Bulls n Bears Daily Market Commentary : 12 June 2020

Mon Jun 15 05:59:54 CAT 2020

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Bulls n Bears Daily Market Commentary : 12 June 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$54,444,819.20 with foreign buys at ZWL$3,819,512.00 and foreign sales were ZWL $10,577,484.90 Total trades were 267.

The All Share index recovered 2.51 points to close at 1,535.99 points. BAT  added $5.2500 to $172.0000, DAIRIBORD rose by $1.1943 to $7.2000 and INNSCOR  added $1.1042 to settle at $21.1055. ZIMRE HOLDINGS  also increased by $0.2394 to $1.4425 and AFRICAN SUN  gained $0.2384 to close at $1.4800.

Trading in the negative; MEIKLES lost $3.0000 to $12.0000, TSL  eased $0.7500 to close at $3.8500 and PADENGA was $0.5663 lower at $13.2837. POWERSPEED  also decreased by $0.2673 to $1.2600 and HIPPO VALLEY ESTATES was $0.1968 weaker at 18.5000.

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Global Currencies & Equity Markets

Lebanon

Lebanese central bank to inject dollars to stop pound's slide

(Reuters) - Lebanon’s central bank will begin injecting dollars into the market on Monday, President Michel Aoun said on Friday, as it tries to stop a sharp fall in the local pound currency which has led to economic hardship and sparked unrest.

The Lebanese pound had slumped to about 5,000 to the dollar from around 4,100 a week earlier, igniting protests in several cities on Thursday against the deteriorating economic conditions.

One dealer who was buying dollars at 5,000 pounds before the announcement said the price had now fallen to 4,500, indicating the move may help the local currency to steady.

In total, the pound has lost some 70% of its value since October, when Lebanon plunged into a financial crisis that has seen businesses close, prices and unemployment soar, and the introduction of capital controls that have severed Lebanese from their hard currency savings.

Finance Minister Ghazi Wazni also said the pound was starting to gain ground after the announcement and would continue to do so, according to broadcaster LBCI.

Parliament speaker Nabih Berri said earlier that the government had agreed steps to reduce the dollar price to about 3,000-3,200 pounds.

The heavily indebted country has maintained an official dollar peg of 1,507.5, but dollars at this level have been rationed exclusively for imports of fuel, medicine, and wheat.

In a bid to rein in the parallel market, the central bank began a unified pricing system last week with the goal of lowering the price to 3,200. However, importers said dollars at the lower rate, which was set at 3,940 on Friday and will be gradually lowered each morning, have been unavailable.

Berri also said agreement was reached on speaking to the International Monetary Fund in “one language”, amid disagreement between MPs, the central bank and government officials engaged in talks with the Fund for an economic reform programme.

Beirut is hoping to secure billions of dollars in financing, but the talks have been stalled by internal disagreements over the value of huge losses in the financial system and proposals for how to cover them.

Aoun said that financial sector losses should not be borne by depositors but instead by the government, central bank, and commercial banks.

South Africa

South Africa's rand recovers slightly after selloff

(Reuters) - The South African rand recovered slightly on Friday as investors returned to riskier assets following a steep selloff a day earlier.

At 1532 GMT, the rand traded at 17.0910 per dollar, 0.5% firmer than its close on Thursday, when it fell more than 3% on a brutal day for global markets.

Thursday’s decline was a sharp reversal for a currency that had notched up gains of more than 11% since the start of May.

But analysts at Capital Economics said they did not expect the recovery in risky assets to be over, citing unprecedented support from central banks and saying the worst for the world economy could have passed.

Investors in South African assets have tended to overlook a grim domestic economic outlook in recent weeks, focusing on government measures to cushion the blow from COVID-19 and the attractive yields of local government debt over worrying fiscal metrics or recent credit rating downgrades.

Africa’s most industrialised economy was already in recession before COVID-19 struck.

Local stocks also gained on Friday, with the Johannesburg bourse’s All-share Index rising around 0.7%, its first day of gains this week. The Top-40 index rose a similar amount.

In fixed income, the yield on the 2030 government bond rose 6.5 basis points to 9.23%.

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Asia

Asian stocks, oil fall as second wave fears grow

(Reuters) - Asian shares stumbled on Monday and oil prices slipped as fears of a second wave of coronavirus infections in Beijing sent investors scurrying for safe-havens while underwhelming data from China further weighed on sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3% with Australian shares off 0.1% and South Korea easing 0.3%. Japan’s Nikkei faltered 0.7%.

Chinese shares opened in the red with the blue-chip CSI300 index down 0.1%.

Monday’s losses follow a strong rally in global equities since late March, fuelled by central bank and fiscal stimulus and optimism as countries gradually lifted restrictions put in place to curb the spread of the novel coronavirus.

McGlew expects a further correction “as markets quantify what lies ahead of us.”

The lead from Wall Street was also dour with e-minis for the S&P500 sinking 1.1% in early Asian trading.

Risk sentiment took a knock after Beijing recorded dozens of new COVID-19 cases in recent days, all linked to a major wholesale food market. Authorities have closed the centre and locked down nearby housing districts.

Investors are also fretting over a spike in cases in the United States where more than 25,000 new cases were reported on Saturday.

Worldwide coronavirus cases have crossed 7.86 million with 430,501 deaths, according to a Reuters tally.

Economic data from China did little to revive risk appetite.

China’s industrial output rose 4.4% in May from a year ago when analysts had forecast a gain of 5.0% while retail sales fell a larger-than-expected 2.8% in a sign of weak domestic demand.

The Chinese yuan extended losses in offshore trade after the data to be last at 7.0883 per dollar.

Some analysts were still hopeful of a revival in sentiment.

The risk-sensitive currencies of Australia and New Zealand sold off with both down 0.4% at $0.6855 and $0.6424, respectively.

Elsewhere, the safe haven Japanese yen rose on the greenback to 107.18 yen.

Analysts said further tests awaited global markets this week – in particular whether re-opening hopes could still push equities higher.

Federal Reserve Chairman Jerome Powell is also due to testify before Congress where “he may try to spin a more upbeat/hopeful outlook – but whether markets listen remains to be seen,” said Betashares chief economist David Bassanese.

Also of interest is U.S. May retail sales figures on Tuesday, which are expected to bounce smartly after a slump in April.

In commodities, oil extended losses after posting its first weekly loss since late April. Brent crude was last down 2.25% at $37.86 a barrel while U.S. crude fell 3.09% to $35.14.

Oil investors await OPEC+ committee meetings of experts later this week who will advise the producer group and its allies on output cuts.

Gold rose 0.2% to $1,732.2 an ounce on safe haven demand.

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Commodities Markets

Copper trading volumes slide on CME, LME as funds withdraw

(Reuters) - Copper trading on the CME and London Metal Exchange tumbled last month as funds and speculators fled from high volatility during the coronavirus pandemic, but volumes shot up in top metals consumer China as lockdowns were lifted.

Dealing activity in copper - the metal widely regarded as an economic barometer of the global economy due to its industrial uses - has withered in the West and analysts expect it to remain weak after sharp swings on the market.

The CME Group, favoured by funds and other speculators, was hardest hit, with trading volumes in Comex copper futures and options plummeting 40% to 1.26 million contracts in May compared to last year.

The larger London Metal Exchange, the main venue for physical business from miners and industrial users, saw volumes slide 26% to 2.12 million lots last month, according to data from the exchanges.

Open interest - measuring the flow of money that remains in a contract - in CME’s Comex copper futures stands at the lowest levels since 2016.

Guy Wolf, global head of market analytics at commodities broker Marex Spectron, said there had been derisking across quantitative strategies.

Banks, mainly in the West, have formulated “risk premia” products for institutional investors that seek to boost returns using alternative assets such as commodities.

Speculators piled in with bearish positions as COVID-19 lockdowns cut demand for metals, pushing benchmark copper prices on the LME to a 45-month low of $4,371 a tonne on March 19.

Prices have since rebounded by about a third to around $5,800, but volumes and open interest have remained subdued.

Volumes were high in March across metals exchanges, surging 31.6% on Comex and 18% on the LME, reflecting increased bearish bets and withdrawal of participants.

In China, however, copper volumes have been robust, surging 21% on the Shanghai Futures Exchange in May after a 38% jump in April.

That reflects the fact that ShFE attracts a lot of small retail speculators, which have persisted in their trades, as well as increasing numbers of industrial players.

The LME is owned by Hong Kong Exchanges and Clearing Ltd.

China May crude steel output rises 8.5% m/m to 92.27 mln tonnes

(Reuters) - China’s crude steel output rose 8.5% to 92.27 million tonnes in May from a month earlier, data from the statistics bureau showed on Monday, fueled by robust demand from construction activities.

On an annual basis, May output was up 4.2% from a year earlier, according to the National Bureau of Statistics.

In the first five months of the year, China churned out 411.75 million tonnes of the industrial metal, up 1.9% from same period in 2019. 

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 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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