Bulls n Bears Daily Market Commentary : 19 March 2020

Fri Mar 20 02:29:49 CAT 2020

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Bulls n Bears Daily Market Commentary : 19 March 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$21,761,497.85 with foreign buys at ZWL$657,516.00 and
foreign sales were ZWL$5,494,966.00 Total trades were 207

The All Share index continues to lose ground after losing 0.36 points to
close at 474.06 points. HIPPO  eased $0.5067 to $6.0000, INNSCOR AFRICA lost
$0.1493 to $7.8505 and POWERSPEED  was $0.0600 weaker at $0.3500. ECONET
WIRELESS  also decreased by $0.0412 to $2.6074 and OK ZIMBABWE  traded
$0.0325 lower at $1.9000.

Trading in the positive was MEIKLES LIMITED  which added $0.6878 to $7.2333,
OLD MUTUAL rose by $0.1019 to $38.0097 and PPC LIMITED was $0.0981 stronger
at $4.5981. Two more conuters to advance were AXIA  which was up by $0.0429
to $2.0501 and PADENGA HOLDINGS  was $0.0278 firmer at $5.4581.

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

  Global Currencies & Equity Markets

South Africa

S.Africa's rand sinks as big rate cut fails to stem declines

(Reuters) - South Africa’s rand fell on Thursday, with even the central
bank’s biggest interest rate cut since the global financial crisis unable to
drag the currency back into positive territory.

At 1627 GMT, the rand traded at 17.3900 per dollar, 1.76% weaker than its
previous close and slightly above its January 2016 low, as the coronavirus
pandemic continued to cause market turmoil across the world.

Africa’s most industrialised economy is already in recession and the
pandemic is expected to make matters worse by hurting tourist arrivals and
commodity exports to China, an important trading partner.

The South African Reserve Bank said it would cut interest rates by 100 basis
points on Thursday, joining other central banks around the world in taking
aggressive measures to try and mitigate the damage.

Investec said in a note that while the rand had pulled up following the
decision, it remains heavily influenced by the global outlook and runs
deeper into the severe down case as fears of a worldwide recession rise.

The Africa Centres for Disease Control warns that “the epidemic is expected
to take hold more fully in coming weeks, and this likely includes in (South
Africa} too,” it said.

Bond yields also remained elevated and, like the rand, remained barely
changed relative to such a significant move by the central bank.

The yield on the 10-year government bond due in 2030 was up 1 basis point at
11.730%.

It was another rough day for many stocks too, with the Johannesburg Stock
Exchange (JSE) overall falling further, though not as rapidly as it had
earlier in the week.

The JSE’s Top-40 index closed just over 1% lower at 34,239 points, while the
broader all-share index fell 1.33% to 37,963 points. A host of firms saw
their shares sink by more than 10% or 15% as the coronavirus sell-off hit
local stocks.

One bank, Capitec tried to calm nervous investors as its shares plummeted
far more than rivals, at one point losing more than 50% over Wednesday and
Thursday.

Anglo American Platinum’s stock closed 7.35% lower after the company said
production would be at the lower end of its guidance following an explosion
at its processing facilities prompted a force majeure. 

Nigeria

Nigerian currency dealers refuse to show naira quotes after vow to crack
down on speculators

(Reuters) - Nigerian currency dealers are refusing to show quotes to sell
the U.S. dollar after the central bank last week vowed to crack down on
speculators in a bid to stop the naira from depreciating, traders said on
Thursday.

The central bank last Thursday said it was collaborating with the Nigerian
Financial Intelligence Unit (NFIU) to uncover speculation and would charge
such dealers for economic sabotage. The bank added that market fundamentals
did not support a devaluation.

The naira has been easing on the over-the-counter market on fears of a
possible devaluation in the wake of an oil price collapse that has worsened
dollar shortages in Africa’s biggest economy.

The currency was quoted at 370 per dollar a week ago versus 366.5 two weeks
earlier. On the black market the naira traded at 375 while it steadied at
307 on the official market supported by the central bank.

On Thursday traders were willing to buy dollars between 368 and 370 naira on
the over-the-counter market but there were no sellers, they said, as
liquidity was tight and traders were weighing central bank’s threat.

JP Morgan analysts have said they expect the naira to be devalued by around
10% to 400 naira per dollar by the end of June. 

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Dollar rules; ECB stimulus boosts bonds

(Reuters) - The dollar surged on Thursday as extraordinary steps by central
banks across the world to cope with a coronavirus-induced financial rout had
mixed success.

The dollar gained against the British pound to its highest since 1985, last
up 0.8% at $1.1535, as investors rushed to secure liquidity.

Against a basket of six major currencies the dollar gained 0.6%, near a
more-than-three-year high touched a day earlier. Bond markets recovered
after the European Central Bank pledged late on Wednesday to buy 750 billion
euros ($820 billion) in sovereign debt through 2020. That brought the ECB’s
planned purchases for this year to 1.1 trillion euro, with the new purchases
alone worth 6% of the euro zone’s GDP.

Sovereign bond yields in Italy and across the euro zone dropped after the
ECB’s emergency measures, and European stocks arrested their rout.

Europe’s broad Euro STOXX 600 eked out a 1.2% gain in early trading, with
most indexes in Frankfurt up a 1.5% and Paris climbing 3.3%. London’s FTSE
added 0.6%.

Equities remained shaky elsewhere as the dollar rose. MSCI’s broadest index
of Asia-Pacific shares outside Japan slumped by 4% slump. Korea and Taiwan
led the losses as the index plunged to a four-year low, with circuit
breakers triggered in Seoul, Jakarta and Manila.

MSCI’s world equity index, which tracks shares in 49 countries, was down
0.2%.

Wall Street futures were pointing to gains of 0.1%..

ITALIAN YIELDS FALL

Italy, which has seen its borrowing costs jump in recent days, led the drop
in yields after the ECB move. Its two-year bond yields slumped by than 100
basis points to 0.41% , heading for its biggest one-day fall since 1996.
Italy’s 10-year bond yields slid as much as 90 bps to 1.40% .

The gap over safer German Bund yields tightened almost 100 bps from
Wednesday’s closing levels and were set for the biggest daily drop since the
2011 euro one crisis.

Markets elsewhere failed to respond to central bank action. Before the ECB
move, the U.S. Federal Reserve promised a liquidity facility for money
market mutual funds and the Bank of Japan made two unscheduled bond
purchases totalling 1.3 trillion yen ($12 billion). The Australian central
bank slashed interest rates to a record low of 0.25%.

Traders reported huge strains in bond markets, however, as distressed funds
sold any liquid asset to cover losses in stocks and redemptions from
investors.

Benchmark 10-year sovereign bond yields in New Zealand, Malaysia, Korea and
Singapore and Thailand surged as prices tumbled, and U.S. 10 year Treasuries
rose 10 basis points through the session.

Commodities fell as the virus outbreak worsened. The pandemic has killed
almost 9,000 people globally, infected more than 218,000 and prompted
widespread emergency lockdowns.

Gold fell 1% before regaining some of those losses. Copper hit its
down-limit in Shanghai.

Oil steadied after an overnight plunge to an 18-year low in Asian trade.
Brent was up $2.14 to $27.02.

J.P. Morgan economists forecast the U.S. economy will shrink 14% in the next
quarter and the Chinese economy will drop more than 40% on an annualised
basis in the current one.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper hits lowest since Jan 2016 on deepening coronavirus fears

(Reuters) - Copper languished near four-year lows on Thursday as the spread
of the coronavirus intensified fears about global economic growth and demand
for industrial metals.

Economic activity in top consumer China and other major economies has been
shredded by government measures to contain the virus, which has so far
claimed more than 9,000 lives, sparking recession fears around the world.

Benchmark copper on the London Metal Exchange (LME) snapped a three-session
losing streak to close 2% up at $4,835 a tonne after bargain-hunting by some
players, one trader said.

Earlier, the price fell as low as $4,371 a tonne, its lowest since January
2016, and has shed about 12% so far this week.

Copper, which is used by investors as a bellwether for global economic
health, is still within striking distance of its lowest since the global
recession in 2009.

Traders say falling production costs thanks to tumbling energy prices have
lowered the floor for metal prices. A stronger U.S. dollar, which makes
commodities more expensive for holders of other currencies, was also
subduing demand.

Meanwhile, industrial metals markets are expecting further deliveries into
exchange-monitored warehouses as end-users in Europe and the United States
close down operations due to the virus, indicating supply is swamping
demand.

Inventories of copper in warehouses approved by the LME MCUSTX-TOTAL have
jumped about 30% over the last week to 231,025 tonnes, mostly in South Korea
and Taiwan.

In China, the world’s top copper consumer, stocks of the metal in warehouses
monitored by the Shanghai Futures Exchange are at four-year highs of 380,085
tonnes. CU-STX-SGH

In aluminium MALSTX-TOTAL, total stocks surged 41,775 tonnes to 1.01 million
tonnes, reversing a steady trend of declining stocks.

Pressure on metals and mining companies globally is increasing, with many
announcing delays and suspensions of operations as the virus disrupts supply
chains and puts restraints on staff.

Chilean copper miner Codelco will reduce operations for 15 days to comply
with a national state of catastrophe while MMG Ltd reduced mining and the
transport of concentrates in Peru.

“Should these (delays) extend beyond a few weeks, it could ultimately lead
to a tighter market for copper in the medium term vs forecast surpluses
generated by substantial mine supply growth through 2021-23,” analysts at
Macquarie said in a note.

Elsewhere in the complex, aluminium was down 1.2% at $1,630 a tonne, zinc
was steady at $1,847, lead eased 3% to $1,625.50, tin added 2.4% to $13,900
and nickel lost 1.3% to $11,250.

Shanghai Gold Exchange cuts trading margin, limit for silver contract

(Reuters) - China’s Shanghai Gold Exchange said on Thursday it would cut
margin requirement for its Ag(T+D) silver contract to 16% from 19% from
settlement on March 19 as market remained stable after trade resumption.

The exchange will also change trading limit for silver contracts to 15% from
18%, effective from March 20, it said in a statement on its website. 

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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