 1.33% to close higher at
217.55pts. Mash headlined the winners’ pack after surging 19.52% to $0.1200
trailed by, Zimpapers which garnered 19.05% to $0.2000. Brick manufacturer
Willdale swelled 12.78% to settle at $0.0450 while, conglomerate Meikles
jumped 7.14% to close at $3.0000. National foods completed the top five
gainers of the day on a 5.56% surge to $9.5000.

Bindura let go 9.75% to settle at $0.1805 weighing down the Mining Index to
328.79pts after a 3.16% loss. Hotelier African Sun dipped 7.14% and closed
at $0.2600 while, banking group CBZ lost a further 6.06% to end at $0.6200.
Padenga wrapped the fallers of the day on a 0.03% slip to close at a vwap of
$2.4493. Activity aggregates were mixed in midweek session as seen in the
volume aggregate which shed 72.69% to 2.08m shares while, value outturn was
up 11.25% at $9.23m. Volume leaders of the day were OKZim, Willdale, Mash
and Delta which claimed a combined 61.37% of the aggregate. Old Mutual
accounted for a huge chunk of 77.08% of the total value outturn, leaving the
rest of the counters with 22.92% to share.

  Global Currencies & Equity Markets

South Africa

South African rand rises as demand for riskier assets picks up

(Reuters) - South Africa’s rand firmed more than 1% on Wednesday, helped by
a recovery in demand for riskier assets, while Dutch-based technology group
Prosus led stocks lower.

At 1542 GMT, the rand traded at 14.3310 versus the dollar, 1.17% stronger
than its previous close.

Swift updates from China about the spread of a new flu-like coronavirus
raised hopes the outbreak would be contained.

The outbreak tested risk appetite on Tuesday, although most analysts point
to recent losses as being temporary even as investors grapple with its
potential implications for the global economy.

Locally, consumer price inflation (CPI) quickened to 4.0% year-on-year in
December, from 3.6% in November, data from Statistics South Africa showed.
The figure was in line with a Reuters poll.

Benign inflation readings allowed the South African Reserve Bank (SARB) to
cut its main lending rate by 25 basis points last week to 6.25%, the first
cut since July last year.

Government bonds were also a shade stronger, with the yield on the benchmark
2026 bond down 0.5 basis points to 8.135%.

Stocks closed lower, with the Johannesburg Stock Exchange’s Top-40 Index
ending down 0.05% at 51,808 points, while the broader all-share index fell
0.1% to 57,918 points.

Prosus led the decliners on the Top-40 index, down 3.36% after Naspers,
which is the majority shareholder in the Dutch-based technology group, said
it sold around 1.5 billion euros ($1.7 billion) worth of shares in order to
buy back its own stock.

Lebanon

"No dollars today": Exchanges resist Lebanon's push to steady currency

(Reuters) - A push by Lebanon to rein in a thriving parallel market for
dollars and halt the slide of its slumping pound hit a snag on Wednesday
when currency dealers largely refused to sell at a new, lower price agreed
with the central bank.

Lebanon is in the throes of a deep economic crisis that has prompted banks
fearing capital flight to put stiff controls on dollars, forcing everyone
from major importers to average Lebanese to turn to exchange bureaus to meet
their needs.

Since mass protests against the country’s elite erupted in October, the
dollar price on this parallel market has soared, hitting as high as 2,500
pounds to the dollar versus an official rate of 1,507.5 in place since 1997,
hiking prices.

Lebanon is hoping a new government formed on Tuesday will restore confidence
to secure urgently needed foreign funds and stabilise its currency and
banks.

Looking to stem the currency’s fall, Lebanon’s union of exchange dealers
said shortly before the cabinet was announced that it agreed with the
central bank to set a maximum buying price of 2,000 Lebanese pounds to the
dollar.

It said violators would be subject to unspecified “legal and administrative”
penalties.

On Wednesday, dollars once easily attained at Beirut’s buzzing exchanges
were elusive, potentially posing a new challenge for Lebanese hit by the
worst financial strains since a 1975-1990 civil war.

LOSSES

Eight of 10 currency bureaus visited by Reuters said they did not have
dollars for sale but were willing to purchase dollars at the new price of
2,000 Lebanese pounds. Several customers were seen selling dollars at the
new rate.

Other dealers said the price control would force the market underground,
pushing transactions outside exchange bureaus.

While two bureaus in Beirut’s Hamra district were selling small quantities
of dollars to customers at rates of 2,050 and 2,075, while buying at 2,000,
five others were turning customers away with a terse: “No dollars today.”

Some dealers said the snap decision to impose a price ceiling meant the
dollars they purchased a day earlier at a higher rate of 2,170-2,180 pounds
would leave them with losses.

New finance minister Ghazi Wazni threw cold water on hopes the pound could
return to pre-crisis levels, telling local broadcaster LBC “it is impossible
for the dollar to return to what it was before” on the parallel market.

Central bank governor Riad Salameh has insisted import-dependent Lebanon
will stick by the peg, citing the need to keep in check the price of staple
goods like fuel.

GLOBAL MARKETS

Stocks edge up as China virus worries abate; oil drops

(Reuters) - World stock markets bounced back on Wednesday, even as deaths
from China’s new virus rose to 17, while oil prices tumbled as a market
surplus forecast alleviated supply concerns.

Worries about contagion of the virus and its effect on the global economy,
particularly as millions travel for upcoming Lunar New Year festivities, had
knocked the world’s top equity markets off record peaks.

Official newspaper China Daily on Wednesday said 544 cases had now been
confirmed in the country. Cases of the previously unknown, flu-like
coronavirus have emerged as far away as the United States.

The outbreak revived memories of the Severe Acute Respiratory Syndrome
(SARS) epidemic in 2002-03, a virus outbreak that killed nearly 800 people
worldwide and hit Hong Kong’s economy particularly hard.

Though Hong Kong confirmed its first case, measures are now in place to
minimize public gatherings in the most affected regions.

Germany’s DAX touched an intraday record high but ended the day down 0.3%.
Italy’s benchmark fell after reports the leader of its co-governing 5-Star
movement had resigned.

Italian government bonds saw their biggest sell-off in a month. Yields, a
proxy of the country’s borrowing costs, jumped as investors wondered whether
the country’s fragile coalition would collapse.

Across the Atlantic, the S&P 500 hit a record high boosted by waning fears
over the coronavirus. An airline stock index rose 1.0% after falling as much
as 3.8% on Tuesday.

IBM rallied 3.1% after better-than-expected full-year profits, while
streaming giant Netflix warned the next few months would be tougher and its
stock fell 3.1%.

The Dow Jones Industrial Average rose 31.05 points, or 0.11%, to 29,227.09,
the S&P 500 gained 8.7 points, or 0.26%, to 3,329.49 and the Nasdaq
Composite added 49.30 points, or 0.53%, to 9,420.11.

The pan-European STOXX 600 index lost 0.08% and MSCI’s gauge of stocks
across the globe gained 0.25%. Emerging market stocks rose 0.63%.

Overnight, the coronavirus developments boosted Shanghai stocks from an
early 1.4% drop to end higher. Japan’s Nikkei, South Korea’s Kospi index and
Hong Kong’s Hang Seng all rose by more than half a percentage point.

NO PANIC, CAUTION

Companies across China are handing out masks and warning staff to avoid the
central city of Wuhan amid fears that the virus will rapidly spread as much
of the population embarks on travel for Lunar New Year holidays.

The dollar index rose 0.05%, with the euro up 0.03% to $1.1085.

The Japanese yen strengthened 0.01% versus the greenback at 109.88 per
dollar, while Sterling was last trading at $1.3124, up 0.59% on the day.

Oil prices fell sharply as traders figured a well-supplied global market
would be able to absorb disruptions that have cut Libya’s crude production.

U.S. crude fell 2.52% to $56.91 per barrel and Brent was last at $63.33,
down 1.95% on the day.

U.S. 2-year, 10-year and 30-year yields were little changed but earlier hit
fresh two-week lows after the Bank of Canada held interest rates steady and
opened the door for possible easing amid an economic slowdown, rekindling
worries about global growth.

Benchmark 10-year notes last rose 1/32 in price to yield 1.7673%, from
1.769% late on Tuesday.

Spot gold fell 0.07% to $1,557.84 an ounce. U.S. gold futures gained 0.01%
to $1,556.50 an ounce. Copper lost 0.92% to $6,103.50 a tonne.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold holds steady on central bank policy expectations

(Reuters) - Gold prices were little changed on Wednesday as technical
support on expected dovish monetary policy from central banks offset revived
appetite for riskier assets and an upbeat dollar.

Spot gold was down 0.1% at $1,555.73 an ounce at 1322 GMT. U.S. gold futures
dipped 0.2% to $1,555.50.

Investors will keep a close eye on the European Central Bank’s first policy
meeting of the year on Thursday, while the Fed’s first meeting is scheduled
for Jan. 28-29.

Lower interest rates reduce the opportunity cost of holding non-yielding
bullion and weigh on the dollar.

Global equities rose, buoyed after Chinese authorities raised hopes that the
coronavirus outbreak would be contained, while the dollar firmed against
other key currencies.

The death toll from the outbreak in China rose to nine on Wednesday with 440
confirmed cases, Chinese health officials said as authorities stepped up
countermeasures as millions of Chinese prepare to travel for the Lunar New
Year holiday.

China’s gold consumption fell for the first time in three years in 2019,
data showed on Tuesday, as high prices and an economic slowdown hit buying
in the world’s biggest gold market.

Elsewhere, palladium gained 0.2% to $2,405.16 an ounce, having slid by about
4% in the previous session.

The auto-catalyst metal touched a record high of $2,582.19 on Monday,
propelled by a prolonged supply deficit.

Silver rose 0.2% to $17.81 and platinum was up 0.1% at $1,000.31. 

Copper falls to a near 3-week low as virus death toll rises in China

(Reuters) - Copper fell to a near three-week low on Wednesday as the rising
death toll from the Wuhan virus outbreak deepened concerns over potential
damage to economic growth and metals demand.

Chinese authorities on Wednesday said the virus had claimed a total of nine
lives with 440 confirmed cases and stepped up efforts to control the
outbreak.

Benchmark copper on the London Metal Exchange (LME) was down 0.8% at $6,108
a tonne at the close after touching its lowest since Jan. 3 at $6,095.50.

Also, rising copper inventories in LME-approved warehouses continued to
weigh on prices. Headline stocks rose 20% to 195,375 tonnes, their highest
since Dec. 4. MCUSTX-TOTAL

SPREADS: The LME cash contract’s discount to three-month copper was near its
highest since early October at $33.50, pointing to plentiful supply of the
metal. CMSN0-3

COPPER OUTPUT: Antofagasta reported a 5.8% drop in fourth-quarter copper
production, citing civil unrest in Chile, though it still registered record
annual output.

ZAMBIA: Eurasian Resources Group plans to put its Chambishi Metals copper
and cobalt refinery in Zambia under care and maintenance and cut 229 jobs at
the end of January, the president of the Mineworkers’ Union of Zambia said.

ALUMINIUM: Indonesian state-owned smelting company PT Indonesia Asahan
Aluminium will raise its annual smelter capacity to a million tonnes in the
next six to seven years from 250,000 tonnes now, its managing director said.

NICKEL: The global nickel market deficit tightened to 1,266 tonnes in
November from a shortfall of 3,077 tonnes the previous month, the
International Nickel Study Group said.

ZINC SPREAD: The premium of LME cash zinc to the three-month contract MZN0-3
increased to $23.75 a tonne, its highest since Nov. 29, indicating tighter
availability of LME supplies.

“Physical demand on aluminium and zinc is better than normal for the
pre-Chinese New Year season,” one trader said, pointing to a contango in
aluminium and high premiums of long-term zinc contracts.

COLUMN: Global output drop fails to disperse aluminium gloom.

PRICES: Aluminium was down 0.7% at $1,811 a tonne, zinc shed 2.3% to $2,396,
lead ended up 1.3% at $1,986, tin firmed 0.9% to $17,425 and nickel ended
0.2% down at $13,640 a tonne after hitting a six-week low. 

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
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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