Bulls n Bears Daily Market Commentary : 09 March 2020

Tue Mar 10 01:46:54 CAT 2020

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Bulls n Bears Daily Market Commentary : 09 March 2020

 <mailto:info at bulls.co.zw> 

Zimbabwe Stock Exchange Update

Market Turnover ZWL$30,907,631.77 with foreign buys at ZWL$4,427,412.65 and
foreign sales were ZWL$11,314,799.50 Total trades were 237

The All Share index opened the week on a higher note adding 6.53 points  to
close at 471.34 points. BAT  gained $2.0000 to end at $90.0000, OLD MUTUAL
LIMITED  added $0.6734 to close at $50.5088 and DELTA CORPORATION LIMITED
was $0.3272 stronger at $6.2782. SIMBISA  also increased by $0.1993 to
$3.9000 and SEEDCO   traded $0.1975 firmer $4.5000.

Trading in the negative; ECONET eased $0.1656 to $2.5125, ZIMRE  lost
$0.0100 to $0.3900 and EDGARS  was $0.0040 lower at $0.5000. ZPI   also
decreased by $0.0031 to $0.1719 and AFRICAN SUN   traded $0.0009 weaker at
$0.6500.

. <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

S.Africa's rand crumbles to 4-year low as panic selling in Asia deepens rout

(Reuters) - South Africa’s rand tumbled to a four-year low on Monday,
joining a global sell-off in riskier assets as the coronavirus outbreak
continued to spread globally and oil prices collapsed.

The rand was already on the back foot after ratings firm Moody’s, the last
of the top three agencies to rank the country at investment level, cut it
2020 growth forecast on Friday to 0.4% from 0.7%, citing the impact of the
coronavirus alongside long-standing fiscal frailties.

South Africa confirmed its first case of the virus on Thursday, and by the
weekend officials had confirmed another two cases, but offshore risks to the
rand looked set to drag the currency even lower.

At 0630 GMT, the rand was 3.82% weaker at 16.3000 per dollar, having plunged
to 16.9850, its lowest since February 2016, earlier in the session.

The sell-off was exacerbated by low liquidity as well as the ongoing
unwinding of carry trades as downgrade risks heightened.

Against the euro, the rand was down 4.8% to 18.5622 and 3% softer versus the
British pound at 21.2407 . The local currency hit a record low against the
Japanese yen, giving up more than 6%.

Volatility on the rand also spiked, with the one-month risk reversals, used
to hedge against sharp price moves, climbing to a 7-month high.

Bonds also suffered despite indications that central banks in developed
markets, including the U.S. Federal Reserve, would intervene further by
cutting lending rates to shield their economies.

The yield on the benchmark 2030 government issue was up 12.5 basis points to
9.18%.

Kenya

Kenyan shilling weakens against dollar

(Reuters) - The Kenyan shilling weakened on Monday due to dollar demand from
commercial banks beefing up their foreign reserves outweighing inflows from
diaspora remittances, traders said. 

At 0639 GMT, commercial banks quoted the shilling at 102.90/103.10 per
dollar, compared with 102.75/95 at Friday's close. 

The shilling dropped to its weakest level in more than three months last
week after the central bank said it was looking to buy $100 million from
banks every month until June.  

GLOBAL MARKETS

Coronavirus fears, oil price plunge pummel world markets

(Reuters) - Global stock markets plunged on Monday and oil prices tumbled by
as much as a third after Saudi Arabia launched a price war with Russia,
sending investors already spooked by the coronavirus outbreak fleeing for
the safety of bonds and the Japanese yen.

A benchmark pan-Europe index entered bear market territory and a 7% slide in
the S&P 500 at the open on Wall Street triggered a circuit-breaker put in
place after the financial crisis a decade ago, halting U.S. stock trading
for 15 minutes.

The yield on the 10-year U.S. Treasury note slid as low as 0.318% - a level
unthinkable just a week ago - and German government debt yields set fresh
record lows as investors rushed to cut risk assets and snap up safe-havens.
Gold briefly topped $1,700 an ounce for the first time since 2012 and is up
more than 10% so far this year.

The rout’s depth, sparked after Saudi Arabia stunned markets on Sunday with
plans to hike oil production sharply following the collapse of the
Organization of the Petroleum Exporting Countries’ supply-cut agreement with
Russia, unnerved investors.

Mike Loewengart, managing director of Investment Strategy at E*TRADE
Financial Corp, said in an email that as markets move at breakneck speeds
wide price swings are never comfortable.

Jim Vogel, interest rate strategist at FHN Financial in Memphis, Tennessee,
said “nobody thought that Saudi Arabia would start a price war. Suddenly you
have to re-evaluate what else could impact this.”

Saudi Arabia’s grab for market share was reminiscent of a drive in 2014 that
sent prices down by about two-thirds, while the renewed plunge on Wall
Street came exactly 11 years after U.S. stocks touched bottom during the
financial crisis.

Brent and U.S. crude futures slid $14 a barrel to as low as $31.02 and
$27.34 in volatile trade.

Both crude benchmarks recouped some losses but still fell almost 25% in
their biggest daily drop since 1991, the start of the first Gulf War.

Brent fell $10.91 to settle at $34.36 a barrel, while U.S. crude settled
down $10.15 at $31.13 a barrel.

The Dow fell a record 2,000 points when trading opened and the S&P 500
posted its largest single-day percentage drop since December 2008, the
depths of the financial crisis.

All three of Wall Street’s major benchmarks - the Dow industrials, S&P 500
and Nasdaq composite - were roughly 1 percentage point shy of bear
territory.

The Dow fell 2,013.76 points, or 7.79%, to 23,851.02. The S&P 500 lost
225.81 points, or 7.60%, to 2,746.56 and the Nasdaq dropped 624.94 points,
or 7.29%, to 7,950.68.

Equity markets in Frankfurt and Paris tumbled about 8.5% and London tanked
11%. Italy’s main index slumped 14.3% after the government over the weekend
ordered a lockdown of a northern swath of the country, including the
financial capital, Milan.

The pan-regional STOXX 600 fell into bear territory from an all-time high in
February. Oil stocks bore the brunt of losses, with giants BP 19.5% lower
and Royal Dutch Shell off 18.2% as the European energy sector slid to its
lowest since 1997.

The losses in Europe amplified declines in Asia. MSCI’s broadest index of
Asia-Pacific shares ex-Japan lost 4.4% in its worst day since August 2015
and Japan’s Nikkei dropped 5.1%. Australia’s commodity-heavy market closed
down 7.3%, its biggest single-day fall since 2008.

‘DO SOMETHING!’

Investors piled into safe-haven debt, driving the 30-year U.S. Treasury
yield below 1% on bets the Federal Reserve will cut interest rates by at
least 75 basis points when policymakers meet next week. The Fed last week
cut rates by half a percentage point after an emergency meeting.

The number of people worldwide infected with the coronavirus rose above
111,600, and 3,800 have died.

There were mounting worries that debt-heavy U.S. oil producers would be
unable to meet financial obligations as the drop in prices slashes their
revenue.

ECB MEETING

The European Central Bank meets on Thursday and will be under intense
pressure to act, but rates are already deeply negative.

The 10-year Bund yield - the euro zone’s leading safe asset - fell to a
record low of -0.906%, while inflation expectations for the euro zone sank
below 1% for the first time.

Data suggested the global economy toppled into recession this quarter.
Figures from China over the weekend showed exports fell 17.2% in
January-February from a year earlier.

The fall in U.S. yields and Fed rate expectations pushed the dollar to its
largest weekly loss in four years before it recovered some ground..

The dollar extended its slide to 101.20 yen, depths not seen since late
2016. It was last down 3.1% at 102.07.

The euro shot to the highest in over 13 months at $1.1492 and was last at
$1.1431.

Gold retreated from the $1,700 level it briefly touched as investors sold
bullion to cover margin calls in plummeting securities, overshadowing the
metal’s safe-haven status.

U.S. gold futures settled up 0.2% at 1,675.70 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Oil price cut triggers sell-off; rouble, Mexican peso at 4-yr low

(Reuters) - Currencies of oil-exporting countries Russia and Mexico sank
more than 7% on Monday as crude oil lost more than a quarter of its value
after Saudi Arabia launched a price war with Russia, adding to fears of a
global recession.

Stocks across emerging markets were also deep in the red, as global investor
confidence was shattered by the double whammy of the sharpest one-day fall
for oil in 29 years and the rapid spread of the coronavirus outside China.

Saudi Arabia slashed its official crude selling price and set plans for a
dramatic increase in production following Russia’s refusal to make a further
steep output cut to stabilize oil markets.

Saudi stocks plunged as much as 9% to their lowest since September 2016,
with Saudi Aramco down 10%.

The rouble slumped as much as 10% against the euro to hit its lowest level
since the first quarter of 2016. Russian authorities were quick to respond
to the currency’s fall on Monday, a non-working day. The central bank
suspended its daily purchases of foreign currency for state reserves for 30
days.

Mexico’s peso also slid to its lowest level since 2016 as investors worried
about the impact of the price cut on heavily indebted state oil firm Pemex.

South Africa’s currency tumbled to four-year lows after state power utility
Eskom said it would resume nationwide power cuts in Africa’s most
industrialized nation on Monday.

The rand dropped up to 7.6%, before cutting some losses to trade down 2.3%
at 16.03 to the dollar.

A massive drop in yields quashed the dollar, helping cap losses in some
Asian currencies. The Indian rupee declined the least among emerging market
peers as the net importer was one among the few beneficiaries of the oil
slump.

SEA OF RED

The MSCI index of developing world equities lost 4.4%, giving up its gains
from last week when sentiment had been lifted by policy easing from the U.S.
Federal Reserve and some emerging market central banks to stem the economic
damage from the health crisis.

Markets have fully priced in an additional 75 basis points cut by the Fed
next week as the number of global infections surpasses 100,000, even as
analysts question the extent to which monetary easing will be meaningful in
reviving supply chains.

Data from Institute of International Finance showed emerging markets are in
the middle of their worst outflow period on record as portfolio managers
pulled around $30 billion in about 45 days.

Asian shares gave up between 3% and 6%, taking an index of regional equities
excluding Japan down 5% to its lowest in six months.

Shares in Turkey and South Africa lost between 3% and 6%. Polish stocks
crumbled 6.5% to their lowest since 2009, while Hungarian stocks slumped 8%.

Jingye Group completes buyout of British Steel

(Reuters) - Steelmaker Jingye Group completed its buyout of British Steel on
Monday, the Chinese company said, reviving a business that was placed into
compulsory liquidation last May.

A statement from Jingye said that it had completed the acquisition of
British Steel’s UK and Dutch assets from the official receiver and confirmed
it planned to invest 1.2 billion pounds ($1.57 billion) in the company. ($1
= 0.7635 pounds) 

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

 <mailto:info at bulls.co.zw> 

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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