Bulls n Bears Daily Market Commentary : 15 June 2020

Tue Jun 16 04:32:12 CAT 2020

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Bulls n Bears Daily Market Commentary : 15 June 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$13,659,057.50 with foreign buys at ZWL$359,330.00 and foreign sales were ZWL $2,407,014.40 Total trades were 239.

The All Share index opened the week on a positive note adding 19.71 points to close at 1,555.70 points. CAFCA  gained $3.0000 to settle at $46.0000. CBZ  and PROPLASTICS both rose by $1.0000 to close at $22.0000 and $7.2000 respectively. INNSCOR also increased by $0.8976 to $22.0031 and FIRST MUTUAL PROPERTIES  traded $0.3622 stronger at $2.1775.

Trading in the negative; HIPPO VALLEY ESTATES eased $1.8333 to $16.6667, DAIRIBORD retreated by $1.2000 to $6.0000 and POWERSPEED was $0.2500 weaker at $1.0100. ECONET  also decreased by $0.0975 to $8.7826 and CASSAVA SMARTECH traded $0.0560 lower at $8.7112.

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Global Currencies & Equity Markets

South Africa

S.African rand drops as virus fears hit riskier assets

(Reuters) - The South African rand tumbled on Monday as investors fled to safe-haven assets on fears of a second wave of global coronavirus infections.

At 1530 GMT, the rand was 1.2% weaker at 17.2600 per dollar, not far off the one-and-a-half week low of 17.34525 it touched earlier in the session.

China’s capital Beijing has recorded dozens of new cases of the novel coronavirus in recent days, all linked to a major wholesale food market, sparking fears that a resurgence could hamper a global economic recovery.

South African government bonds also suffered, with the yield on the bond due in 2030 adding 15 basis points to 9.380%.

Fears of a second virus wave also rattled stocks, with the Johannesburg All-Share index falling 2.55% to 52,270 points, and the Top 40 companies index declining 2.7% to 47,919 points.

Among the decliners were gold producers as bullion prices fell more than 1%, with the dollar hovering near a more than one-week high.

Sibanye-Stillwater ended 6.49% weaker, while Harmony Gold fell 4.62%.

Insurer Discovery declined 2.83% after it warned its full-year profits could fall by up to 90%, hit by a 3.3 billion rand ($191 million) provision to cover the potential impact on claims and policy lapses due to the coronavirus. 

Nigeria

Nigeria sells 162.6 bln naira of Islamic bonds - debt office

(Reuters) - Nigeria has raised 162.56 billion naira ($450 million) to help finance infrastructure projects through the sale of Islamic bonds to local funds and insurance companies, the Debt Management Office (DMO) said.

The government had planned to sell 150 billion naira of the sukuk in its third outing, the DMO said, but it increased the size of the offer after it received a more than four-fold subscription.

The agency said it expected to issue more bonds to improve infrastructure and plans to use the proceeds of the sukuk sale to finance 44 road projects across Nigeria.

It did not give the maturity or the yield for the naira-denominated bonds.

Africa’s biggest economy had a series of debt issues lined up this year before the new coronavirus pandemic triggered a plunge in oil prices, Nigeria’s main export, forcing the government to shelve foreign commercial borrowing.

The government is now tapping domestic markets and concessionary loans to help fund its 2020 budget deficit which has been worsened by lower oil prices that have slashed revenues and weakened the naira currency.

The oil price crash has also triggered excess naira liquidity on domestic money markets as foreign investors sell Treasury bills, a situation that has helped created dollar shortages in Nigeria, whose economy is projected to contract as much as 8.9% this year. ($1 = 361.00 naira) 

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EMERGING MARKETS

Stocks set for worst day in over 3 weeks on second virus wave fears

(Reuters) - Emerging market stocks were headed for their worst day in more than three weeks on Monday, due to concerns over a second wave of coronavirus infections and subdued industrial data from China.

The MSCI’s index of developing world stocks fell around 2%, extending losses from the prior week and on track for its worst session since May 22, while currencies retreated 0.4% as the dollar benefited from safe-haven demand.

A fresh COVID-19 outbreak in Beijing and rising cases in the United States hurt optimism over a smooth reopening of major economies, while weaker-than-expected industrial output data from China continued to highlight the outbreak’s economic damage.

Emerging market stocks had rallied to three-month highs earlier in the month, as monetary and fiscal stimulus from around the globe inspired some confidence in risk assets.

But sobering comments from the U.S. Federal Reserve last week saw markets reassessing a bulk of the recent optimism that had been priced into risk assets, dragging equities down globally.

South African assets lagged their peers, with stocks shedding nearly 3%, while the rand falling about 1.3% to the dollar.

The rand is one of the worst performing developing world currencies so far this year, down nearly 24%. It had led the sell-off last week, marking its worst day in 2-1/2 years on Thursday.

Oil prices retreated as the second wave of infections brought with it the possibility of fresh lockdowns, pointing to weaker demand.

Russia’s rouble fell more than 1%, with stocks falling about 1.7%.

Turkey’s lira dropped nearly 0.4%. Data on Friday showed that the outbreak was extracting a heavy toll on the Turkish economy, although analysts said the worst had likely passed.

Central European currencies, such as the Hungarian forint and the Polish zloty, retreated slightly to the euro.

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Commodities Markets

Gold Price Drop 'A Buying Opportunity Before $1900' as Covid 'Second Wave' Hits Stock Markets

GOLD PRICES dropped Monday in London as European stock markets and crude oil tumbled amid widening reports that a second wave of the deadly novel coronavirus pandemic is taking hold, writes Atsuko Whitehouse at BullionVault.

Gold bullion prices for London settlement fell 1.1% to $1711 per ounce as the US Dollar rallied on the FX market, curbing the precious metal's earlier 2.6% gain from last week – its biggest jump in 10.

The Dollar Index – a measure of the US currency's value versus its major peers – climbed 0.5% Monday morning from its multi-month lows and gave some back by lunch time. 

Major government bond prices rose, pushing interest rates lower, as European stocks lost 0.6% on the Stoxx Europe 600 index, paring an earlier drop of as much as 2.6%.

Japan's benchmark Nikkei 225 closed 3.5% down for the day and South Korea's Kospi lost 4.5%, more than twice the drop in Hong Kong's Hang Seng while the Shanghai Composite declined 1.0% despite China imposing strict new lockdowns across capital city Beijing after a jump in new cases of Covid19.

The United States saw more than 25,000 new cases reported on Saturday led by states as far apart as Alabama and California, with a record number of new virus-related hospitalizations.

Chart of gold priced in Dollars vs. S&P500 index. Source: St.Louis Fed

China's official data today said industrial output expanded 4.4% in May from a year earlier but missed analyst forecasts as retail sales across the world's 2nd largest economy dropped at a slower pace of 2.8% compared to 7.5% in April.

Gold prices on the Shanghai Gold Exchange today continued to show a discount to London, with the gap increasing to nearly $15 on Monday after showing its smallest weekly average in 12 at $8 per ounce.

Euro gold prices dropped 1.0% to €1521 per ounce as Germany and Belgium fully reopened their borders alongside EU state Croatia and neighboring Switzerland, while France announced a number of coronavirus restrictions are being lifted.

Regional governments in Spain, however, are not allowing free internal movement despite 70% of the badly-hit country now seeing 'phase 3' de-escalation by Madrid.

Gold prices for UK investors also declined 1.0% on Monday, retreating to £1366 per ounce as Prime Minister Boris Johnson got set to join a video-conference with European Union leaders in a bid to make headway in negotiations on a future EU-UK relationship.

Silver prices declined further than gold, down by 1.8% to $17.17 per ounce after making 0.5% gains last week.

That pushed the Gold/Silver Ratio – which tracks the two formerly monetary metals' relative prices – back up towards 100, the highest in three weeks and an all-time record high when touched for 1 day in 1990.

The Gold/Silver Ratio reached 123 as the first global wave of the Coronavirus pandemic hit Europe and the US in mid-March.

Platinum prices meantime held flat above $810 per ounce on Monday as crude oil sank over 2.3% and shares in London-listed giant BP (LON: BP) lost 4.5% on news it will write down the value of its business by as much as $17.5 billion because the pandemic will prove a long-term hit to energy demand worldwide.--bullionvault.com

Oil jumps 2% on optimism around OPEC+ output pact

Oil prices rose on Monday as signs fuel demand was recovering while OPEC+ members were complying with a production cut deal outweighed fears that new coronavirus infections could further slow the global economy.

West Texas Intermediate crude rose 86 cents, or 2.37%, to settle at $37.12 per barrel. Brent crude rose 96 cents, or 2.5%, to trade at $39.73 per barrel.

Prices rebounded from early losses after the energy minister of the United Arab Emirates voiced confidence that OPEC+ countries with poor compliance to agreed cuts would meet their commitments and reported signs oil demand was picking up.

An OPEC-led monitoring panel will meet Thursday to discuss whether countries have delivered their share of output reductions.

Iraq agreed with its major oil companies to cut crude production further in June, Iraqi officials working at the country's giant southern oilfields told Reuters on Sunday.

Saudi Arabia has also reduced the volume of July-loading crude it will supply to at least five buyers in Asia, sources said.

Also positive for prices, China's crude oil throughput in May rose 8.2% from a year earlier as independent refiners increased processing to meet the recovery in fuel demand following the easing of lockdowns.

Still, fuel demand concerns have weighed on market sentiment. More than 25,000 new coronavirus cases were reported on Saturday in the United States, where more than 2 million people have been infected, about a quarter of the cases worldwide.

After nearly two months with no new infections, Beijing officials reported 79 coronavirus cases over the past four days, sparking fears of an outbreak in one of the world's most populous cities.

Economic data from China suggested the world's second-biggest economy was struggling to get back on track. Industrial output in May expanded 4.4% from a year earlier, less than expected.

Germany's economic output will also fall further in the second quarter, its economy ministry said on Monday.--cnbc.com

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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