Bulls n Bears Daily Market Commentary : 20 March 2020

Mon Mar 23 02:25:30 CAT 2020

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Bulls n Bears Daily Market Commentary : 20 March 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$6,985,274.38 with foreign buys at ZWL$312,760.00 and
foreign sales were ZWL$3,846,901.80 Total trades were 108

The All Share index recovered 10.31 points  to close at 484.37 points. OLD
MUTUAL LIMTED led the movers with a significant rise of $7.4903 to $45.5000,
HIPPO  added $1.200 to settle at $7.2000 and MEIKLES  was $0.6167 stronger
at $7.8500. DELTA also moved up by $0.3735 to $6.6628 and INNSCOR  rose by
$0.1503 to end at $8.0008.

Gains were partially offset by losses in BAT  which eased $1.1503 to close
at $95.8497, BINDURA lost $0.0824 to $0.4019 and AMALGAMATED REGIONAL
TRADING  was $0.0534 weaker at $0.4300. EDGARS  also decreased by $0.0500 to
$0.3800 and DAWN   traded $0.0200 lower at $0.1100.

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

  Global Currencies & Equity Markets

eSwatini

Africa's eSwatini delivers 100 bps rate cut amid COVID-19 outbreak

(Reuters) - The Central Bank of eSwatini decided to cut its main lending
rate by 100 basis points to 5.5%, citing global and domestic economic
developments, including the impact of coronavirus, the country’s central
bank said in a statement late on Friday.

The central bank said the reduction was to ensure the equal pegging of the
local currency with the South African rand after the South African Reserve
Bank (SARB) cut its main lending rate by 100 basis points to 5.25% on
Thursday.

The small land-locked Southern African country has one confirmed case of
COVID-19.

Nigeria

Nigeria central bank devalues official FX rate by 15% after trade with local
bank -traders

(Reuters) - The Nigerian central bank devalued the official currency rate by
15% on Friday, in a move to converge a multiple exchange rate regime which
it has used to manage pressure on the naira, traders said.

The currency in Nigeria, which is Africa’s biggest economy and relies on
crude sales for 90% of foreign exchange earnings, has come under pressure
after oil prices plunged following a disagreement between Russia and Saudi
Arabia over a deeper production cut. The coronavirus outbreak has also hit
global demand for oil.

The central bank on Friday sold the U.S. dollar to local Jaiz Bank at 360
naira on the official market, weaker than the 306 where it was previously
pegged for more than two years, traders said.

Traders said no quotes were shown on Friday for the naira on the official
market, which is supported by the central bank. Previously, traders had
refused to show quotes on the over-the-counter spot market after the bank
vowed to crack down on speculators.

The central bank did not respond to a request for comment on the currency
adjustment. Jaiz Bank also declined comment.

The adjustment comes after the impact of the oil price plunge spread across
asset classes in Nigeria, causing investors to widen spreads on the bond
market, sell stocks and weaken the country’s dollar reserves.

Last week JP Morgan said it expected Nigeria to devalue its currency by
around 10% to 400 naira for the over-the-counter spot market widely quoted
by foreign investors by the end of June.

FX RATE CONVERGENCE

Currency analysts at one Nigerian asset manager said Friday’s adjustment
signalled that the central bank favoured a convergence of its multiple
exchange rates in order to realign the currency as an effective tool for
resource allocation.

Nigeria has operated a multiple exchange rate regime for years, which it has
used to manage pressure on the currency. On the over-the-counter spot market
few trades were done on Friday at 380 naira on thin liquidity, against 370
in the previous session, traders said.

The bank also adjusted the forex rate for exchange bureaux to 380 naira per
dollar from 360, in a sign it wanted to achieve a uniform exchange rate for
the currency, said Aminu Gwadade, head of the exchange bureaux association.

Central bank governor Godwin Emefiele, who supports a strong currency,
backed by President Muhammadu Buhari, has resisted calls for a devaluation,
saying that market fundamentals do not support such move.

But he has been burning through its reserve of $36 billion, which is now
down 16% from a year ago, to prop up the naira.

Since the virus outbreak, which started in China, spread to Nigeria local
importers have been front-loading dollar demand.

Ratings agency Fitch has said that Nigeria’s B+ rating, which has a negative
outlook, could face problems if a prolonged attempt to defend the country’s
currency peg ate heavily into its international reserves.

On Wednesday, Emefiele said he will inject $3.27 billion to boost local
production and stimulate the economy.

Nigeria has reported 12 cases of the coronavirus, with no deaths so far.

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GLOBAL MARKETS

Asia on ropes as S&P500 slides, dollar in demand

(Reuters) - Asian markets were set for another turbulent week on Monday as
more countries all but shut down in the fight against the coronavirus,
threatening to overwhelm policymakers’ frantic efforts to cushion what is
clear to be a deep global recession.

In a taste of what was to come, E-Mini futures for the S&P 500 dived 5%
right at the start of Asian trading to be limit down. Nikkei futures sank
5.8%.

Oil was not far behind as mass bans on travel worldwide crushed demand for
fuel. Brent crude futures slid a further $1.90 to $25.01 a barrel in chaotic
trade, while U.S. crude shed $1.58 to $21.05.

Analysts fear the collapse in oil and other commodity prices will set off a
deflationary wave making it harder for monetary policy easing to gain
traction as economies shut down.

Nearly one in three Americans were ordered to stay home on Sunday to slow
the spread of the disease, while Italy banned internal travel as deaths
there reached 5,476.

U.S. President Donald Trump went on TV to approve disaster deceleration
requests from New York and Washington, while St. Louis Federal Reserve
President James Bullard warned unemployment could reach 30% unless more was
done fiscally.

U.S. stocks have already fallen more than 30% from their mid-February and
even the safest areas of the bond market experiencing liquidity stress as
distressed funds are forced to sell good assets to cover positions gone bad.

Also needed would be evidence that China can re-emerge from the virus,
without reigniting infections and, that other major economies have hit the
inflection points for infection rates, he added.

The mounting economic toll led to a major rally in sovereign bonds late last
week, with efforts by central banks to restore liquidity in the market
allowing for more two-way trade.

Yields on the benchmark U.S. 10-year note dived all the way to 0.84% on
Friday, having been as high as 1.28%, an enormous swing that has become all
too common.

Treasury futures extended the bounce on Monday by climbing more than a full
point.

In New Zealand, the central bank announced its first outright purchase of
government paper aiming to inject much-needed liquidity into the local
market.

In currency markets, the first instinct on Monday was to dump those
leveraged to global growth and commodity prices, sending the Australian
dollar down 1.4% to $0.5717.

The U.S. dollar was again buoyed by safe-haven flows and edged up 0.2% on
the yen to 111.03, while the euro eased 0.3% to $1.0662.

Against a basket of currencies the dollar gained 0.4% to 102.810.

The steady rise in the dollar undermined gold, which slipped 0.5% to
$1,490.07 per ounce.

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Commodities Markets

China steel, copper inventories dip as demand recovers from virus

(Reuters) - Steel and copper inventories in China fell this week for the
first time in months, exchange and consultancy data showed, as downstream
metal consumers severely hit by the coronavirus come closer to restoring
normal operations.

Total steel product stocks in China stood at 37.05 million tonnes as of
Thursday, according to Mysteel. That was down 4.8% from 38.91 million tonnes
a week earlier and marked the first drop since Dec. 19 as the traditional
stock build ahead of the Lunar New Year was exacerbated by a virus-driven
collapse in demand.

Inventories of copper CU-STX-SGH> in warehouses tracked by the Shanghai
Futures Exchange fell 0.7% from last week’s near four-year high to 377,247
tonnes, the first dip since Jan. 10.

In the virus epicentre of Hubei province, fabricators of copper products -
widely used in power and construction - have not fully restored production
but companies everywhere else in China essentially have, an industry
official overseeing the sector said on Friday.

Industrial output in China contracted at its sharpest pace in 30 years in
the first two months of 2020 but this week’s inventory declines indicate
manufacturing and construction are returning to normal, with the country
reporting no locally transmitted new virus cases for three days running.

The picture outside China, however, is bleak, with transport restrictions
around the world set to hit consumption.

ShFE zinc stocks ZN-STX-SGH also declined this week, falling 0.9% to 168,325
tonnes and lead stocks plunged 31.9% to a four-month low.

Inventories of aluminium AL-STX-SGH, meanwhile, nudged up another 2.8% to
their highest since May last year.

About 65% of Chinese aluminium fabricators are back at work, up 25
percentage points from February, research house Antaike said on Thursday,
adding that operating rates at aluminium foil producers had risen to more
than 85%.

Asia Gold-Singapore demand surges, India discounts narrow sharply on price
fall

(Reuters) - Physical demand for gold jumped this week in Singapore as buyers
took advantage of a recent slide in prices after investors dumped the metal
to raise cash, while discounts in India narrowed despite closures due to the
coronavirus outbreak.

In Singapore, premiums rose to $0.70-$0.80 an ounce versus last week’s
$0.50-$0.60.

Spot gold prices have fallen 14% from a more than 7-year high of $1,702.56
an ounce hit earlier this month as the rapid spread of virus triggered panic
and sparked a wide sell-off in assets. But that has made bullion, which
normally acts as a safe haven in times of crisis, attractive to some.

In India, discounts narrowed to $6 an ounce over official domestic prices
this week, from last week’s discount of $33. The domestic price includes a
12.5% import tax and 3% sales tax.

Indian gold futures were trading around 40,700 rupees per 10 grams on
Friday, having hit a record high of 44,961 rupees earlier this month.

Meanwhile, the Bangladesh Jewellers Association lowered the prices of all
types of gold, the first cut since September, citing uncertainty over the
pandemic.

The new rates, with the best quality gold priced at 60,362 taka ($710) per
Bhori, or 11.664 grams, came into effect from Thursday.

In top consumer China, prices swung between discounts of as much as $17 an
ounce and premiums of $5, while in Hong Kong, gold was sold at par with the
benchmark up to a premium of $1 an ounce.

In Japan, premiums of $0.50-$1 per ounce were offered.

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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