Bulls n Bears Daily Market Commentary : 17 June 2020

Thu Jun 18 05:09:47 CAT 2020

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Bulls n Bears Daily Market Commentary : 17 June 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$45,282,965.75 with foreign buys at ZWL$1,911,663.00 and
foreign sales were ZWL $1,453,712.50 Total trades were 205.

The All Share index added another 16.09 points  to close at 1,607.90 points.
CBZ gained by $4.9332 to close at $29.6500, NATFOODS rose by $1.7000 to
close at $45.2500 and MEIKLES was $1.4954 firmer at $15.0500. FBC HOLDINGS
also increased by $1.3213 to $8.6113 and INNSCOR was $0.2935 stronger at
$22.5000.

Trading in the negative; DELTA eased $1.7243 to $22.9225, RIOZIM lost $1.500
to $10.5000 and OLD MUTUAL LIMITED retreated by $0.9722 to $84.0278. PADENGA
also decreased by $0.4679 to $13.3137 and ECONET traded $0.3161 weaker at
$8.4720

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Global Currencies & Equity Markets

South Africa

South Africa's rand inches up, Aspen leads stocks higher

(Reuters) - South Africa’s rand clung on to small gains on Wednesday,
supported by stimulus measures from major central banks, following a
sell-off sparked by fears of a second global wave of coronavirus infections.

At 1530 GMT, the rand was 0.23% firmer at 17.2000 per dollar, moving away
from a session-high of 17.0875.

New coronavirus infections have hit record highs in six U.S. states, while
Beijing has cut flights and closed schools to contain a fresh outbreak in
the Chinese capital.

This week the U.S. Federal Reserve said it would start buying corporate debt
as part of an already announced stimulus scheme, with the extra money making
it easier for investors to borrow the greenback to invest in high-yielding
emerging market assets.

In fixed income, the yield on the long-dated government bond due in 2030 was
up 1.5 basis points at 9.465%.

Stocks posted their best daily gain in almost a month on Wednesday, catching
up with global markets following upbeat trial results for a COVID-19
treatment. Markets in South Africa were closed on Tuesday for a holiday.

Trial results announced on Tuesday showed dexamethasone, used to reduce
inflammation in other diseases such as arthritis, reduced death rates by
around a third among the most severely ill COVID-19 patients admitted to
hospital.

South African pharmaceutical firm Aspen Pharmacare confirmed on Wednesday
that it owns rights to dexamethasone and distributes it in a number of
countries, including at home.

This pushed its shares up 9.29% to 148.90 rand.

BP Bernstein portfolio manager Gerhard Parkin said the news was positive for
Aspen as it meant governments would buy the drug from the firm, with funds
expected to be used to lower the debt that has worried investors and hit its
share price.

A jump in Aspen gave the Johannesburg All-Share index its best day since May
19, closing 3.36% firmer, while the Top-40 companies index surged 3.63%. 

Nigeria

Nigeria's naira slides on official market on plan to align exchange rates

(Reuters) - Nigeria’s naira opened 6.2% lower against the U.S. dollar on the
official market on Wednesday as traders quoted the currency close to the
over-the-counter spot market rate on indications the government would move
to conserve dwindling reserves.

In a finance ministry document seen by Reuters on Wednesday, the Minister of
Finance Zainab Ahmed said the government would seek to unify the exchange
rates to generate more naira from its foreign inflows and manage the rate in
a sustainable manner.

It would also direct oil firms to sell dollars to the central bank as
opposed to the state-owned petroleum corporation NNPC, Ahmed said, adding
that the government would deregulate petroleum prices as part of measures to
safeguard oil revenues.

The policies will be implemented over a 12 month period, the document said.

The naira traded at 385 per dollar on the official market, supported by the
central bank on Wednesday, before recovering to 361, where it closed on
Tuesday, data from Refinitiv Eikon showed.

The central bank did not immediately respond to a request for comment.

Nigeria, Africa’s largest economy, has operated a multiple exchange rate
regime used by the central bank to manage pressure on the naira. But dollar
shortages have plagued the economy after the coronavirus-induced oil price
crash slashed government revenues and weakened the local currency.

The currency has been hitting new lows on the black and over-the-counter
spot markets since March after the central bank adjusted its official rate,
implying a 15% devaluation.

The naira was quoted at 452 on the black market on Wednesday, while the
longest five-year currency futures contract quoted it at 578.69. 

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Global Markets

Global stocks retreat on rising second wave fears

(Reuters) - Asian stocks and Wall Street futures fell on Wednesday as
spiking coronavirus cases in some U.S. states and China crushed hopes of a
quick global economic comeback from the pandemic.

S&P 500 mini futures fell 1.2% in early Asian trade while MSCI’s broadest
index of Asia-Pacific shares outside Japan lost as much as 1%.

Japan’s Nikkei lost 1.3% while in mainland China, bluechip CSI300 shares
shed 0.1% in early trade.

On Wall Street, the S&P 500 lost 0.36% on Wednesday but tech-heavy Nasdaq
added 0.15% due to hopes of increased demand for various online services due
to the epidemic.

Several U.S. states including Oklahoma, where President Donald Trump plans a
campaign rally on Saturday, reported a surge in new coronavirus infections.

The daily count of infections also hit a new benchmark in California and
Texas, while Florida and Arizona also recorded the second-highest daily
increases.

China’s capital cancelled scores of flights, shut schools and blocked off
some neighbourhoods as it ramped up efforts to contain a coronavirus
outbreak that has fanned fears of wider contagion.

Investors rushed to the safety of bonds, with the 10-year U.S. Treasuries
yield falling 3 basis points to 0.704%.

In the currency market, the safe-haven yen rose about 0.3% to 106.72 per
dollar while the U.S. dollar also firmed against risk-sensitive currencies.

The euro dipped 0.1% to $1.1235 while the Australian dollar lost 0.4% to
$0.6852, also hit by worse than expected employment data.

Australia’s unemployment rate jumped to the highest in about two decades in
May as nearly a quarter of a million people lost their jobs due to the
coronavirus pandemic-driven shutdowns.

Oil prices also dropped with U.S. crude futures falling 1.9% to $37.49 per
barrel, while international benchmark Brent lost 1.4% to $40.14 a barrel.

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Commodities Markets

Sudan further opens gold trade to private sector

(Reuters) - Sudan, a gold producer, has taken steps to open up the trade in
the precious metal further to private investors, allowing them to handle all
exports and taking the business out of state hands, the Sudan News Agency
(SUNA) reported on Tuesday.

A circular approved on Tuesday bars government bodies from exporting gold
and opens the trade to private firms provided they meet requirements, such
as paying taxes and royalties, it said.

Sudan has been trying to crack down on gold smuggling and generate more
foreign currency. For years, the central bank had a monopoly on exports,
buying gold locally at fixed prices at collection sites nationwide, which
led to the illegal trade.

Sudan produced an estimated 93 tonnes of gold in 2018, Energy and Mining
Minister Adil Ibrahim said in November, a level that would make it Africa’s
third biggest producer after South Africa and Ghana, according to the U.S.
Geological Survey.

Regulations approved in January opened gold exports to private companies but
limited private mining firms to exporting 70% of their output with the rest
to be sold to the central bank.

The exporters were also required to sell all foreign exchange export
proceeds to the central bank at the official exchange rate, which was at
that time about 45 Sudanese pounds to the dollar, equivalent to about half
the black market rate.

The SUNA report made no mention of that requirement.

The official rate has since weakened to 55 pounds to the dollar, while the
black market rate has fallen further to 146 pounds.

The new rules bar the central bank from buying gold entirely except to
increase official reserves, in which case it must be bought from the local
market, SUNA said.

Traders would now be able to export gold through Khartoum international
airport and the government would crack down on other routes used for
smuggling, the news agency reported.

The new rules were agreed upon by an economic committee meeting headed by
Sudan’s top military commander, Mohamed Hamdan Dagalo, also known as
“Hemedti”, and including Prime Minister Abdalla Hamdok.

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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