Bulls n Bears Daily Market Commentary : 17 July 2020

Fri Jul 17 15:52:25 CAT 2020

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Bulls n Bears Daily Market Commentary : 17 July 2020

 <mailto:info at bulls.co.zw> 

 <https://www.renaultzimbabwe.com/cars/kwid/index.html?utm_source=newsletter&utm_medium=email&utm_term=&utm_content=pip&utm_campaign=newsletter-faithcapitalcorp-jul20> ZSE commentary

Finance Minister shares more details regarding Vic Falls Exchange

Mthuli Ncube shared the mid-term budget review yesterday and in it is a bunch of interesting updates and government’s plan to revive our ailing economy. One of the projects announced with intent to help government get its paws on foreign currency is the Victoria Falls Exchange (VFEX).

The securities exchange was launched to in order to attract critical offshore capital to the economy. Details of the VFEX have been shared to the public in tiny pieces and before yesterday’s budget review we knew the following;

VFEX will be managed by Zimbabwe Stock Exchange;

§  ZSE CEO Justin Bgoni suggested those dealing with VFEX will be subject to different rules when it comes to taxation and repatriation of funds i.e participants are likelier to get tax concesisons and it will be easier to move money out of the country;

§  The exchange will have listings mainly from the mining sector;

§  ZSE is working with the RBZ and the government on a framework for repatriation of funds for foreign investors;

What’s new?

In the 2020 mid-term budget, the Victoria Falls Exchange was referenced again and this time the following details were revealed;

The VFEX will thus be operated from the central business district of Victoria Falls, and will seek to partner any exchanges or international investment banks;

In addition to this there is mention of “government incentives” which are not fully explained as follows:

Exemption from Corporate Income Tax for the VFSE;

Exemption from Capital Gains Withholding Tax on disposal of shares listed on the VFSE; and;

A lower rate of 5% on dividends payable to non-resident investors on the VFSE.-Techzim

Global Currencies & Equity Markets

South Africa

S.African rand slips as weak China data overshadows vaccine hope

(Reuters) - South Africa’s rand weakened on Thursday, pausing a recent rally to one-month highs as disappointing Chinese consumption data dampened investor hopes of a quick economic recovery from the COVID-19 pandemic.

At 1500 GMT, the rand was 0.3% weaker at 16.6500 per dollar, compared with the previous session’s best of 16.5075.

Wednesday’s rally, across most emerging market assets, was spurred by progress in finding a COVID-19 vaccine by U.S. firm Moderna, whose experimental shot showed it was safe and provoked immune responses in all 45 healthy volunteers.

But China’s unexpected drop in retail sales - for a fifth straight month - saw some investors rush back to safe-haven assets.

The rand has been at the mercy of global sentiment for the past few weeks, pulling away from the key 17.00 technical level despite South Africa’s creaking economy and strained finances.

On Thursday, South Africa’s government committed to secure funds for the overhaul of struggling state-owned South African Airways (SAA), which requires at least 10 billion rand ($600 million).

SAA is among a group of state firms in need of additional state bailouts, with the pandemic adding to existing problems.

Stocks were mostly unchanged after deteriorating U.S.-China relations dampened global risk appetite.

The FTSE/JSE All Share Index fell 0.25% to 55,808 points, while the FTSE/JSE Top 40 Companies Index ended down 0.47% at 51,363 points.

Retailer TFG Limited fell 4.9% to 69.27 rand after it priced its rights issue at 41% discount.

Nigeria

Naira crashes to N470/$1 as currency uncertainty worsens 

The exchange rate at the parallel market fell to another new 3-year low closing at N470/$1 on Wednesday, July 15, 2020. However, on the officially recognized NAFEX market, the forex turnover rose by 44.9% while the exchange rate depreciated closing at N386.50/$1.       

Parallel Market: At the black market where forex is traded unofficially, the Naira depreciated by N5 to a dollar to close at N470 to a dollar on Wednesday, according to information from Aboki FX a prominent FX tracking website. This is against the N465 that it exchanged on Tuesday. However, during intraday trading, Nairametrics research observed the dollar sold for as high as N470/$ and as low as N465/$1. Nairametrics FX tracker also reported a parallel market FX rate of N470/$1.  

NAFEX:  The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday, closing at N386.50/$1, compared with the N386 that was reported on Tuesday, July 14. The opening indicative rate was N387.75 to a dollar on Wednesday. This represents a 17 kobo gain when compared to the N387.92 to a dollar that was recorded on Tuesday.     

Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window). Nairametrics reported a few weeks ago that the government has set plans in motion to unify the multiple exchange rate in line with requirements from the World Bank. Nigeria is seeking a world bank loan of up to $3 billion. The country has been under pressure from the International Monetary Fund and the World Bank for currency reforms.-nairametrics.com

 <mailto:info at bulls.co.zw> 

EMERGING MARKETS

Stocks up on optimism for more stimulus, still set for weekly fall

(Reuters) - Emerging market stocks bounced back on Friday, as hopes of stimulus helped ease economic worries amid surging COVID-19 cases, although U.S.-China tensions kept a gauge for the shares on course for its biggest weekly decline in three months.

Market participants are betting on U.S. policymakers to adopt more stimulus measures as the world’s largest economy struggles to contain the epidemic, with Congress set to begin debating a package next week.

MSCI’s index for developing world stocks rose 0.6%, but was set for a 1.6% weekly decline, its worst week in nearly three months as virus infections surged in the United States, India, Russia and Brazil. The ongoing dispute on trade and other issues between Washington and Beijing also hammered risk sentiment.

Central and eastern European markets watched for developments around the EU recovery fund, as a summit commenced on Friday where EU leaders will discuss a proposed stimulus deal to kick-start economic growth.

Currencies in Hungary, Poland, the Czech Republic and Romania were flat against the euro.

Dutch opposition and the threat of a Hungarian veto weigh on chances for a deal on the EU’s 2021-27 budget envisaged at slightly above 1 trillion euros and an attached new recovery fund worth 750 billion euros meant to help rebuild the southern economies affected the most by the crisis.

The Russian rouble was rangebound and has underperformed its peers for the week, pressured by declining oil prices and Washington’s sanctions on individuals and entities tied to Russian President Vladimir Putin.

Britain’s National Cyber Security Centre (NCSC) said on Thursday that hackers backed by Russia were trying to steal COVID-19 vaccine and treatment research from academic and pharmaceutical institutions around the world.

The Turkish lira was flat against the dollar, while the South African rand firmed.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper steady but virus fears and U.S.-China friction weigh

(Reuters) - Copper hovered near its highest in two years on Friday, supported by supply disruptions, though souring U.S.-China relations and rising coronavirus infections kept gains in check.

Three-month copper on the London Metal Exchange (LME) rose 0.2% to $6,474 a tonne in official trading but could yet snap an eight-week winning streak.

The industrial metal, also seen as a bellwether for economic health, rallied to its highest in nearly 25 months on Monday at $6,633 a tonne on supply worries in top producer Chile.

But analysts say the price might be overheating and see fair value around $6,000 a tonne.

CORONAVIRUS: The United States shattered its daily record for coronavirus infections on Thursday, reporting more than 77,000 new cases as the number of deaths in a 24-hour period rose by nearly 1,000, according to a Reuters tally.

TRADE TENSIONS: U.S. President Donald Trump’s administration was considering a ban on travel to the United States for all members of the Chinese Communist Party and their families.

POSITIONING: Large holdings of copper warrants and cash contracts have fuelled concerns about nearby supply on the LME market. <0#LME-WHC> SPREADS: The concerns can also be seen in the premium for cash copper over the three-month contract, which is at $1.25 a tonne, compared with a discount of $30 a month ago. CMCU0-3

RIO TINTO: The global miner said that total mined copper production reached 132,800 tonnes in the three months to June 30, beating a consensus forecast of 114,000 tonnes.

OTHER METALS: Aluminium dropped 1% to $1,654.50 a tonne, zinc fell 1.1% to $2,200.50, lead lost 0.8% to $1,833.50, tin eased by 0.2% to $17,340 and nickel was down 1% at $13,320. 

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Masimba

AGM

Virtual

21 July 2020 | 12pm

Proplastics

AGM

Virtual

23 July 2020 | 10am

NMB

AGM

Virtual

28 July 2020 | 10am

FMP

AGM

Ground Floor, First Mutual Park, 100 Borrowdale Road, Borrowdale

29 July 2020 | 9:30am

FML

AGM

Ground Floor, First Mutual Park, 100 Borrowdale Road, Borrowdale

29 July 2020 | 11:30am

ZBFH

AGM

Board Room, 21 Natal Road, Avondale

30 July 2020 | 10:30am

OK Zimbabwe

AGM

Virtual

30 July 2020 | 3pm

ZHL

AGM

virtual

31 July 2020 |

Delta

AGM

Virtual, Head Office, Northridge Close, Borrowdale

31 July 2020 | 12:30pm

Zimbabwe

National Heroes Day

Zimbabwe

10  August 2020

Zimbabwe

Defence Forces’ Day

Zimbabwe

11  August 2020

CBZ

AGM

Virtual

14  August 2020 | 6pm

 <mailto:info at bulls.co.zw> 

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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