Bulls n Bears Daily Market Commentary : 14 May 2020

Fri May 15 08:18:33 CAT 2020

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Bulls n Bears Daily Market Commentary : 14 May 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$15,925,622.95 with foreign buys at ZWL$15,583.20 and
foreign sales were ZWL $9,195,706.00 Total trades were 198.

The All Share index closed the day on a higher note as counters continued to
advance significantly, after adding 62.02 points to close at 643.30 points.
OLD MUTUAL LIMITED added another $6.2082 to close at $53.2078, DELTA
CORPORATION LIMITED  traded $1.3608 firmer at $8.2495 and RIOZIM LIMITED
rose by $0.7900 to $7.5000. Two more counters to advance were ECONET
WIRELESS LIMITED  which traded $0.7782 higher at $4.6750 and CASSAVA
SMARTECH  advanced by $0.7259 ending at $4.9991.

No counter lost ground 

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand weaker as global economic worries weigh

(Reuters) - South Africa’s rand weakened on Thursday as demand for emerging
currencies continued to ebb due to growing concerns over the impact of the
coronavirus on the global economy.

The currency also lost strength after President Cyril Ramaphosa hinted on
Wednesday evening that metropolitan areas might remain on an “alert level 4”
lockdown, and over renewed worries about Sino-U.S. trade relations.

The stock market dropped on Thursday on continued worries over a resurgence
in coronavirus cases in some countries and U.S.-China trade relations,
making Tuesday’s rise an aberration.

At 1620 GMT the rand was 0.38% weaker at 18.5700 per dollar from an opening
level of 18.4980, extending losses from the previous session, which was
triggered by a grim economic outlook given by the U.S. central bank.

Moves in risk currencies globally, including the rand, have been
sentiment-driven in recent sessions, with investors mostly staying on the
sidelines as they weigh the prospects of a quick economic recovery.

U.S. Federal Reserve chairman Jerome Powell on Wednesday gave a sobering
assessment of the U.S. economic outlook in a closely watched speech that
quickened a move to safe-haven assets.

The grim outlook highlights South Africa’s economic fragility, with its
dependence on trade with and investments from the United States, China and
the European Union.

President Ramaphosa’s announcement late on Wednesday to cautiously ease
lockdown restrictions failed to spur optimism as he said places with the
most infections likely would remain into June on “alert level 4” of a
five-level system.

The province of Gauteng, which houses the financial hub Johannesburg, and
Western Cape, where the legislative capital of the country Cape Town is
located, are the so-called epicentres of the coronavirus outbreak in South
Africa.

The Johannesburg Stock Exchange’s (JSE) FTSE/JSE all share index extended
losses on Thursday, closing down 2.07% at 49,113 points, while the top 40
companies index slipped 2.09% to settle at 45,445 points.

Commercial banks led losses, leading to a 5% drop in JSE’s banking index,
and offset an almost 4% gain in the gold index. Gold prices were up 1.07% at
1630 GMT.

Bonds reflected the sour risk mood, with the yield on the government issue
due in 2030 up 16 basis points to 9.590%.

Nigeria's naira to weaken, Kenyan shilling seen steady

(Reuters) - The Nigerian naira is seen weakening in the days ahead on the
back of accumulated demand, while the Kenyan shilling could steady as
importer appetite in the energy sector sags.

NIGERIA

Nigeria’s naira is seen weakening on the black market as dollar demand
balloons from foreign investors and importers with payment obligations that
have accumulated amid hard currency shortages triggered by an oil price
crash, traders said.

The black market naira traded on the streets fell to 450 against the dollar
on Thursday, reflecting the build-up of demand pressure. The naira had
firmed on the unofficial market last week after a coronavirus lockdown was
eased.

Meanwhile the naira is seen rangebound on the official and over-the-counter
spot markets, traders say, as bidders resist weakening the currency since
the majority of dollar supply is from the central bank.

The bank resumed forex sales last week to help importers and individuals
with dollar expenses abroad ramp up economic activity following a phased
easing of the coronavirus lockdown.

KENYA

The Kenyan shilling is seen broadly stable in the coming week, with demand
for hard currency from most importers including energy firms seen remaining
thin.

At 1125 GMT on Thursday commercial banks quoted the shilling at 106.50/70
per dollar, compared with 105.90/106.10 at last Thursday’s close.

TANZANIA

Tanzania’s shilling is expected to remain stable next week on the back of
some inflows from commodity exports.

Commercial banks quoted the shilling at 2,309/19 against the dollar on
Thursday, the same level as last week.

A trader at a commercial banks in Tanzania’s commercial capital Dar es
Salaam said the local currency was likely to remain stable with hard
currency supplies from exports of commodities like minerals matching demand.

Tanzania mainly ships gold, among other minerals.

UGANDA

Uganda’s shilling is seen trading with a firmer tone, helped by a central
bank mop-up of excess local currency liquidity from the interbank market.

At 1126 GMT commercial banks quoted the shilling at 3,780/3,790, compared to
last Thursday’s close of 3,790/3,800.

The central bank on Thursday removed a total of 690.5 billion Ugandan
shillings ($182.6 million) worth of excess liquidity in the interbank market
via a seven-day repurchase agreement (repo) and a deposit auction.

ZAMBIA

The kwacha is seen trading slightly weaker against the dollar as demand for
the U.S. currency picks up after tax payments.

On Thursday, commercial banks quoted the currency of Africa’s second-largest
copper producer at 18.2500 per dollar, up from 18.4130 at the close of
trading a week ago.

 <mailto:info at bulls.co.zw> 

Asia

Asia shares struggle as coronavirus strains U.S.-China relations

(Reuters) - Asian stocks struggled to extend gains on Friday and were on
course to end the week lower as deteriorating U.S.-China relations undercut
optimism over the reopening of major economies.

Worries about confrontations between the two largest economies in the world
eclipsed Chinese economic data, which showed it economy is gradually
recovering from the shock of the coronavirus outbreak.

With China the first to relax lockdowns, global investors are closely
watching it for clues on how long demand will take to bounce back, as other
countries begin to ease their own anti-virus measures.

MSCI’s broadest index of Asia-Pacific shares outside Japan were little
changed, with gains in Australia offset by falls in Hong Kong.

Japan’s Nikkei dipped 0.3% while mainland Chinese shares also ticked lower.

U.S. S&P500 futures dipped 0.15% after the index gained 1.15% the previous
day, recovering from a three-week low.

While many analysts regarded the drop as a natural correction after a fast
rally since mid-March, they are also increasingly worried about U.S.-China
relations as U.S. President Donald Trump blames China for the disease that
killed more than 85,000 Americans.

Trump signalled a further deterioration of his relationship with China over
the novel coronavirus, saying he has no interest in speaking to President Xi
Jinping right now.

He went so far as to suggest he could even cut ties with the world’s
second-largest economy, a day after U.S. federal pension fund delayed
investment in Chinese shares in the wake of White House pressure.

China’s industrial output rose 3.9% in April from a year earlier, exceeding
expectations for a 1.5% rise and expanding for the first time this year as
the world’s second-largest economy slowly emerges from its coronavirus
lockdown.

But retail sales remained weak as unemployment rose.

In the currency market, the dollar steadied near a three-week high as
Sino-U.S. tensions and worries about a second wave of coronavirus infections
rattled investors.

In Asia, major currencies were little changed with the euro changing hands
at $1.0806 and the yen at 107.19 per dollar.

Oil prices were mixed after big gains a day earlier when the International
Energy Agency (IEA) predicted crude stockpiles would start to shrink in
second-half 2020 after surging while the coronavirus pandemic slashed fuel
demand.

 <mailto:info at bulls.co.zw> 

Commodities Markets

China April crude steel output jumps, demand picks up after coronavirus
curbs eased

(Reuters) - China’s steel mills ramped up production 7.7% in April from the
previous month, boosted by robust domestic demand as the world’s
second-biggest economy began to pick up after easing curbs imposed earlier
in the year to counter the coronavirus epidemic.

Total crude steel output last month was 85.03 million tonnes, data from the
National Bureau of Statistics (NBS) showed on Friday, up from 78.98 million
tonnes in March, and also 0.2% higher than in April 2019.

Average daily output last month climbed to 2.83 million tonnes, up 11% from
a more than one-year low of 2.55 million tonnes in March. April’s daily
production was the highest since June 2019, according to Reuters
calculations based on the official data.

In the first four months of the year, the world’s top steel producing
country churned out 319.46 million tonnes of the metal, up 1.3% from the
same period last year, the NBS data showed.

Production at Chinese steel firms - especially for construction materials -
has picked up quickly since late March boosted by a revival of downstream
consumption.

Daily trading volumes of steel products like rebar and wire rod compiled by
consultancy Mysteel have risen to levels higher than before the coronavirus
outbreak. According to Mysteel, blast furnace capacity utilisation rates at
163 mills rose to the highest in nearly 11 months as of May 15 at 85.6%.

The rapid ramp-up has raised concerns among analysts and industry bodies
about a risk of oversupply given the country is still digesting high
inventories and global steel demand remains weak.

The China Iron and Steel Association has urged authorities to look closely
at plans by steelmakers for new capacity and to crack down strictly on any
irregularities.

Seasonal output at non-major mills in China from Feb. 20 to the end of April
surpassed average production levels over the past four years.

Liu said there was a risk of imbalance between supply and demand amid the
robust production, and steel prices in the medium term could be relatively
weak.

Indonesia state miner Inalum plans buyback of about $1 bln in bonds

(Reuters) - State miner PT Indonesia Asahan Aluminium (Inalum) plans to buy
back bonds worth about $1 billion from a total of $2.25 billion maturing in
2021 and 2023, its chief executive told reporters on Friday.

Inalum aims to cut short-term debt and the $2.5 billion in global bonds it
sold this week will help finance the buyback, Orias Petrus Moedak said.

The bonds Inalum plans to buy back were part of its debt of $4 billion
issued in 2018 to help fund acquisition of a stake in PT Freeport Indonesia,
a unit of Freeport McMoRan Inc.

This week, Inalum raised $2.5 billion in new global bonds with maturities of
5-, 10- and 30-years and coupon rates of 4.75%, 5.45% and 5.8% respectively.

Moedak said the new bonds had helped lengthen the company’s average debt
maturities and cut its average financing cost.

The rest of the proceeds will help Inalum finance its acquisition of a 20%
stake in nickel miner PT Vale Indonesia , Moedak said.

Inalum is the third state firm to issue global bonds amid a coronavirus
pandemic that set off massive outflows from emerging markets, after issues
of $500 million by lender PT Bank Mandiri and $600 million by construction
firm PT Hutama Karya. 

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
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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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