Bulls n Bears Daily Market Commentary : 29 January 2020

Thu Jan 30 09:32:44 CAT 2020

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Bulls n Bears Daily Market Commentary : 29 January 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$11,589,665.34 with foreign buys at ZWL$12,809.40 and
foreign sales were ZWL$102,624.15 Total trades were 170

The All Share index further continued to advance, after adding 14.93 points
to close at 279.53 points. OLD MUTUAL LIMITED  advanced massively by adding
$3.1610 to close at $43.7007, DELTA  added $0.3362 to $3.9986 and CASSAVA
SMARTECH traded $0.3122 firmer at $1.9633. PADENGA HOLDINGS traded $0.2218
higher at $3.2093 and PPC

LIMITED  rose by $0.2046 ending at $5.0000.

Gaines were offset by losses in BRITISH AMERICAN TOBACCO which eased $1.2443
to $49.0557,MEIKLES LIMITED lost $0.5499 to end at $3.1000 and FIRST MUTUAL
HOLDINGS  was $0.0080 lower at $0.3120.Two more counters to lose ground were
SIMBISA BRANDS  which dropped $0.0033 to end at $1.5907 and WIILLDALE  which
eased $0.0030 to close at $0.0514.

  Global Currencies & Equity Markets

Uganda

Ugandan shilling weakens a touch on uptick in importer demand

(Reuters) - The Ugandan shilling weakened slightly on Wednesday on an uptick
in demand for hard currency by merchandise importers, traders said.

At 0927 GMT commercial banks quoted the shilling at 3,680/3,690, a touch
weaker than Tuesday’s close of 3,675/3,685.

South Africa

South Africa's rand weakens as China virus knocks risk appetite

(Reuters) - South Africa’s rand weakened against the dollar early on
Thursday as concerns over the rapid spread of a new virus from China,
coupled with a weak domestic economic outlook, weighed on sentiment.

At 0630 GMT, the rand traded at 14.6800 per dollar, 0.38% weaker than its
previous close.

The death toll from the virus outbreak in China has risen to 170, with over
7,700 people infected, and more cases are being reported around the world.

For the rand, investors are also cautious about South Africa’s poor economic
outlook, with state power utility Eskom’s creaky fleet of coal-fired plants
struggling to meet electricity demand.

Eskom said on Thursday that the power system was tight, and warned it might
implement rotational power cuts in the evening.

The utility implemented severe nationwide power cuts in several bursts last
year and sporadically earlier this month.

The power cuts have pushed the economy to the brink of recession and piled
pressure on President Cyril Ramaphosa, who came to power with a pledge to
revive investor confidence and lift economic growth.

In fixed income, the yield on the benchmark government bond was up a single
basis point to 8.035%. 

GLOBAL MARKETS

Stocks crumble as China virus toll mounts, safe havens in favour

(Reuters) - Asian stocks took a battering on Tuesday as the death toll from
a virus in China climbed, leaving investors fretting over the widening
economic fallout from the outbreak and lifting bonds on expectations central
banks would need to keep stimulus flowing.

Outside of Asia, futures pointed to a positive start for Europe and Wall
Street but that followed a hefty sell-off on Monday.

In early European trades, the pan-region Euro Stoxx 50 futures and German
DAX futures each rose 0.3% while futures for London’s FTSE added 0.1%. The
S&P 500 e-mini contracts gained 0.5%.

As the death toll reached 106 in China, the country extended the Lunar New
Year holiday to Feb. 2 nationally, and to Feb. 9 for Shanghai. China’s
largest steelmaking city in northern Hebei province, Tangshan, suspended all
public transit in an effort to prevent the spread of the virus.

With Chinese markets shut investors were selling the offshore yuan and the
Australian dollar as a proxy for risk. Oil was also under pressure as fears
about the wider fallout from the virus mounted, although futures had bounced
from Monday’s lows.

Asian shares too pared some of their early losses on Tuesday but were still
deep in the red.

MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 0.8%.
Japan’s Nikkei, which was down nearly 1% at one point, closed 0.6% lower.
Australian shares ended 1.3% down and South Korea’s Kospi index skidded 3%.

In an indication of the size of losses for Chinese stock markets when they
re-open, iShares China Large-Cap ETF sank 4% on Monday. It is down about 10%
since Jan 17.

Chinese authorities also may have limited room to stimulate the country’s
economy than it had during the 2002-03 outbreak of the Severe Acute
Respiratory Syndrome (SARS) virus, another reason investors were jittery.

Many investors were still trying to figure out the potential impact from the
coronavirus, though travel and tourism sectors are expected to bear the
brunt of the impact.

Analysts at JPMorgan said the coronavirus outbreak was an “unexpected risk
factor” for markets though they see the contagion as a regional rather than
a global shock.

Treasury 10-year note yields came off lows after diving as deep as 1.598% on
Monday, the lowest since Oct. 10. Yields on two-year paper also fell sharply
while Fed fund futures rallied as investors priced in more risk of a rate
cut later this year.

Futures imply around 35 basis points of easing by year end . The Federal
Reserve is widely expected to stand pat at its policy meeting this week, but
markets will be sensitive to any changes to its economic outlook.

JPMorgan said they have not yet altered their developed or emerging markets
forex forecasts though they were taking profits on their “bullish” EUR/USD
positions and remain “considerably long” on Swiss francs which benefits from
safe-haven demand.

Short build-up in the Aussie was another risk hedge. The currency was last
flat at $0.6760 after two straight days of losses.

The euro was a shade firmer at $1.1022.

The yen, which has been rising for the past five sessions, dipped slightly
to 109.01 per dollar.

In commodities, Brent crude was off 12 cents at $59.20 while U.S. crude
eased 2 cents to $53.12.

Spot gold was a shade weaker at $1,579.28.

 <mailto:info at bulls.co.zw> 

Commodities Markets

India's 2020 gold demand to rebound from 3-year low - WGC

(Reuters) - India’s gold demand is expected to rebound in 2020 as the
government seeks to bolster consumer confidence and spending power to revive
Asia’s third-biggest economy, the World Gold Council (WGC) said on Thursday.

A rise in consumption by the world’s second-biggest gold buyer would further
boost global prices, which scaled a near seven-year high earlier this month,
but could widen India’s trade deficit and pressure the rupee.

Gold consumption in 2020 will likely be 700-800 tonnes, compared with 690.4
tonnes last year, said Somasundaram PR, the managing director of WGC’s
Indian operations.

But government measures aimed at bringing transparency in bullion trading
are likely to keep demand below the 10-year average of 843 tonnes, he said.

Finance Minister Nirmala Sitharaman, who will present the annual budget to
parliament on Saturday, is widely expected to cut some personal tax in the
2020/2021 budget, to spur consumer demand and investment.

As Indian gold prices jumped 25% in 2019, hitting a record high, consumption
fell 9% from the previous year to 690.4 tonnes, the lowest since 2016, the
WGC said in a report published on Thursday.

Gold buying in the key December quarter dropped 18% from a year earlier to
an eight-year low of 194.3 tonnes.

Demand usually jumps in December quarters due to the wedding season and as
Indians celebrate festivals such as Diwali, when buying bullion is
considered auspicious.

The country’s scrap supplies in 2019 jumped 37% to 119.5 tonnes, helping New
Delhi to bring down net bullion imports by 14% to 646.8 tonnes, the WGC
said.

New Delhi’s move to increase import tax on gold to 12.5% from 10% in July
lifted smuggling in India.

Around 115-120 tonnes of gold were smuggled into the country in 2019, up
from 90-95 tonnes a year earlier, Somasundaram said.

India has been trying to bring transparency in bullion trading by curbing
cash transactions and making hallmarking of jewellery and artefacts
mandatory.

Copper extends losses as coronavirus spreads

(Reuters) - Copper prices fell on Wednesday, taking losses over the last
seven trading days to 10% as an outbreak of coronavirus in China curtailed
economic activity and threatened to reduce metals demand.

Other industrial metals also fell as the death toll from the virus rose to
133, airlines stopped flights to China and the infection spread to other
countries.

Oil prices and global stock markets, however, largely stabilised.

Underlining the ongoing risk to metals consumption, a Reuters poll showed
growth in China’s sprawling manufacturing sector likely stalled in January.

Toyota said it would keep its production plants in China closed through Feb.
9, and a Chinese government economist said the country’s economic growth may
drop to 5% or even lower in the first quarter.

China is by far the largest consumer of metals.

Benchmark copper on the London Metal Exchange (LME) ended 1.1% lower at
$5,642 a tonne, down from around $6,250 at the start of last week.

Prices of the metal used in power and construction had been rising as
prospects for economic growth improved, but are now nearing a 28-month low
of $5,518 a tonne reached last August.

YIELD CURVE: Fears of economic damage from coronavirus are also reflected in
the U.S. Treasury yield curve, where three-month yields briefly rose on
Tuesday above 10-year borrowing costs.

The so-called curve inversion is seen as a fairly reliable signal of
oncoming recession.

DOLLAR: The dollar strengthened for a fifth day as investors looked for safe
places to park money, putting pressure on metals priced in the greenback by
making them more expensive for buyers with other currencies.

FED: The U.S. Federal Reserve will conclude its latest policy meeting on
Wednesday with interest rates almost certain to remain on hold.

LEAD SPREAD: The premium of cash lead over the three-month contract on the
LME fell to $0.75 from a 5-1/2 month high of $26.50 on Monday, suggesting
that tightness in nearby supply was easing. MPB0-3

OTHER METALS: Benchmark LME lead finished down 3.1% at $1,832 a tonne,
aluminium slipped 0.9% to $1,735.50, zinc fell 0.9% to $2,211, nickel lost
0.1% to $12,550 and tin closed down 0.8% at $16,200.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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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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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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