Bulls n Bears Daily Market Commentary : 18 May 2020

Tue May 19 07:02:07 CAT 2020

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Bulls n Bears Daily Market Commentary : 18 May 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$39,181,202.87 with foreign buys at ZWL$1,536,580.00 and
foreign sales were ZWL $4,697,580.00 Total trades were 234.

The All Share index opened the week stronger at 743.29 points after gaining
49.60 points . OLD MUTUAL LIMITED led the movers with $10.9724 gain to close
at $67.0299, BAT rose by $3.3003 to $108.9670 and HIPPO VALLEY ESTATES
traded $1.3600 stronger at $8.2000. MEIKLES also increased by $1.1740 to
$7.7500 and DELTA  was $0.9013 firmer at $9.9118.

No counter traded in the negative in today’s session.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

S.Africa's rand rises on easing lockdown restrictions globally, markets
rally

(Reuters) - South Africa’s rand strengthened on Monday as demand for
emerging-market currencies was boosted by further easing of lockdown
regulations globally, while a rally in metals prices also helped
commodity-linked currencies.

The stock market firmed up following cues from Asia, where shares rose on
hopes of an increase in demand due to eased restrictions and a rise in crude
oil prices.

At 1350 GMT the rand was up 1.13% at 18.3800 per dollar, compared with a
close of 18.5900 on Friday in New York. Countries around the world have
continued to lift coronavirus restrictions, with previous hotspots such as
New York, Italy and Spain slowly rolling back lockdown rules and allowing
economic activity to restart.

South Africa has also let some industries come back to work with a 50%
workforce. However, many have claimed that the slow easing of restrictions
in the country is weighing on the rand.

The South African currency continues to be weaker against the dollar than
most emerging market currencies such as that of Turkey, Argentina or Brazil.
It is also weaker than most commodity-driven currencies of Australia, Norway
or Russia, Bishop said.

But there was optimism at the start of the week that new coronavirus
infections have declined, improving risk sentiment, which has been shaken in
the last few sessions by a flare-up in U.S.-China tensions.

The Johannesburg Stock Exchange (JSE) was upbeat on higher gold, platinum
and crude prices with the benchmark FTSE/JSE all share index up 3.53% to end
the day at 51,382 points, and the FTSE/JSE top 40 companies’ index closed up
3.75% to 47,674 points.

The rally was driven by JSE’s mining index, an index formed out of top 10
mining companies in South Africa, which was up 6.8%.

Bonds also shared the optimism, with the yield on the government issue due
in 2030 down a huge 49.5 basis points to 9.100%. The yield also reflected
expectations that the South African Reserve Bank was likely to cut interest
rates later this week by 50 basis points.

Egypt

Egyptian pound slips to weakest in three months

(Reuters) - Egypt’s currency weakened on Monday to its lowest against the
U.S. dollar since early February, before the coronavirus ravaged some of its
biggest sources of foreign exchange.

The pound traded as low as 15.83 to the dollar, down from 15.72 at Monday’s
opening, before strengthening again, Refinitiv data showed.

Alarm over the coronavirus pandemic triggered a large outflow of foreign
investment from Egypt, halted the tourism industry - a major source of
dollars - and threatened remittances from Egyptians working in oil-dependent
Arab countries of the Gulf.

The International Monetary Fund last week approved a package of $2.77
billion through its Rapid Financing Instrument designed to help Egypt close
a gap in its balance of payments.

Cairo is now negotiating an even bigger support package with the IMF under a
Stand-By Arrangement (SBA), and economists anticipate the IMF will be
looking for at least a moderate currency devaluation as part of the package.

Foreign customers sold more than half their Egyptian pound treasury bill
holdings in March, according to central bank data, reducing the total to
149.3 billion Egyptian pounds ($9.44 billion) as of the end of March from
310.65 billion at the end of February.

Tourism, which earned Egypt $13 billion in 2019 or about 5% of gross
domestic product, came to a virtual halt after the government halted
commercial flights in March.

Egyptians working abroad sent home $26.78 billion in 2019.

 <mailto:info at bulls.co.zw> 

India

India stocks hinder gains in EM shares; commodity currencies rise

(Reuters) - Most emerging market stocks rallied on Monday buoyed by hopes of
economic recovery as countries emerged from coronavirus-induced lockdowns,
but a sharp fall in Indian shares due to disappointment over government
stimulus capped further gains.

India’s benchmark indexes fell as much as 3.4% as details of the
government’s $266 billion package fell short of market expectations due to
the lack of enough measures to boost immediate demand and consumption.

Bank stocks plummeted after the government said it would stop fresh
insolvency cases for a year to avoid bankruptcies from firms hit by the
COVID-19 pandemic.

The rupee slipped 0.14% to the dollar. A nationwide lockdown in place since
late March was extended yet again till the end of this month as cases in
India crossed 90,000.

Philippine shares touched a three-week low, and Asian heavy-weight Taiwan’s
main stock index fell 0.7%, keeping gains in MSCI’s index of emerging market
shares at 0.1%. The index had ended 1.5% lower last week.

Other Asian bourses rose on Monday, while those from Russia to South Africa
traded up between 0.8% and 2.5%. U.S. futures pointed to a strong opening,
signalling gains in EM shares may sustain through the day.

Amid warnings that re-opening economies may trigger a second wave of the
virus, parts of the United States and hot-spots in Europe such as Spain and
Italy gradually opened more of their economies. Investors welcomed the
potential pick up in economic activity, but recent grim economic data from
across the globe heralds an extended period of recovery.

Surging oil prices kept Russia’s rouble well below 74 per dollar. On
Tuesday, the country’s first quarter GDP will be eyed. A Reuters poll shows
the Russian economy returning to growth only in the second quarter of 2021.

Rallying gold prices aided a 0.3% rise in South Africa’s rand, while
Turkey’s lira marked its eight straight session in the black on hopes of
global funding. The lira has risen about 6% from all-time lows hit earlier
this month.

Investors will be keeping an eye out for central bank rate meetings in South
Africa and Turkey on Thursday. TD Securities’ head of EM strategy, Cristian
Maggio, expects the banks to cut interest rates by 50 and 100 basis points,
respectively.

Escalating U.S.-China trade tension also continued to remain a reason for
caution, with Beijing opposing the latest rules against telecoms equipment
company Huawei. Meanwhile, Washington is crafting proposals, including tax
breaks and subsidies, to push American companies to move operations or key
suppliers out of China.

 <mailto:info at bulls.co.zw> 

Commodities Markets

London copper rises to two-month high on vaccine hopes

(Reuters) - London copper climbed to a two-month high on Tuesday, as
positive data from an early-stage trial for a coronavirus vaccine and moves
by many countries to ease restrictions lifted investor optimism about a
pickup in economic activities.

Moderna Inc’s experimental COVID-19 vaccine, the first to be tested in the
United States, produced protective antibodies in a small group of healthy
volunteers, very early data released by the biotech company showed.

Three-month copper on the London Metal Exchange (LME) rose as much as 1.1%
to $5,377.50 a tonne, its highest since March 16.

The most-traded copper contract on the Shanghai Futures Exchange advanced 2%
to 43,770 yuan ($6,157.33) a tonne.

FUNDAMENTALS

* OTHER PRICES: LME aluminium rose 0.2% to $1,499.50 a tonne, while nickel
advanced 0.3% to $12,290 a tonne. In Shanghai, aluminium hit a 2-1/2-month
high of 12,920 yuan a tonne, while nickel jumped 2.9% to 101,930 yuan a
tonne.

* EU: France and Germany proposed a 500-billion-euro ($545.65 billion)
Recovery Fund for European Union regions and sectors hit hardest by the
pandemic.

Gold rises slightly on U.S.-China tensions, gloomy economic outlook

(Reuters) - Gold prices inched up on Tuesday, supported by strained
Sino-U.S. relations and a dismal global economic outlook, although positive
news from an early-stage trial for a coronavirus vaccine spurred some risk
appetite and capped the metal's gains.

    FUNDAMENTALS

* Spot gold was up 0.2% at $1,735.04 per ounce by 0042 GMT. U.S. gold
futures gained 0.2% to $1,737.10.

* On Monday, the metal fell back from a more than seven-year high to settle
0.5% lower, as stocks and oil surged after drugmaker Moderna  said its
experimental vaccine showed promising results in an early-stage trial.

* Highlighting Sino-U.S. friction, stock exchange Nasdaq Inc is set to
unveil new restrictions on initial public offerings, which will make it more
difficult for some Chinese companies to debut on it, sources said. 

* U.S. lawmakers and officials are crafting proposals to push American
companies to move operations or key suppliers out of China that include tax
breaks, new rules, and carefully structured subsidies.    

* Money markets ramped up expectations that the United Kingdom could cut
interest rates below zero for the first time.

* The global economy will take much longer to recover fully from the shock
caused by the new coronavirus than initially expected, the head of the
International Monetary Fund said.  

* Gold has risen about 14% this year as central banks rolled out a wave of
rate cuts and other stimulus to limit the economic damage from the pandemic.
Lower interest rates reduce the opportunity cost of holding non-yielding
bullion.

* Epicentres of the coronavirus outbreak including New York, Italy and Spain
are gradually lifting restrictions that have kept millions inside.  

* Palladium slipped 0.9% to $1,995.76 per ounce, platinum  fell 0.5% to
$814.01, and silver  fell 0.5% to $17.09.

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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