Bulls n Bears Daily Market Commentary : 23 March 2020

Tue Mar 24 03:25:53 CAT 2020

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Bulls n Bears Daily Market Commentary : 23 March 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$9,933,504.89 with foreign buys at NIL and foreign sales
were ZWL$1,093,361 Total trades were 171

The All Share index gained 10.05 points to close at 494.42 points. PADENGA
HOLDINGS LIMTED led the movers with a significant rise of $0.4500 to
$6.0000, ECONET WIRELESS added $0.3980 to settle at $2.9985 and DELTA
CORPORATIONS was $0.3840 stronger at $7.0468. FIRST MUTUAL PROPERTIES  also
moved up by $0.1325 to $0.8025 and OK ZIMBABWE  rose by $0.1000 to end at
$2.0000.

Trdaing in the negative was OLD MUTUAL LIMITED  which eased $1.8826 to close
at $43.6174, MEIKLES LIMITED lost $0.7606 to $7.0894 and HIPPO  was $0.1574
weaker at $7.0426. Two more counters to lose ground were CASSAVA SMARTECH
which eased $0.0543 to $2.7457 and BINDURA  traded $0.0463 lower at $0.3556.

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

  Global Currencies & Equity Markets

South Africa

South Africa's rand on the ropes as virus fears mount

(Reuters) - South Africa’s rand weakened on Monday, threatening to break
through a lifetime low against the dollar as concerns over coronavirus
infections and likely stricter measures weighed on already shaky sentiment,
as stocks fell.

At 1510 GMT the rand traded 1.08% weaker at 17.7200 per dollar, after
hitting a high of 17.5800 earlier in the session as it edged closer to an
all-time worst level of 17.9950 in 2015.

Bonds continued to tumble, with the government issue due in 2030 adding 63.5
basis points to 12.305%.

With South Africa reporting a sharp jump in confirmed coronavirus cases on
Monday to 402, from less than 50 just over a week ago, sentiment towards the
rand and other local assets is set to remain on the ropes.

President Cyril Ramaphosa has declared a national state of disaster and
imposed measures such as travel bans to curb the spread of coronavirus. He
is expected to address the nation later on Monday on new measures.

On the stock market, the JSE’s Top-40 index closed down 4.43% at 34,696
points, while the broader all-share index fell 4.98% to 38,267 points. A
host of firms saw their shares sink by more than 10% or 15% as the
coronavirus sell-off hit local stocks.

The banking sector led the fallers down 9.89%

Egypt

Currency black market re-emerges in Egypt as coronavirus spreads

(Reuters) - A small black market in the Egyptian pound has re-emerged in the
last few days as the coronavirus takes a toll on the country’s main sources
of foreign currency, bankers and businessmen said on Monday.

Some unofficial trades were taking place at 16.15 pounds to the dollar,
compared to the 15.75 pounds offered by currency exchange bureaus and banks,
they said.

Egypt has so far registered 327 cases of the respiratory disease caused by
the virus, including 14 deaths, the health ministry said on Sunday.

The government last week suspended almost all commercial flights in an bid
to control the spread, devastating the vital tourism industry that earned
the country $12.5 billion in 2019.

The number of container ships passing through the Suez canal fell by 7.3% in
February, an indication the coronavirus is dampening world trade, Al Mal
reported on Monday.

A brisk carry trade in Egyptian treasury bills has slowed in the last few
weeks, economists say, with foreign investors pulling dollars out of Egypt.

Still, with $45.51 billion in foreign reserves as of end-February, Egypt has
a strong armory to support the currency - which has lost little value on
official markets since the outbreak compared to currencies of other emerging
market countries such as Russia, Turkey and South Africa.

Naeem Brokerage said in a note on Monday that the dollar was trading at
16.10-16.15 pounds in the parallel market, but that trade was very thin as
importers postpone orders.

The central bank closely manages the currency, sometimes putting pressure on
banks not to let it weaken.

A licensed money changer in downtown Cairo said on Monday that retail trade
had ground to a near halt in the last few weeks, with little demand for
either dollars or pounds.

One step already taken was for banks to issue certificates of deposit (CDs)
for Egyptian pound accounts, with a 15% guaranteed rate of interest over a
fixed period to deter people from switching to dollar holdings, he said.

Another investment banker said colleagues had asked a state bank for dollars
as a test. They were “asked to wait for 48 hours but were granted what they
requested, but not before some negotiations regarding the quantity,” he
said.

In another move to deter dollarisation, the central bank on Monday told
commercial banks to cut their interest rates on dollar deposits to one
percentage point above the London Interbank Deposit Rate (Libor) from the
previous one and a half percentage points.

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GLOBAL MARKETS

Asia stocks rally, Fed launches limitless QE against economic reality

(Reuters) - Asian stocks rallied on Tuesday as the U.S. Federal Reserve’s
sweeping pledge to spend whatever it took to stabilise the financial system
eased debt market pressures, even if it could not offset the immediate
economic hit of the coronavirus.

While Wall Street seemed unimpressed, investors in Asia were encouraged
enough to lift E-Mini futures for the S&P 500 by 1.9% and Japan’s Nikkei by
4.9%.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.2%,
though that followed a drop of almost 6% on Monday. South Korea and
Australia also recouped a little of their recent losses.

In its latest drastic step, the Fed offered to buy unlimited amounts of
assets to steady markets and expanded its mandate to corporate and muni
bonds.

The numbers were certainly large, with analysts estimating the package could
make $4 trillion or more in loans to non-financial firms.

The Fed’s package helped calm nerves in bond markets where yields on
two-year Treasuries hit their lowest sine 2013, while 10-year yields dropped
back sharply to 0.77%.

Yet analysts fear it will do little to offset the near-term economic damage
done by mass lockdowns and layoffs.

Speculation is mounting data due on Thursday will show U.S. jobless claims
rose an eye-watering 1 million last week, with forecasts ranging as high as
4 million.

Goldman Sachs warned the U.S. economic growth could contract by 24% in the
second quarter, two-and-a-half times as large as the previous postwar
record.

A range of flash surveys on European and U.S. manufacturing for March are
due later on Tuesday and are expected to show deep declines into
recessionary territory.

While governments around the globe are launching ever-larger fiscal stimulus
packages, the latest U.S. effort remains stalled in the Senate as Democrats
said it contained too little money for hospitals and not enough limits on
funds for big business.

The logjam combined with the stimulus splash from the Fed to take a little
of the shine off the U.S. dollar, though it remains in demand as a global
store of liquidity.

The dollar eased just a touch on the yen to 110.90 after hitting a one-month
top at 111.59 on Monday, while the euro inched up to $1.0754 from a
three-year trough of $1.0635.

The dollar index stood at 102.120, off a three-year peak of 102.99.

Gold surged in the wake of the Fed’s promise of yet more cheap money, and
was last at $1,564.51 per ounce having rallied from a low of $1,484.65 on
Monday.

Oil prices also bounced after recent savage losses, with U.S. crude up 64
cents at $24.00 barrel. Brent crude firmed 53 cents to $27.56.

 <mailto:info at bulls.co.zw> 

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
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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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