Bulls n Bears Daily Market Commentary : 26 June 2020

Fri Jun 26 15:31:16 CAT 2020

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Bulls n Bears Daily Market Commentary : 26 June 2020

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Zimbabwe Stock Exchange Update

ZSE rebounds in weekending session¡

The ZSE rebounded from previous session¡¯s minor setback as investors
continue to hedge themselves against inflationary pressures by buying
stocks. The primary All Share Index gained 1.58% to 1,788.75pts while, the
Industrial Index rose 1.57% to close at 5,870.36pts. 

The Mining Index advanced 1.88% to 3,995.48pts spurred by gains in Bindura
and Riozim that improved 2.19% and 0.78% to close at $3.9378 and $11.3382
respectively. 

The blue-chip index accumulated 1.05% to 1,232.79pts, buoyed by SeedCo
International, National Foods and Delta. RTG headlined the winners of the
day on a 20% rally to $2.6025 while, cement manufacturer Lafarge surged
19.84% to settle at $6.0400.

Banking group NMB put on 18.79% to $4.1575 while, SeedCo International
jumped 17.14% to $29.9500. First Capital completed the top five risers¡¯
pack on a 16.92% lift to $1.1692.-EFE Securities

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Global Currencies & Equity Markets

South Africa

South Africa's rand little changed amid rising virus cases

South Africa’s rand was little changed early on Friday amid surging global
coronavirus infections, despite the currency’s staging a recovering after a
gloomy budget earlier in the week.

At 0617 GMT, the rand traded at 17.1750 versus the dollar, 0.2% lower than
its New York close on Thursday.

The rand had regained ground after the budget speech, which forecast
ballooning debt and a higher government deficit, as well as fading hopes
globally of a quick economic recovery.

Finance Minister Tito Mboweni said on Wednesday the main budget deficit
would widen to a record 14.6% of gross domestic product in 2020/21, while
public debt would top 80% as the country borrows to plug gaps in revenue
caused by the COVID-19 pandemic.

However rising cases of the new coronavirus across the globe have kept
investor optimism in check. In the United States, Florida, Oklahoma and
South Carolina reported record increases in new cases on Wednesday and
Australia posted its biggest daily rise in two months.

Cases in South Africa have also surged, with confirmed COVID-19 cases up by
more than 6,000 from Wednesday to reach over 118,000 by late on Thursday,
with more than 2,200 registered deaths. “With minimal data releases today,
we are expecting to see the rand test its continued move stronger, as
markets search for a new catalyst,” Bianca Botes, executive director at
Peregrine Treasury Solutions, said in a morning note.

The rand is expected to trade in a range of 17.00 to 17.30 rand to the
dollar, NKC African Economics said in a morning note.

In fixed income, government bonds strengthened with the yield on the 2030
bond down 2.5 basis points to 7.535%. 

Zambia

Zambia sees 2020 expenditure up $1.1 bln as kwacha falls

(Reuters) - Zambia’s expenditure is expected to rise by approximately 20
billion kwacha ($1.11 billion) this year as the local currency weakens,
piling more pressure on a nation already struggling with huge debt,
President Edgar Lungu said on Thursday.

External debt service will rise by 8.7 billion kwacha because of a sharp
fall in the currency, Lungu said in a national address.

Zambia has $3 billion of Eurobonds outstanding and owes $2 billion to
commercial banks, $2 billion to the International Monetary Fund and World
Bank, and a further $3 billion to China.

The kwacha has weakened more than 28% against the U.S. dollar so far this
year, with the central bank in May attributing the depreciation to
macroeconomic challenges associated with debt service and debt levels.

Economic activity in Africa’s second-largest, copper-producing nation has
also been hurt by the coronavirus crisis.

Lungu announced the reopening of all international airports to revive
tourism after closures in March hit the sector.

Zambia has registered 1,497 coronavirus cases and 18 deaths, Lungu said.

Zambia is reviewing its 2020 budget after a reduction in revenue as a result
of the coronavirus pandemic and other factors, Secretary to the Treasury
Fredson Yamba said.

Zambia’s budgeted revenue is estimated to fall short of target by close to
20% as a result of economic adjustments due to COVID-19, the ministry of
finance said in April.

$1 = 18.0700 Zambian kwacha

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GLOBAL MARKETS

Stocks, oil and euro gain despite surging coronavirus cases

(Reuters) - Markets showed signs of optimism on Friday, with European shares
gaining for a second consecutive day, oil prices rising and the dollar
falling, despite a record number of new COVID-19 infections in the United
States.

Coronavirus cases rose across the United States by at least 39,818 on
Thursday, the largest one-day increase yet. The governor of Texas
temporarily halted the state’s reopening on Thursday as infections and
hospitalisations surged.

But European shares were undeterred, with the Stoxx 600 up 1.2% at 1030 GMT,
erasing some losses from earlier in the week . The index is set to end the
week down 0.5%, its smallest weekly change in five months. London’s FTSE 100
was up around 1.5%.

The MSCI world equity index, which tracks shares in 49 countries, was up
0.4%, extending gains from late on Thursday.

Graf said that recent downward corrections of market optimism have had
little follow-through.

The possibility of a second coronavirus wave and renewed lockdowns has
limited market impact because if lockdown measures resume then markets
expect this to raise the likelihood of more fiscal support for economies, he
said.

Having risen between 0500 and 0700 GMT, the dollar fell in London, reaching
97.325 against a basket of currencies by 1030 GMT and on track to end the
week down around 0.4%.

The riskier New Zealand dollar was up 0.2%, having spent most of June
unchanged from its level before the coronavirus crisis for markets peaked in
March.

The euro gained versus the U.S. dollar and is on track for its biggest
weekly rise in three weeks after the European Central Bank reaffirmed its
dovish stance in the minutes of its policy meeting.

The euro zone is “probably past” the worst of the economic crisis caused by
the pandemic, European Central Bank President Christine Lagarde said on
Friday, while urging authorities to prepare for a possible second wave.

Oil prices also rose, extending gains on optimism about a recovery in fuel
demand worldwide, despite signs of a revival in U.S. crude production.

U.S. West Texas Intermediate crude futures gained 20 cents, or 0.5%, to
$38.92. Brent crude futures rose 31 cents, or 0.8%, to $41.36.

Demand for safe euro zone government debt was little changed, with Germany’s
10-year Bund yield edging up from recent one-month lows at -0.464%.

The yield on benchmark 10-year Treasuries was steady at 0.6725%. Gold edged
up slightly to $1,763.65 an ounce. US/ GOL/

S&P 500 futures pointed to a slightly bullish U.S. stock market open, up 1%.

Investors have poured $2.6 billion into Treasury inflation-protected
securities (TIPS) in the week to Wednesday, Bank of America said, the
largest amount ever.

Credit Suisse changed its position on global equities to “neutral”, from
“overweight”, saying that it was taking profits after the recent rally, but
kept its overweight positions in credit markets.

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Commodities Markets

Asia Gold-Discounts widen in top Asian hubs as COVID-19 keeps buyers indoors

(Reuters) - Physical gold discounts widened in China and India this week as
a surge in coronavirus infections restricted buying, while the reopening of
retail outlets in Singapore saw a slight pick up in demand for the precious
metal.

Indian dealers were offering a discount of up to $18 an ounce over official
domestic prices this week, from last week’s $13. The domestic price includes
a 12.5% import tax and 3% sales tax.

Indian gold prices hit a record high of 48,589 rupees per 10 grams on
Wednesday.

Retail buyers are not going out shopping as coronavirus cases have been
rising in the last few days, said a Mumbai-based dealer with a bullion
importing bank.

In China, discounts of $10-$20 an ounce were being offered compared with
$10-$15 last week.

Physical gold was sold at a discount of $0.50 an ounce to a premium of $0.50
an ounce versus the benchmark in Hong Kong, slipping from last week’s
premium of $0.50-$1.50.

In Singapore, premiums of $0.80-$1.50 an ounce were being charged over the
benchmark prices versus last week’s $0.80.

Thailand’s gold shipments jumped 735% in May from a year earlier.

In Japan, gold was sold 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
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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