Bulls n Bears Daily Market Commentary : 05 June 2020

Mon Jun 8 04:46:51 CAT 2020

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Bulls n Bears Daily Market Commentary : 05 June 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$140,922,417.69 with foreign buys at ZWL$102,735,657.00
and foreign sales were ZWL $48,469,048.50 Total trades were 357.

The All Share index rebounded by 76.82 points  to close at 1,581.85 points.
BAT recovered by $28.6000 to $171.6000, DELTA added $4.0475 to close at
$29.0531 and SEEDCO  was $1.4686 lower at $21.0000. DAIRIBORD also increased
by $0.9188 to end at $5.7838 and PADENGA traded $0.8662 stronger at
$14.0022.

Gains were offset by losses in OLD MUTUAL LIMITED  which eased $1.0924 to
$92.8951, MEIKLES dropped $0.2583 to $13.6101 and FIRST MUTUAL PROPERTIES
was $0.0300 weaker $1.7000. EDGARS also  decreased by $0.02980 to close at
$1.2902 and ZIMPLOW  traded $0.02460 weaker at $2.1554.

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Global Currencies & Equity Markets

Egypt

Egypt net foreign reserves drop by $1 bln in May

(Reuters) - Egypt’s plunging foreign reserves declined by a further $1
billion in May, the central bank said on Sunday, as the coronavirus crisis
continues to pressure the economy.

Reserves at the end of May were $36 billion, down from $37 billion at the
end of April, having already fallen by $3.07 billion in April and $5.4
billion in March as investors unnerved by the coronavirus pulled cash from
emerging markets.

The May decline looks small compared with the previous months, but the
extent of outflows could be higher if any proceeds from May’s $5 billion
eurobond sale and $2.78 billion from the International Monetary Fund (IMF)
was used to bolster reserves.

South Africa

South Africa's "junk" bonds back in demand as high-yield lures local,
foreign investors

(Reuters) - After selling a record 69.6 billion rand ($4 billion) of South
Africa’s recently downgraded bonds this year, foreign investors - faced with
low to zero returns around the world - are rushing back to grab the
high-yielding debt in the ailing economy.

In the last two weeks foreign investors have been net buyers of local bonds
to the tune of more than 4 billion rand, after weeks of being net sellers.

This week Goldman Sachs said it was sticking to a “buy” recommendation on
South Africa’s 10-year issue.

Deutsche Bank and Bank of America also recommend the South African debt,
with Deutsche Bank saying it preferred long-dated bonds due in 2035 and
2037.

Outflows in a stampede out of emerging markets has pushed foreign holdings
in South Africa’s bonds to an eight-year low, as the coronavirus pandemic
and the rating downgrades that followed sucked-up liquidity and spooked
investors.

Foreigners held 31.5% of South Africa’s bond in May, down from 37.3% in
January, according to National Treasury data.

But in the last few weeks, with the global economic recovery increasingly on
the cards and the local central bank buying government bonds to ease
liquidity strains, foreign investors are doing what locals have done all
along.

On Friday central bank data showed the regulator had bought 10.2 billion
rand worth of government securities in May, compared to the 20.6 billion
rand it purchased in April, making its bond-buying scheme among the more
conservative policies in emerging markets. ($1 = 16.8252 rand)

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GLOBAL MARKETS

Asian shares hit two-month high as economic optimism spreads

(Reuters) - Asian shares rose to a two-month high on Thursday as government
stimulus expectations supported investor confidence in an economic recovery
from the global coronavirus pandemic.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%,
earlier touching the highest since March 9.

Shares in Australia rose 0.66% after the country’s prime minister unveiled a
fourth stimulus package to repair the economy.

Chinese shares were little changed due to lingering worries about diplomatic
tension between the United States and China, while U.S. stock futures fell
0.23%.

The euro held onto gains before a European Central Bank meeting later on
Thursday, where policymakers are expected to increase debt purchases to
support the bloc’s weakest economies.

Oil prices fell, reversing gains made the previous session, due to
uncertainty about supply cuts by major producers.

Markets for risk assets have been on a tear, carrying some stock market
indexes to within sight of levels before the coronavirus outbreak.

The Nasdaq Composite,, the S&P 500, and the Dow Jones Industrial Average are
close to overtaking all-time closing highs registered in February.

Elsewhere in Asia, Japanese shares snapped a three-day winning streak and
fell 0.06%.

Hong Kong’s stock market gave up early gains and traded 0.12% lower due to
concerns about Beijing’s plans for a new national security law for the
former British colony.

The euro held near multi-month highs in Asia amid growing expectations the
ECB will increase the size of its 750 billion euro ($669 billion) Pandemic
Emergency Purchase Programme, when it meets on Thursday.

The yield on the benchmark 10-year eased slightly to 0.7425% in Asia on
Thursday.

A closely watched part of the U.S. Treasury yield curve measuring the gap
between yields on two- and 10-year Treasury notes, reached 55 basis points
on Wednesday, the steepest level since mid-March. A steepening curve often
points to a stronger economy.

Governments around the world have gradually started to lift tough lockdown
measures imposed to contain the coronavirus which has infected nearly 6.4
million people and killed over 379,000.

Markets await Friday’s U.S. Labor Department May jobs report, which is
expected to show the unemployment rate soaring to a post-World War Two high
of nearly 20% from 14.7% in April.

On Wednesday, a report showed U.S. private payrolls fell less than expected
in May, suggesting layoffs were abating as businesses reopen.

U.S. crude dipped 1.85% to $36.60 a barrel. Brent crude fell 1.18% to $39.32
per barrel.

Spot gold rose 0.4% to $1,704.31 an ounce early on Thursday after losing 1.6
% on Wednesday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper on track for its biggest weekly gain since September 2018

(Reuters) - Copper prices surged on Friday to the highest in 13 weeks as an
unexpected increase in U.S. employment in May fuelled hopes of a revival of
global economic activity.

The payrolls data fed an optimistic mood on markets, with global equities
extending their rally as coronavirus lockdowns ease and the European Central
Bank ramps up stimulus measures.

Benchmark copper on the London Metal Exchange (LME) was up 2.9% at $5,692.50
a tonne at 1600 GMT after hitting the highest since March 5.

It has risen almost 6% this week, the biggest weekly gain since September
2018.

TECHNICALS: Encouraging further buying, copper this week broke above its
100-day and 200-day moving averages at $5,417 and $5,656, respectively, and
resistance around $5,540, the level of previous lows in 2017, 2019 and
earlier this year.

POSITIONING: Traders said copper was rising thanks in part to investors
abandoning bets on lower prices. Speculative investors had cut their net
short in LME copper to 5.5% of open contracts by Wednesday, brokers Marex
Spectron said.

CHINA: Prices were also supported by rumours that China’s National Food and
Strategic Reserves Administration will stockpile copper to support prices.
Reuters has not been able to confirm the authenticity of this information.

COPPER STOCKS: Visible stockpiles continued to fall.

On-warrant inventories in LME-registered warehouses fell by 5,875 tonnes to
159,300 tonnes, the lowest since March 13. MCUSTX-TOTAL

Stocks in Shanghai Futures Exchange warehouses slipped by 5,075 tonnes to
139,913 tonnes in the week to Friday, the third consecutive weekly decline.
CU-STX-SGH

OTHER METALS: Benchmark aluminium was up 1.3% at $1,591.50 a tonne, zinc
rose 0.6% to $2,045.50, nickel gained 1.7% to $12,995, lead added 1.9% to
$1,774 and tin was 2.9% higher at $16,540.

All have risen this week. 

Asia Gold-India dealers offer big discounts as virus fears stifle demand

(Reuters) - Physical gold dealers in India offered the highest discounts in
about two months this week as customers kept away with coronavirus cases in
the country continuing to mount, while Singapore saw steady safe haven
demand.

In thin volume trade, discounts of up to $32 an ounce were offered over
official domestic prices in India, the highest since early April. The
domestic price includes a 12.5% import and 3% sales tax.

Jewellery shops have opened in a few states, but they are mostly deserted,
said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the
eastern city of Kolkata. India’s gold imports plunged 99% in May from a year
earlier.

A few jewellers who had opened stores in May for a week were forced to shut
again due to poor consumer response, said a Mumbai-based dealer with a
bullion importing bank. In top consumer China, discounts eased to $11-$14 an
ounce versus benchmark prices from last week’s $14-$18 discounts, with
demand still lacklustre.

The June-August period is also a “soft season” for jewellery demand in
China, said Samson Li, a Hong Kong-based precious metals analyst at
Refinitiv GFMS.

Global benchmark spot gold prices traded in the $1,681.75-$1,744.62 an ounce
range this week.

In Hong Kong, which has also been grappling with protests over a Chinese
legislation, premiums eased to $0.5-$1 an ounce from last week’s
$0.50-$1.75.

In Singapore, due to “the previous ‘circuit breaker’ period, not many people
had stocks of gold kilo bars and demand was also higher,” said Brian Lan of
dealer GoldSilver Central.

Premiums of $1-$1.5 an ounce were charged, against last week’s $0.80-$1.90.

In Japan, gold was sold at anywhere between at par with the benchmark to a
$0.50 premium.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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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
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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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