Bulls n Bears Daily Market Commentary : 11 May 2020

Tue May 12 07:19:16 CAT 2020

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Bulls n Bears Daily Market Commentary : 11 May 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$16,198,384.15 with foreign buys at ZWL$21,948.06 and
foreign sales were ZWL $398,950.00 Total trades were 136.

The All Share index opened the week strong at 512.29 points after adding
12.29 points . BAT gained $10.0000 to $90.0000, OLD MUTUAL LIMITED rose by
$1.7122 to

$42.9900 and DELTA was $0.4520 firmer at $6.3135. TSL also increased by
$0.3682 to end at $2.2882 and CBZ  traded $0.2500 stronger at $2.3000.

Gains were offset by losses in AFRICAN SUN which decreased by $0.0980 to
$0.3970, BINDURA  which eased $0.0811 to $0.4467 and ECONET which dropped by
$0.0033 to $3.2531. Other counters to lose ground include FIRST MUTUAL
PROPERTIES  which was $0.0025 down at $1.2975 and FIRST CAPITAL BANK  which
traded $0.0023 weaker at $0.2100.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

Nigeria

Nigeria to ensure orderly foreign investor exits after oil price crash

(Reuters) - Nigeria has put in place policies to ensure foreign investors
that want to repatriate funds can exit the country in an orderly fashion,
the central bank said late on Sunday, without giving any details.

Foreign investors have sold Nigerian assets at an accelerated pace since
February as lockdowns to curb the coronavirus pandemic have stalled economic
activity and triggered a crash in the price of oil, Nigeria’s main export.

That has put pressure on the naira currency and foreign exchange reserves.
Nigeria’s dollar reserve has declined 24% to $34 billion over the last year.

Last week, the central bank weakened the naira currency on the futures
market, mostly used by foreign investors to hedge against a fall versus the
U.S. dollar, by an average of 73 naira across maturities, a signal it
expects further depreciation.

In a statement late on Sunday, Governor Godwin Emefiele said that where
foreign exchange is available, strategic importation or service obligations
would take priority, adding that the central bank wanted to galvanise local
manufacturing activity.

The statement noted that the central bank had settled all dollar commitments
in an orderly manner in 2015, when the last oil price rout created a similar
dollar shortage.

Then, the bank introduced capital controls to avoid a mass exodus. It later
created a multiple currency regime to manage pressure on the naira which
culminated in a 15% devaluation two months ago as the central bank sought to
converge the rates.

The naira has since hit a series of lows on the black and over-the-counter
spot markets and the gap with the official market has widened, especially
after the bank suspended dollar sales in the wake of a coronavirus lockdown.
The oil price crash has exacerbated a shortage of dollars.

The central bank resumed forex sale to locals last week following the phased
easing of a coronavirus lockdown but has yet to start sales to foreign
investors, instead urging them to be patient and citing its new orderly exit
policy.

Buying naira futures does not guarantee access to dollars if there is a hard
currency shortage.

Analysts estimate there is pent up demand between $1.5 billion and $1.8
billion from investors looking to exit Nigeria, whose economy is now
forecast to shrink by 3.4% this year.

South Africa

South Africa's rand weaker as investors turn gloomy on coronavirus
bounce-back

(Reuters) - South Africa’s rand weakened on Monday as optimism over the
global economic recovery faded, with investors turning back to safe haven
assets as a second wave of novel coronavirus infections hit South Korea and
Germany.

At 1500 GMT, the rand was 0.22% weaker at 18.3700 per dollar, having touched
a session-best 18.2260 in early trade before the New York saw investors
tempering their expectations of a quick recovery and backing out of risk
currencies.

South Korea warned of a second wave of the virus as infections rebounded to
a one-month high and new infections have also accelerated in Germany.

The rand eked out gains alongside other emerging market currencies last
week, moving further away from the peak above the 19.00 psychological mark
earlier it touched in early April, but lingering concerns over the local
economy kept the rally in check.

The announcement that government will increase the amount of debt on sale at
its weekly auctions by nearly 2 billion rand to cover the stimulus package
announced by President Cyril Ramaphosa in April has also kept those concerns
in view.

The stock market softened after a strong close last week as a rebound in
coronavirus cases wiped off the optimism of economies restarting globally.

The FTSE/JSE all share index sank 1.57% to close at 50,203 points while the
JSE top 40 index slipped 1.49% to end at 46,360 points.

Bonds ended weaker, with the yield on government issue due in 2030 up 13
basis points to 9.425%.

 <mailto:info at bulls.co.zw> 

GLOBAL MARKETS

Asian stocks stumble on fears of second coronavirus wave, oil up

(Reuters) - Asian shares skidded on Tuesday on growing worries about a
second wave of coronavirus infections after the Chinese city where the
pandemic originated reported its first new cases since its lockdown was
lifted.

The central Chinese city of Wuhan reported five new cases on Monday, casting
doubts over efforts to lower coronavirus-related restrictions across the
country as businesses restart and individuals went back to work.

MSCI’s broadest index of Asia Pacific shares outside of Japan stumbled more
than 1%, snapping two straight sessions of gains.

Hong Kong’s Hang Seng index was among the hardest hit , down 1.4% followed
closely by Australia, off 1.3%. Chinese shares dithered in early trade with
the blue-chip CSI300 index off a shade. South Korea’s KOSPI faltered 0.9%.

As countries around the world gradually ease restrictions in an effort to
restart their economies, investors are becoming anxious about a second wave
of infections.

Germany’s Robert Koch Institute reported that the “reproduction rate” - the
number of people each person infected with the coronavirus goes on to infect
- had risen to 1.1. Any rate above 1 means the virus is spreading
exponentially.

The worrisome news follows a fresh outbreak in night clubs in South Korea
and record number of new cases in a day in Russia.

Fund managers expect equity markets to stay the course through June and
avoid retesting March lows given the massive monetary stimulus provided by
the U.S. Federal Reserve and other major central banks.

Late on Monday, the Fed said it would start purchasing shares of
exchange-traded funds that invest in bonds, one of several tools to improve
market functioning in the wake of the coronavirus pandemic.

Markets are also keeping a wary eye on China’s trade relations with the
United States as well as Australia.

U.S. President Donald Trump said on Monday he opposed renegotiating the
U.S.-China “Phase 1” trade deal while Australian media reported that China
has suspended imports from four abattoirs in an escalation of tensions.

On the policy front, investors will be looking to comments from Fed
officials. James Bullard and Patrick Harker are due to make remarks at 1300
GMT and 1400 GMT, respectively, ahead of a highly anticipated speech from
chairman Jerome Powell on Wednesday.

Overnight, the S&P 500 barely closed higher but the Nasdaq posted its sixth
consecutive advance as technology and healthcare shares provided the biggest
lift to all three major U.S. stock indexes.

The Nasdaq is now within 10% of its all-time high reached in February.

On Wall Street, the Dow Jones Industrial Average fell 0.45%, the S&P 500
gained 0.01% and the Nasdaq Composite added 0.78%.

The dollar rose on Monday as fears of a second wave of infections drove safe
haven demand.

As risk sentiment was knocked, the Australian dollar became the top loser,
dropping about 0.8% to a one-week low, while its kiwi cousin extended falls.

The euro slipped below $1.08 for the first time in almost a week and the
Japanese yen nursed an overnight loss of about 1% to sit at 107.48 per
dollar, the bottom end of a range it has kept since mid April.

In commodity markets, oil prices climbed following an unexpected commitment
from Saudi Arabia to deepen production cuts in June.

Brent crude futures climbed to a high of $30.11 a barrel and were up 0.5%,
or 16 cents, at $29.79 at 0244 GMT, reversing some of the previous session’s
losses. The benchmark fell $1.34 on Monday.

U.S. West Texas Intermediate (WTI) crude futures were up 1.4%, or 34 cents,
at $24.48 after touching a high of $24.77.

Spot gold was barely changed at $1,696.6 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper prices hit 8-week high on China demand hopes

(Reuters) - Copper prices hit eight-week highs on Monday as recovering
economic activity in top consumer China after the coronavirus lockdowns
boosted expectations of stronger demand and the country’s central bank
signalled further stimulus.

Benchmark copper on the London Metal Exchange was down 0.3% at $5,258 at
1600 GMT. Prices of the metal used widely in the power and construction
industries earlier touched $5,370 a tonne, the highest since March 16 and a
gain of more than 20% since March 19.

LOANS: New bank lending in China fell less than expected in April from the
previous month while growth of broad money supply quickened, as the central
bank ramped up policy support for the coronavirus-ravaged economy.

AUTOS: China’s monthly auto sales rose for the first time in almost two
years as the country eased virus-related curbs and reopened for business.

DATA: China’s industrial production data for April due on Friday is expected
to show a small rise compared with a contraction in March.

STIMULUS: China’s central bank said on Sunday it will step up
counter-cyclical adjustments to support growth and make policy more flexible
to fend off financial risks.

On Monday, it lowered interest rates on its standing lending facility (SLF)
in April.

SECOND WAVE: Copper prices are likely to be capped by the risks of a second
wave of COVID-19 infections in China and elsewhere limiting manufacturing
activity again this year.

NICKEL: The Shanghai Futures Exchange (ShFE) will allow delivery of nickel
briquettes against its nickel futures contracts later this year in response
to rising demand for other forms of the metal, notably for electric vehicles
(EVs).

STAINLESS: Chinese stainless steel futures surged, hitting their highest
level in more than nine months as domestic demand continued to pick up after
coronavirus-related shutdowns.

TIN: Indonesia exported 4,220.59 tonnes of refined tin in April, down 28%
year-on-year.

STOCKS: Traders say declining exports from Indonesia are partly behind the
draws on tin inventories in LME-approved warehouses MSNSTX-TOTAL, which at
4,745 tonnes are down nearly 40% since early April.

SPREADS: The premium for the cash over the three-month tin contract at $97 a
tonne suggests concern about nearby supplies of the soldering metal on the
LME market.

Three-month tin rose 0.2% to $15,255 a tonne.

OTHER METALS: Aluminium was up 0.7% at $1,495, zinc added 1.1% to $2,026,
lead gained 1.8% to $1,673 and nickel rose 0.2% to $12,345 a tonne.

Gold miner SSR to buy Alacer in $1.7 bln deal as bullion prices surge

(Reuters) - Canadian precious metals producer SSR Mining said it would to
buy Alacer Gold in an all-stock deal valued at C$2.41 billion ($1.72
billion), adding heft as gold prices surge due to demand for the yellow
metal in an uncertain economy.

Gold miners have benefited from a 12% jump in prices this year as investors
seek safer assets to shield themselves from the damaging impact of the
coronavirus outbreak on the global economy.

The move also comes on the back of a record year of mergers and acquisitions
in the sector, including some of of the biggest deals in a decade in 2019.

The new company, which will be headquartered in Denver, Colorado, will have
operational mines in four countries and will be led by Alacer Chief
Executive Officer Rodney Antal, the two companies said on Monday.

Alacer has focused over the past several years on free cash flow generation,
and this merger allows the miner to continue this strategy while
diversifying its single operating asset exposure, Antal said.

SSR Mining has operations in Nevada, United States, Saskatchewan, Canada and
Jujuy, Argentina, while Alacer is a low-cost gold producer focused on its
cornerstone Çöpler Gold Mine in Turkey.

The “zero-premium” merger is expected to generate annual free cash flow of
about $450 million and produce about 780,000 gold equivalent ounces over the
next three years based on analysts’ estimates, according to the companies.

As part of the deal, Alacer shareholders will receive 0.3246 SSR Mining
shares for each share held, implying a value of C$8.19 per Alacer share.

Shareholders of SSR Mining and Alacer will own about 57% and 43% of the new
company, respectively, with the new board consisting of five directors from
each of the miners’ existing boards.

The deal includes a $70 million termination fee payable under certain
circumstances, the companies said.

National Bank Financial acted as financial adviser to SSR Mining, while
McCarthy Tétrault LLP and Lawson Lundell LLP acted as legal counsel to the
miner.

Earlier in the day, Gran Colombia said it had proposed to merge with Guyana
Goldfields and Gold X , while Shandong , one of China’s biggest gold
producers, said last week it would buy TMAC Resources.

Shares of SSR Mining were trading down about 8% in morning trade, while
Alacer climbed nearly 2.5%. ($1 = 1.4007 Canadian dollars) 

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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