Bulls n Bears Daily Market Commentary : 27 July 2020

Mon Jul 27 17:11:39 CAT 2020

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Bulls n Bears Daily Market Commentary : 27 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. 

Nigeria

ABCON explains how to stop naira depreciation

The Association of Bureau De Change Operators of Nigeria (ABCON) has
explained how to stem the tide and subsequently crash the rising exchange
rate.

The association revealed that the reopening of the BDC window for foreign
exchange, among others, would crash the prevailing spike in the exchange
rate.

The disclosure was made by the President of ABCON, Alhaji Aminu Gwadabe,
during his interaction with the News Agency of Nigeria (NAN) on Sunday in
Lagos.

Gwadabe pointed out that BDCs have always been the medium and bridge for
availability of liquidity in the retail end of the foreign exchange market.

The ABCON chief noted that they had always provided some level of exchange
rate stability in the forex market due to its proximity of BDCs to genuine
FX end users.

He said, “The germane role of BDCs is bridging the gap between the official
rates and the parallel market rates, which was achieved from early 2017 to
early 2020.’’

While appreciating efforts by the CBN in ensuring stability in the exchange
rate, ABCON said that the factoring of BDCs into the FMDQ floor and Diaspora
remittances agencies would ensure long term exchange rate stability in the
economy.

The volatility of the foreign exchange market is primarily due to the crash
in crude oil prices (which is about 90% of the country’s foreign exchange
earnings) and triggered by the coronavirus pandemic.

app

The low forex earnings have negatively affecting the Central Bank of
Nigeria’s capacity to intervene in the foreign exchange market.

Diaspora remittances before the COVID-19 pandemic had also always helped in
boosting liquidity at the foreign exchange market, had been greatly hampered
due to global lockdown and restrictions due to the pandemic.

A World Bank report has projected that remittances to Nigeria, Egypt,
Senegal and other Low and Middle-income Countries would drop sharply by 19.7
per cent to $445 billion in 2020 due to the economic crisis induced by the
COVID-19 pandemic and lockdown.

The report noted that the decline would be the sharpest in recent history
and was largely due to a fall in the wages and employment of migrant workers
that were more vulnerable to loss of jobs and wages during an economic
crisis in a host country.

Nairametrics had reported that the CBN had suspended indefinitely the sales
of foreign exchange to the BDC operators in March following the shutdown of
the airports due to outbreak of the coronavirus pandemic.

The suspension was also part of the recommendation by ABCON to the apex bank
as part of the measure to contain the spread of the virus.

However, in April the apex bank resumed sales of forex to only the
commercial banks to SMES for essential imports and school fees for foreign
students

 <mailto:info at bulls.co.zw> 

EMERGING MARKETS

Currencies rise on back of weaker dollar; S.African rand firms

(Reuters) - Emerging market currencies started the week on a firmer footing
on Monday, with the high-yielding South African rand leading gains as the
dollar weakened on growing bets of a more accommodative stance from the U.S.
Federal Reserve this week.

The reserve currency of the world slipped against a basket of currencies,
with focus shifting to a two-day Fed meeting starting on Tuesday.
Expectations are that policymakers may begin laying the groundwork for more
action in September or the fourth quarter.

Analysts note that the move in the dollar may not be a clear signal of a
“risk-on” mood as worsening ties between the United States and China, and
surging coronavirus cases continue to dominate headlines.

Concerns over renewed restrictions to curb the spread of the coronavirus in
parts of Asia also kept risk in check, with Beijing battling the most
aggressive resurgence in months, Australia recording a record daily rise in
cases and Vietnam locking down the city of Danang.

South Africa’s rand rose 0.5% against the dollar, gaining the most among its
emerging market peers, with investors focusing on a slew of economic data
this week, including consumer price inflation on Wednesday and trade data on
Friday.

Turkey’s lira also firmed after data showed business confidence among
Turkish manufacturers rose to 100.7 points in July compared to 92.6 points
in June. A score of 100 or more denotes optimism while a number below the
100 mark designates pessimism.

Russia’s rouble edged higher, even as the Bank of Russia on Friday cut its
benchmark interest rate by 25 basis points to a record low of 4.25%.
Analysts say the cut was by a lesser margin than expected.

Currencies in central and eastern European countries, including Hungary,
Poland, Romania and the Czech Republic, were mostly flat against the euro.

The MSCI’s emerging market equity index added 0.6%, Turkish stocks rising
0.7% and Russian stocks gaining 0.8%.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hits record, equities edge higher on stimulus hopes

(Reuters) - Global equity benchmarks edged higher and gold soared to an
all-time high on Monday as investors weighed expectations for another U.S.
stimulus package with concerns that rising tensions between the United
States and China will the slow the recovery of the global economy from the
coronavirus pandemic.

Gold made a 1.6% jump to surpass its 2011 highs and put $2,000 per ounce in
sight. Silver climbed 7.5%, to take its July streak past 30%, which would be
its best month on record.

China took over the premises of the U.S. consulate in the southwestern city
of Chengdu on Monday, after ordering that the facility be vacated in
retaliation for China’s ouster last week from its consulate in Houston.

U.S. Secretary of State Mike Pompeo said Washington and its allies must use
“more creative and assertive ways” to press the Chinese Communist Party to
change its ways.

MSCI’s gauge of stocks across the globe gained 0.25% following mixed trading
in Asia and broad declines in Europe after the United Kingdom imposed a
quarantine on travelers returning from Spain, which has seen an increase in
coronavirus cases.

In morning trading on Wall Street, the Dow Jones Industrial Average fell
3.87 points, or 0.01%, to 26,466.02, the S&P 500 gained 0.58 points, or
0.02%, to 3,216.21 and the Nasdaq Composite added 53.71 points, or 0.52%, to
10,416.89

Hopes for a quick U.S. economic recovery are fading as coronavirus
infections showed few signs of slowing.

That means the economy could suffer without fresh support from the
government, with some earlier steps such as enhanced jobless benefits due to
expire this month.

Investors hope U.S. Congress will agree on a deal before its summer recess.
U.S. Treasury Secretary Steve Mnuchin said the package will contain extended
unemployment benefits with 70% “wage replacement.”

Concerns about the U.S. economic outlook have also started to weigh on the
dollar. The dollar index dropped 0.5% to its lowest in nearly two years.

The euro gained 0.5% to a 22-month high of $1.1725, continuing a winning
streak since last week’s agreement on a 750 billion-euro post-pandemic EU
recovery fund.

Benchmark 10-year notes last rose 4/32 in price to yield 0.5774%, from
0.589% late on Friday.

Oil prices were capped on worries about the worsening Sino-U.S. relations
and both new and returning waves of the coronavirus around the world, which
has now infected more than 16 million people and killed nearly 650,000.

U.S. crude recently fell 0.85% to $40.94 per barrel and Brent was at $43.08,
down 0.6% on the day.

London copper advances as investors eye U.S. stimulus bill

(Reuters) - London copper rose on Monday as investors hope the U.S. Congress
would soon agree on a coronavirus relief deal, while the U.S.-China tensions
and slowing demand in China capped gains.

Three-month copper on the London Metal Exchange rose 0.5% to $6,448 a tonne
by 0556 GMT, while the most-traded September copper contract on the Shanghai
Futures Exchange eased 0.2% to 51,670 yuan ($7,380.90) a tonne, tracking
losses in the previous overnight London session.

U.S. President Donald Trump’s top aides agreed in principle with Senate
Republicans on a $1-trillion coronavirus relief package, paving the way to
negotiate with Democrats.

However, gains were capped as potential labour strikes in top copper
producer Chile did not materialize, while demand in top consumer China is
slowing and the U.S.-China tensions have dented risk sentiment.

Antofagasta’s avoided a strike at Zaldivar copper mine in Chile, while
mediation talks at its Centinela mine were extended in a last-ditch effort
to stave off a strike.

FUNDAMENTALS

* OTHER PRICES: LME aluminium rose 0.2% to $1,703 a tonne, nickel advanced
1% to $13,795 a tonne, while ShFE nickel jumped 2.1% to 110,160 yuan a tonne
and tin climbed 2.8% to 146,510 yuan a tonne.

* COPPER: An unprecedented drop in lead demand from the auto battery sector
led to massive surpluses, which is only the tip of the iceberg, analysts
say.

* ALUMINIUM: China’s primary aluminium imports in June rose more than 570%
from May.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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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