Bulls n Bears Daily Market Commentary : 24 July 2020

Fri Jul 24 16:48:23 CAT 2020

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Bulls n Bears Daily Market Commentary : 24 July 2020

<https://www.renaultzimbabwe.com/cars/Koleos-HZG/koleos-hzg.html?utm_source=
newsletter&utm_medium=email&utm_term=&utm_content=pip&utm_campaign=newslette
r-faithcapitalcorp-jul20> ZSE commentary

Finance Minister has indicated that the ZSE will mostly likely open in by
the next few weeks. There is currently no clarity as to the reasons behind
delayed market opening.

Global Currencies & Equity Markets

Sudan

Sudan to begin currency adjustment in August

(Reuters) - Sudan will begin a currency adjustment program in August, aiming
to reach a full currency float in two years, a source told Reuters on
Wednesday.

The private sector will be allowed to import fuel using dollars at the free
market price in August as well, the source said. These reforms come as part
of the 2020 budget to be formally passed by Sudan’s cabinet and sovereign
council, acting in parliamentary capacity within days, the source said. 

South Africa

South African Rand Turned Away from Post-March Highs as Local Stocks Seen as
Key to Outlook

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The Rand remained in retreat from post-March highs Friday after being turned
away from them when a South African Reserve Bank (SARB) interest rate cut
crushed local bond yields, and some analysts say the domestic stock markets
will be key to the outlook from here.

Risk appetite has soured with as confidence was undermined by hostilities
between the world’s two largest economies, concerns about the U.S. outlook
and the seemingly ebbing prospect of American lawmakers acting in time to
prevent a rug of fiscal support being pulled from under households' feet.

Losses for stock markets and other risk assets have had a mixed impact on
the U.S. Dollar, which has risen with early European trade in the latter
half of the week only for aappetie to ebb as the North Amerian open
approaches, although South Africa’s own domestic troubles have ensured that
the Rand remains on the back foot even as some Dollar pairs weaken.

Rand losses picked up when a tit-for-tat exchange of consulate closures
between the U.S. and China conspired with a South African Reserve Bank
interest rate cut to turn the local currency back from its highest levels
against the Dollar and Brexit stricken Pound since March.

South Africa’s central bank cut the cash rate by 25 basis points to 3.5% in
line with market expectations in the Thursday session, although in spite of
a consensus that had widely flagged the move, the 10-year bond yield fell
back toward early June lows and took the Rand with it.

SARB Governor Lesetja Kganyago said on Thursday that South Africa’s economy
is likely to contract by -7.3% in 2020, a downgrade from earlier the
projection of -7%, although he also said that risks to the inflation outlook
are now balanced. This indicates the bank is at least close to considering
itself done with rate cuts that have taken the cash rate down from 6.25% in
2020.

The cash rate is -275 basis points this year but the SARB’s quarterly
projection model still advocated Thursday another -25 point cut by year-end.

Even with steep 2020 rate cuts, intended to provide a crutch for businesses,
households and government to lean on, South African government bond yields
have remained among the highest in the world.

Meanwhile, falling inflation expectations have helped spare the Rand from
the same pressure placed on ‘real yields’ in the U.S., UK and other
countries. SA yields have proven enticing for international investors.

Rand losses have been aided by mounting tension between the U.S. and China
which have ordered the closure of consulates in each other’s countries over
U.S. allegations of spying and intellectual property theft. 

Concerns about the impact on the U.S. economy of a second wave of
coronavirus infections, ebbing fiscal support for households and the outcome
of the looming November 03 presidential election have also at times played a
role.

International factors weighed on emerging and developed markets alike
although the South African government’s Thursday order for schools to close
added to the Rand’s woes. South Africa’s coronavirus problem has gone from
contained to uncontained, to bad and then worse throughout July as the
number of infections more than doubled from from 159k to 408k on July 22,
which has seen the country rise to fifth spot in the global size order of
known infections.

Alcohol sales were banned again last Sunday and a nighttime curfew was
imposed, although what might matter most for the Rand is whether these
economically stifling measures and the evapouration of global risk appetite
are able to put a dent into the domestic stock markets.

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

World shares retreat on rise in Sino-US tensions

(Reuters) - Global shares skidded further from five-month peaks on Friday as
a bounce back in European business activity did little to ease the jitters
surrounding Sino-U.S. tensions, while gold approached a record high.

The mood darkened after Beijing ordered the United States to close its
consulate in Chengdu, in retaliation for being told to shut its consulate in
Houston earlier this week.

Unsurprisingly, Chinese blue chips led the declines, retreating 4.4%, wiping
out a week of gains.

European shares were on course for their worst day in a month, with the
pan-region Euro Stoxx 50 down 1.9%.

Technology stocks led losses, following their U.S. peers overnight, while
the China-sensitive basic materials sector lost 2.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.9%. Tokyo
was closed for a holiday, but Nikkei futures were trading 1% lower.

E-Mini futures for the S&P 500 edged down 0.8%.

Investors took little comfort from purchasing managers’ index (PMI) data
which showed euro zone business activity bounced back to growth in July as
more parts of the economy that were locked down to curtail the spread of the
coronavirus reopened.

British businesses experienced the fastest upturn in five years during July
and data for the United States follow later in the day.

The market’s dogged optimism on economic recovery had been challenged on
Thursday by data showing the number of Americans filing for unemployment
benefits unexpectedly rose last week for the first time in nearly four
months.

The euro was at $1.16020, close to its highest level since October 2018,
having enjoyed a winning streak for all of July, as the European Union’s
passing of a 750 billion-euro recovery fund restored confidence.

The yen was up 0.6% at 106.25, its highest since June 23.

The Chinese yuan, a barometer of Sino-U.S. tensions, looks set for its worst
week in three months. It was down 0.2% at 7.0276 per dollar in the offshore
market.

Italy’s 10-year bond yield was steady at around 1.05% , holding near
Thursday’s 4-1/2 month low at 1.04%. Germany’s Bund yield was a touch lower
on Friday at -0.49% .

The combination of super-loose money and negative real bond yields has
burnished the attractiveness of gold, which pays no yield but is supply
constrained.

The precious metal was last at $1,894.23 an ounce for its biggest weekly
gain in more than three months as it held firm near a nine-year high.

Analysts at RBC Capital Markets noted gold-backed exchange traded product
holdings had already reached record peaks.

Oil prices were ending the week on a flat note, having failed to hold a
five-month high as worries about global demand offset a weaker U.S. dollar.

Brent crude was down 1 cent at $43.30 a barrel, while U.S. West Texas
Intermediate (WTI) crude up 1 cent at $41.08.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold sets sights on $1,900/oz as safe-haven flows pick up

(Reuters) - Gold resumed its march toward $1,900 on Friday as souring
U.S.-China relations added fuel to a rally towards a nine-year peak driven
by fears over the economic hit from the coronavirus pandemic.

Silver, meanwhile, was en route to its best week since 1987.

Spot gold was 0.3% higher at $1,892.81 per ounce by 1207 GMT, having hit its
highest since September 2011 at $1,897.91 on Thursday.

U.S. gold futures rose 0.1% to $1,891.70.

If the economy did not show “quality signs” of improving, gold could clear
$1,922 and continue towards $2,000.

Non-yielding gold has surged 24% this year, underpinned by low interest
rates and stimulus from central banks to revive their economies, which
benefits bullion since it’s a perceived safe-haven hedge against inflation
and currency debasement.

China on Friday ordered the United States to shut its Chengdu consulate in
retaliation for the closure of its consulate in Texas, dampening appetite
for risk assets.

Further helping gold, the dollar index held near a two-year low, and was on
track for its biggest weekly decline since early June.

Commerzbank analysts said the rise in gold and silver had happened “possibly
too quickly,” adding in a note that this entailed “the risk of a setback,
especially as gold and silver are being driven almost exclusively by
extremely strong investment demand”.

Silver fell 0.5% to $22.60 per ounce, but was still up over 17% for the
week, bolstered by hopes for a revival in industrial activity.

Platinum rose 0.8% to $912.64 and palladium climbed 1.7% to $2,162.28.

Oil prices edges up on weak dollar, U.S.-China tensions weigh

(Reuters) - Oil prices edged higher on Friday, supported by a weaker dollar,
though tensions between the United States and China and wider economic
uncertainty weighed.

Brent crude was up 10 cents at $43.41 a barrel at 1323 GMT, while U.S. West
Texas Intermediate (WTI) crude was up 18 cents at $41.25.

China ordered the United States to close its consulate in the city of
Chengdu on Friday, responding to a U.S. demand this week that China close
its Houston consulate.

The dollar slid to 22-month lows against a basket of currencies.

A weaker dollar usually spurs buying of commodities priced in dollars such
as oil because they become cheaper for holders of other currencies.

The U.S. economic outlook has darkened in the past month amid renewed
lockdowns in some states to tackle surging coronavirus cases, according to
economists in a Reuters poll.

The number of Americans filing for unemployment benefits hit 1.416 million
last week, unexpectedly rising for the first time in nearly four months,
suggesting the U.S. economic recovery is stalling amid a resurgence in
COVID-19 cases.

Globally, more than 15 million people have been infected and over 620,000
have died.

While the rise in infections has fanned fears of renewed government
lockdowns, worries that oil demand could be hit have been exacerbated by
tensions between the United States and China - the world’s top two oil
consumers.

In China, congestion at east coast oil ports is adding to costs for shippers
and importers even as fuel demand stalls.

Oil prices could see a near-term correction if a recovery in fuel demand
slows further, especially in the United States, Barclays Commodities
Research said.

Still, the bank lowered its oil market surplus forecast for 2020 to an
average of 2.5 million barrels per day (bpd) from 3.5 million bpd
previously.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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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