Bulls n Bears Daily Market Commentary : 30 July 2020

Fri Jul 31 04:21:04 CAT 2020

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Bulls n Bears Daily Market Commentary : 30 July 2020

<https://www.renaultzimbabwe.com/cars/duster/overview.html?utm_source=newsle
tter&utm_medium=email&utm_term=&utm_content=pip&utm_campaign=newsletter-fait
hcapitalcorp-jul20> ZSE commentary

Zimbabwe to resume stock trading, Old Mutual unit remains suspended

(Reuters) - Zimbabwe’s stock market will resume trading next week after a
state financial intelligence body concluded an investigation, but three
stocks also listed on other exchanges, including Old Mutual, will remain
suspended, the finance minister said on Tuesday.

Mthuli Ncube Ncube said investigations revealed that investors used the Old
Mutual Ltd share price as a proxy exchange rate implied by its prices on
foreign bourses such as the London Stock Exchange.

This had caused the slide in the value of the Zimbabwe dollar, Ncube said.

The government halted trading on the bourse last month, saying it was being
used by speculators to undermine the currency.

Old Mutual said in a statement that it was in talks with Zimbabwean
authorities so that the insurer’s listing would not continue to create the
concerns raised by the government.

The suspension of the stock exchange and some mobile phone-based payments
was intended to arrest the currency slide at a time of severe economic
crisis but has spooked some investors already skittish about Zimbabwe.

Ncube said an investigation by the Financial Intelligence Unit revealed a
link between the movement in prices of three dual-listed stocks and the
parallel market rate of the Zimbabwe dollar.

But there was no evidence that Old Mutual, Pretoria Portland Cement and
SeedCo International, were involved, Ncube said.

Morgan Nzwere, group CEO of SeedCo, said the company had not committed any
offence and would wait for regulators to conclude investigations. PPC did
not immediately respond to requests for comment.

Trading on the Zimbabwe Stock Exchange would resume on Aug. 3 but the three
stocks would remain suspended “while further consultations continue on the
best way forward regarding their re-listing under suitable rules,” Ncube
said.

Stock market traders say the government is pushing to de-list the three
firms and list them on a yet to be established dollar-denominated exchange
in the resort town of Victoria Falls.

President Emmerson Mnangagwa’s ruling ZANU-PF party has recommended the
de-listing of Old Mutual. 

Global Currencies & Equity Markets

Kenya

Kenya central bank has 'plenty of firepower', governor says

NAIROBI (Reuters) - Kenya’s central bank governor said on Thursday that
policymakers still had plenty of firepower left to limit the damage to the
country’s economy from the coronavirus crisis.

Policymakers cut the benchmark lending rate by a total of 125 basis points
at the onset of the crisis, lowered cash reserves for commercial banks and
allowed them to restructure distressed loans.

Njoroge said good weather had boosted production volumes and exports of key
crops like tea.

A rebound in exports of flowers, as well as projected higher production of
other crops like maize and higher production of cement, promised a quicker
economic recovery than earlier anticipated, he said.

He lowered the current account deficit forecast for this year to 5.1% of GDP
from the previous forecast of 5.8%.

He cited a better-than-expected performance in hard cash sent by Kenyans
living abroad, known as remittances, and the rebound in farm exports.

The central bank now expects remittances to grow by 1% this year, an
improvement of its initial forecast of a drop of 12.3% due to COVID-19.

The central bank was not concerned by the recent depreciation of the
shilling, which is down 6.3% against the dollar this year to date.

The bank’s Monetary Policy Committee has gone back to meeting to review
rates every two months, it said, after it started meeting every month in
March because of the coronavirus crisis.

Nigeria

Starved of dollars, Nigerian businesses struggle for survival

LAGOS/ABUJA (Reuters) - As women in hairnets and anti-coronavirus masks sort
through folded nappies coming off a conveyor belt, the head of the Nigerian
firm they work for wonders how much longer he can afford to keep them in
employment.

Around 80% of the materials that go into Lagos-based diaper and sanitary
towel manufacturer Wemy’s products are imported. To buy them, Paul Odunaiya
needs dollars, which he can no longer find.

With the price of oil, Nigeria’s main export, depressed and foreign exchange
reserves dwindling, its central bank is hanging on to its dollars to support
the local naira - leaving a dwindling supply of hard currency to buy the
imports that are the bedrock of Africa’s largest economy.

Muda Yusuf, director general of the Lagos Chamber of Commerce, said that,
like Odunaiya, the dollar shortage is hitting most of its 2,000 members
hard.

Inflation has risen for 10 straight months, hitting a two-year high of
12.56% in June, piling on greater economic hardship for a population of whom
40% already live below the official poverty line of 137,430 naira ($382) per
year.

Added to that, there have been two devaluations of the naira’s official rate
this year.

With the oil market depressed by a producer price war and the
pandemic-induced global recession, central bank reserves have fallen 20% in
the past year to $36.1 billion, around five months of import cover.

The bank initially sought to stem the decline by suspending dollar auctions
in March and continues to severely ration their supply.

The government says the economy could shrink by up to 8.9% in 2020, while
many of the local banks that Nigerian companies rely on have seen their
dollar credit lines halted by international lenders who fear they won’t be
paid back.

Many firms have resorted to the black market, where the naira trades at
around 20% below the official rate, making dollar purchases even more
expensive.

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Asian stocks set to rise on Big Tech surge, dollar slides

(Reuters) - Asian equities were set to rise on Friday after shares of Apple,
Amazon and Facebook surged in extended trading on Thursday, with Alphabet
also climbing, while the U.S. dollar continued to slide.

The Big Tech quartet reported quarterly earnings on the same day for the
first time ever, all topping Wall Street estimates.

Deemed “stay-at-home” winners as millions of Americans were ordered indoors
to contain the COVID-19 pandemic, shares of the largest U.S. technology
companies have hit record highs in recent months as the coronavirus pandemic
has thrown the economy into its steepest contraction since the Great
Depression.

Hong Kong’s Hang Seng index futures rose 0.06%. Australian S&P/ASX 200
futures lost 0.47%, while Japan’s Nikkei 225 futures added 0.34%.

Analysts are expecting industrial production data from Japan on Friday,
along with China’s Purchasing Managers Index, a measure of factory activity.

Some fund managers also adjust their hedges on the last day of the month,
which is likely to weaken the U.S. dollar and strengthen other currencies,
such as the euro and Australian dollar, said Joseph Capurso, head of
international economics at Commonwealth Bank of Australia.

U.S. stock markets, oil prices and the dollar slid on Thursday as new
government data underscored the deep economic impact of the coronavirus and
U.S. President Donald Trump raised the possibility of delaying the November
election.

On Wall Street, the Dow Jones Industrial Average fell 225.92 points, or
0.85%, to 26,313.65, the S&P 500 lost 12.22 points, or 0.38%, to 3,246.22
and the Nasdaq Composite added 44.87 points, or 0.43%, to 10,587.81.

The dollar index fell 0.591%, and remains on course for its worst monthly
performance in a decade, with the euro up 0.2% to $1.187.

The dollar has fallen on expectations the Fed will maintain its ultra-loose
monetary policy for years, which risks adding inflationary pressure.

Trump repeated his claims, without evidence, of mail-in voter fraud on
Thursday, writing in a Twitter post: “delay the election until people can
properly, securely and safely vote???”

At a White House news conference later in the day, Trump did not call again
for an election delay but said he was worried about fraud and a long wait
for results from counting mail ballots.

New U.S. government data on Thursday underscored the deep economic impact of
the coronavirus.

U.S. GDP collapsed at a 32.9% annualized rate during the second quarter,
slightly less than expected, but still the deepest decline in output since
the government started keeping records in 1947, the Commerce Department
said.

Also jobless claims rose last week, adding to signs the momentum of economic
recovery has slowed as coronavirus cases spiraled in southern and western
U.S. states.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.06%
lower.

In commodity markets, oil markets fell following Trump’s tweet. U.S. West
Texas Intermediate (WTI) crude futures settled down $1.35, or 3.3%, at
$39.92 a barrel after falling 5% earlier in the session.

Spot gold dropped 0.2% to $1,955.65 an ounce. U.S. gold futures gained 0.43%
to $1,950.60 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper slips on rising virus cases, economic worries

LONDON, (Reuters) - Copper prices slipped on Thursday as investor confidence
was hit by a resurgence of coronavirus cases and more evidence of the
economic impact of the pandemic.

Florida reported a record increase in new COVID-19 deaths for a third
consecutive day on Thursday while Australia and India reported record daily
coronavirus infections.

Data showed Europe’s biggest economy Germany had shrunk by a record 10.1%
the second quarter and the U.S. economy contracted at a 32.9% annualized
rate, its steepest pace since the Great Depression.

Benchmark copper on the London Metal Exchange was down 0.5% at $6,445 a
tonne at 1600 GMT.

It had surged more than 50% during a rebound from lows in March to a
two-year peak of $6,633 a tonne on July 13, partly due to worries about
supply from top producer Chile.

Prices are likely to move sideways to slightly lower in the short term, with
$6,250 fair value, he added.

* COPPER PREMIUM: The Yangshan copper premium SMM-CUYP-CN in China has
declined to $86.50 a tonne, the lowest since June 16 and down from $99 two
weeks ago.

* SHANGHAI ALUMINIUM: The most-traded September aluminium contract on the
Shanghai Futures Exchange hit a more than two-year high, ending up 1.8% at
14,720 yuan a tonne, on a better-than-expected recovery in top consumer
China.

* PRICES: LME aluminium shed 0.2% to $1,722 a tonne after touching
$1,731.50, the highest since March 5, while lead gave up 0.5% to $1,864.

Zinc dropped 0.1% to $2,295.50, having hit a six-month high of $2,312,
nickel fell 0.9% to $13,745, and tin lost 0.5% to $17,845.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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
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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
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
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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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