Bulls n Bears Daily Market Commentary : 24 March 2020

Wed Mar 25 02:28:38 CAT 2020

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Bulls n Bears Daily Market Commentary : 24 March 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$31,020,099.20 with foreign buys at ZWL$17,032.00 and
foreign sales were ZWL$2,897,224.90 Total trades were 276

The All Share index added another 1.86 points  to close at 496.28 points.
MEIKLES gained $1.4106 to $8.5000, TSL rose by $0.2500 to $1.5025 and OLD
MUTUAL LIMITED

recovered $0.1899 to end at $43.8073. FIRST MUTUAL PROPERTIES also increased
by $0.1575 to end at $0.9600 and NATFOODS  was $0.1000 stronger at $20.6000.

Gains were offset by losses in BAT which shed $0.8497 to $95.0000, ECONET
eased $0.1843 to $2.8142 and ARISTON  was $0.0891 weaker at $0.5162. PADENGA
also

decreased by $0.0317 to $5.9683 and WILLDALE shed $0.0084 to close at
$0.0530.

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

  Global Currencies & Equity Markets

Uganda

Uganda central bank sells dollars to slow shilling's depreciation

(Reuters) - Uganda’s central bank on Tuesday sold dollars in the interbank
market, it said in a notice on data provider Refinitiv, offering support to
the local currency which has been experiencing sharp depreciation due to the
coronavirus-related disruptions.

At 0852 GMT, commercial banks quoted the local currency at 3,900/3,910. The
central bank was still in the market selling dollars.

It was the latest intervention this month by the Bank of Uganda to sell
dollars in the interbank market to help stem a sharp depreciation of the
local currency.

Uganda has thus far confirmed 9 cases of the COVID-19 disease and has closed
all its borders to try to stem the spread of the virus.

Those who arrived from high risk countries in the days before the closure of
borders were placed under mandatory 14-day quarantine.

On Tuesday, traders said the shilling has experienced rapid weakening over
the last several days as offshore investors cut positions in local assets.

The shilling has lost 6% percent of its value against the dollar so far this
year.

Kenya

Kenya shilling weakening caused by 'malicious actors' - central banker

(Reuters) - Some of the Kenyan shilling’s recent weakening was caused by
market misunderstanding of the central bank’s plan to boost its reserved by
buying dollars from the market, and some “malicious actors”, central bank
governor Patrick Njoroge said on Tuesday.

The shilling is hovering close to its record low of 106.70 per dollar,
mainly due to the strengthening of the dollar and concerns about the impact
of the coronavirus on Kenya’s export earnings.

Njoroge, however, attributed some of the weakening to traders who did not
understand the central bank’s offer of buying $100 million a month for four
months to shore up reserves, which was announced on March 3.

He also accused unnamed traders, or “malicious actors”, of contributing to
the weakening through indiscipline.

Policymakers cut rates by a larger than expected 100 basis points on Monday,
and reduced the amount of cash commercial banks are required to hold, to
stave off the potential impact of the coronavirus outbreak on the economy.

Njoroge said they will also triple the length of repurchase agreements they
enter with banks to 90 days from the current 28, in order to further boost
liquidity in the financial sector.

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Stocks, gold surge as Congress nears $2 trillion aid package

(Reuters) - Stock markets soared on Tuesday, with a gauge of global equities
posting its biggest gain since the coronavirus roiled financial markets a
month ago, as the U.S. Congress zoned in on a $2 trillion stimulus package
to curb the pandemic’s economic toll.

Senate Majority Leader Mitch McConnell said a deal was “very close” for an
aid package that investors hoped would turn around markets reeling from the
biggest downturn since the global financial crisis more than a decade ago.

The market rally came a day after the U.S. Federal Reserve’s offer of
unlimited bond-buying to help avert a global depression failed to persuade
skittish investors, at least initially.

The mood improved on Tuesday, with U.S. gold futures climbing as much as
6.7% to $1,672.60 an ounce and the dollar halting its steady rise as the
moves by the Fed and others eased the need for cash and slashed the demand
for dollars.

The rally led some to suggest a rout that has trimmed U.S. and European
equities by roughly 30% in the past month may be near an end.

U.S. and European stocks jumped 6% or more and the dollar index, a basket of
major trading currencies, slid.

MSCI’s gauge of stocks across the globe gained 8.39%, the largest single-day
gain since equities tumbled from all-time highs a month ago and since the
height of the global financial crisis in October 2008.

The broad pan-European STOXX 600 index rose 8.40%, its strongest session
since late-2008. The index is still down about 30% from a record peak hit in
February.

German stocks jumped 11% and British blue chips added 9% as both bourses
also posted their best sessions since 2008.

Europe’s so-called fear gauge fell to 52.53, its lowest in nearly two weeks,
after spiking to 12-year highs earlier this month.

Emerging market stocks rose 5.73%.

The rally was wide, lifting most stocks, with only 11 S&P 500 stocks
declining on the day.

On Wall Street, the Dow Jones Industrial Average rose 2,112.98 points, or
11.37%, to 20,704.91. The S&P 500 gained 209.93 points, or 9.38%, to
2,447.33 and the Nasdaq Composite added 557.18 points, or 8.12%, to
7,417.86.

Measures the Fed unveiled on Monday to boost liquidity across debt markets
and backstop lending were seen by investors as helping market conditions.

The Fed also will expand its mandate to buy corporate and municipal bonds
and backstop a series of other measures that analysts estimate will deliver
more than $4 trillion in loans to non-financial firms.

Other countries unveiled their own measures. South Korea’s ravaged market
climbed 8.6% after the government doubled a planned economic rescue package
to 100 trillion won ($80 billion).

In China, mainland stocks posted their biggest gain in three weeks of almost
3%, while Japan’s Nikkei soared 7%, its biggest daily gain in four years.

Still, investors remained wary, as the number of coronavirus infections
globally neared 400,000 and new infections brought in from abroad rose in
China.

Business activity collapsed from Australia and Japan to Western Europe at a
record pace in March, as measures to contain the outbreak hammered the world
economy, and Japan said it was postponing the Olympics.

IHS Markit’s flash composite Purchasing Managers’ Index (PMI) for the euro
zone, seen as a good gauge of economic health, plummeted to a record low of
31.4 in March, the biggest one-month fall since the survey began in 1998.

The government and central bank financial support helped calm nerves in bond
markets, where yields on two-year U.S. Treasuries hit their lowest since
2013.

The benchmark 10-year U.S. Treasury note fell 31/32 in price to yield
0.8642%.

Germany’s 10-year yield was up 2 basis points on the day at -0.36%, compared
with a 4 bps rise before the purchasing managers index (PMI) releases, all
small moves when compared to record lows hit at -0.90% earlier in March.

ALL ABOUT THE ECONOMY

The impact of the virus on the global economy is evident in a series of
growth forecast downgrades and advance readings of PMIs across the world’s
biggest economies.

German activity plunged to the lowest since the 2009 crisis, driven by a
record services contraction, while French activity hit all-time lows. Japan
posted its biggest-ever services fall.

However, the prospect of massive Fed funding pushed the greenback 0.26%
lower against rivals, off three-year peaks , falling against the yen and
sliding 1% versus the euro.

Brent futures rose 12 cents to settle at $27.15 a barrel, while U.S. West
Texas Intermediate (WTI) crude rose 65 cents to settle at $24.01.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper bounces 4% on U.S. stimulus, but gains seen short-lived

(Reuters) - Copper prices rebounded 4% on Tuesday on the back of a new wave
of U.S. economic stimulus and worries about supply due to the coronavirus,
but analysts said the market’s gains were likely to be fleeting.

Industrial metals joined wider financial markets in rebounding after the
U.S. Federal Reserve offered unlimited bond buying, sending more dollar
liquidity into the global economy.

Also supporting base metal prices were further virus-linked shutdowns in
metal-producing countries, which will lead to lower mine output.

But independent consultant Robin Bhar said that the collapse in demand so
far was sharply outweighing mine closures.

Chile is the world’s top copper producer, accounting for nearly a third of
global mine output.

Three-month copper on the London Metal Exchange (LME) had gained 4% to
$4,813 a tonne by 1700 GMT, on track for its biggest one-day gain since
September 2018. Copper, widely used in construction and power sectors, has
slumped by a fifth on the LME so far this year.

* DOLLAR: Also bolstering metals prices was a weaker dollar, which makes
commodities priced in the U.S. currency cheaper for buyers using other
currencies.

* ZINC SHORT: The net speculative short position on LME zinc has risen to
38% of open interest, in line with the peak seen in November 2015, broker
Marex Spectron said in a note.

* COPPER TREATMENT: Charges for processing copper concentrate in China have
fallen for the first time since December, as the coronavirus outbreak leaves
smelters uncertain about future supply.

* COPPER BALANCE: The global world refined copper market showed a 68,000
tonnes surplus in December, compared with a 49,000 tonnes deficit in
November.

* ALUMINIUM SPREAD: The discount of LME cash aluminium over the three-month
contract CMAL0-3 expanded to $34 a tonne, a level unseen since May 2019,
indicating healthy nearby supplies in LME warehouses.

LME inventories MALSTX-TOTAL have gained 14% over the past week, rising to
1.1 million tonnes, the highest in a month.

Three-month LME aluminium shed 0.7% to $1,550.50 a tonne.

* NICKEL: The global nickel market surplus widened to 13,100 tonnes in
January from a surplus of 5,200 tonnes in the previous month.

* PRICES: LME nickel gained 3.5% to $11,260 a tonne, zinc added 0.3% to
$1,823, lead dropped 1.1% to $1,595.50 and tin climbed 1.6% to $13,455.

Gold supply fears push spot prices far below U.S. futures

(Reuters) - London spot gold prices fell far below U.S. gold futures on
Tuesday in a sign the market is worried air travel restrictions and precious
metal refinery closures will hamper shipments of bullion to the United
States to meet contractual requirements.

The promise of unlimited stimulus by the U.S. Federal Reserve on Monday sent
gold prices soaring, but London’s spot market has started lagging behind
prices on the Comex futures exchange in New York.

At 1516 GMT, spot gold was up 3% at around $1,600 an ounce, while March
futures on the Comex exchange were up nearly 5% at $1,642 an ounce - a price
difference of $42.

These prices normally trade within a few dollars of one another. At one
stage on Tuesday the difference was more than $70. On Monday, it was around
$15.

The higher New York price reflected the perceived cost of taking metal from
London to deliver against Comex futures contracts in the United States,
traders and bankers said.

London is home to thousands of tonnes of gold which underpin the world’s
largest hub for physical gold trading.

But if physical gold from London is needed to deliver against Comex futures
contracts it has to be melted down from the 400 ounce bars used in London
and recast as 100 ounce bars accepted by Comex.

This has suddenly become more difficult as governments restrict movement of
people and goods and after three major metals refineries in Switzerland
suspended operations on Monday.

The London Bullion Market Association (LBMA), which oversees the London
trade, said price volatility in New York had impacted liquidity in London
and it had “offered its support to CME Group to facilitate physical delivery
in New York.”

CME Group operates the Comex exchange.

Liquidity on spot gold and the contract used to bridge the London and New
York prices - known as an exchange-for-physical (EFP) contract - was in
short supply, traders said.

The spread between offered buy and sell prices for spot gold - normally
below 50 cents - also rose to as high as $50 on some trading platforms run
by banks and brokers on Tuesday, traders said.

One banker said this was in part because trading systems factored the price
of the EFP contract into the spread between bids and offers.

The difference between spot prices and U.S. futures was likely to remain in
place until either refineries reopened and transport resumed or Comex
changed its rules to allow 400 ounce bars to be used to settle its
contracts, said a banker at a major gold-trading bank.

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
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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