Bulls n Bears Daily Market Commentary : 21 May 2020

Fri May 22 07:24:04 CAT 2020

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Bulls n Bears Daily Market Commentary : 21 May 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$41,211,658.53 with foreign buys at ZWL$813,827.68 and
foreign sales were ZWL $19,124,187.00 Total trades were 267.

The All Share index’s upward trend continues after adding 31.83 points to
close at 866.88 points. NATFOODS  gained $5.6000 to $33.6000, BAT  rose by
$1.8800 to $143.88 and HIPPO VALLEY ESTATES  was $1.6400 firmer at $9.8400.
Other counters to advance include SEEDCO INTERNATIONAL which increased by
$1.2700 to $7.6600 and SEEDCO   which was $1.0650 higher at $6.3900.

Trading in the negative; RIOZIM dropped by $2.400 to $9.6000, ZIMPLOW
eased $0.2651 to $1.3000 and SIMBISA was $0.1377 weaker at $4.004.
AMALGAMATED REGIONAL TRADING  also decreased by $0.0608 to $1.6392 and
BINDURA   traded $0.0200 lower at $0.9775.

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  Global Currencies & Equity Markets

South Africa

South Africa's rand strengthens after cenbank cuts repo rate, stocks fall

(Reuters) - South Africa’s rand rallied on Thursday after the country’s
central bank cut its main lending rate by 50 basis points, while stocks fell
on concerns over the long-term impact of the new coronavirus and simmering
U.S.-China tensions.

At 1653 GMT, the rand was 1.57% firmer at 17.6450 per U.S. dollar after
hitting 17.5100, its best level in more than a month.

The central bank cut its main lending rate by 50 basis points to 3.75% on
Thursday in an effort to shield the economy from the impact of the virus.
Rate cuts this year now total 275 basis points.

The reappearance of tensions between the United States and China, the
world’s two top economies, has capped gains however, after U.S. President
Donald Trump’s attacks on Beijing’s handling of the coronavirus outbreak
spooked already nervous investors.

Bonds weakened, with the yield on the government issue due in 2030 up 8.5
bps to 7.305%.

On the stock market, the benchmark JSE all-share index fell 2.15% to end at
51,023 points, while the top 40 companies index closed down 2.37% to 47,232
points.

Bullion shares fell 7.51% with Gold Fields down 6.96% and Harmony Gold 6.95%
lower on the back of a weaker spot gold price.

Nigeria's black market Naira seen under pressure

(Reuters) - Nigeria’s currency is expected to come under pressure on the
black market next week, with Uganda’s seen firming and Kenya and Zambia’s
holding stable.

NIGERIA

Nigeria’s naira is seen weakening on the black market as dollar shortages at
official sources cause investors and importers to channel demand to the
parallel market, traders said.

The black market naira traded on the streets fell to 460 against the dollar
on Thursday, reflecting the build-up of demand. The naira was quoted at 450
last week on the unofficial market after a lockdown was eased.

Dollar demand from investors and importers has ballooned with payment
obligations accumulating amid hard currency shortages triggered by the oil
price crash.

The Nigerian central bank governor has warned domestic and foreign investors
against patronising the black market, saying it was helping to overheat that
market.

The naira is seen rangebound on the official and over-the-counter spot
markets, traders say.

UGANDA

The Ugandan shilling is seen trading firmer helped by month-end inflows from
some charities looking to pay salaries.

At 1002 GMT commercial banks quoted the shilling at 3,785/3,795, compared to
last Thursday’s close of 3,782/3,792.

KENYA

The Kenyan shilling is seen stable in the coming week with markets eyeing a
resumption of inflows from remittances and horticulture exports amid
month-end dollar demand from merchandise importers, traders said.

Commercial banks quoted the shilling at 106.75/95 per dollar, compared with
106.60/80 at last Thursday’s close.

ZAMBIA

The kwacha is expected to hold steady against the U.S. dollar next week
supported by month-end hard currency sales and a decline in imports.

On Thursday, commercial banks quoted the currency of Africa’s second-largest
copper producer at 18.0440 per dollar from 18.2630 at close a week ago.

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GLOBAL MARKETS

Hong Kong leads Asian shares lower as Beijing readies new security law

(Reuters) - Hong Kong shares tumbled on Friday after Beijing moved to impose
a new security law on the city after last year’s pro-democracy unrest,
risking fresh protests and further straining fast-deteriorating U.S.-China
ties.

Hong Kong’s Hang Seng index fell 3.7% to a seven-week low, helping to pull
down MSCI’s broadest index of Asia-Pacific shares outside Japan 1.2%.

Japan’s Nikkei slipped 0.25%, while South Korea’s Kospi fell 0.7%.

China is set to impose new national security legislation on Hong Kong, a
Chinese official said on Thursday.

The decision drew a warning from President Donald Trump that Washington
would react “very strongly” against the attempt to gain more control over
the former British colony.

Earlier this month, the U.S. State Department delayed a report to Congress
assessing whether Hong Kong enjoys sufficient autonomy from China to
continue receiving special treatment from the United States.

Washington has ramped up criticism of China over the origins of the
coronavirus pandemic. Last week, it moved to block global chip supplies to
blacklisted telecoms equipment giant Huawei Technologies, while the U.S.
Senate passed legislation that could prevent some Chinese companies from
listing their shares on U.S. exchanges.

U.S. stock futures erased early gains to stand flat though they were up 3.3%
so far on the week, supported by hopes of economic reopening in many parts
of the world as coronavirus lockdowns are relaxed.

Major currencies held relatively stable so far.

The euro was unchanged at $1.0945. The yen hardly budged at 107.58 per
dollar after the Bank of Japan unveiled its own version of the U.S. Federal
Reserve’s “Main Street” lending programme to channel more money to small
businesses.

The decision has been widely anticipated as the BOJ had said last month it
would create such a scheme.

Markets were little fazed by China’s announcement that it would not set an
economic growth target this year for the first time in decades and its
pledge of more government support for the virus-hit economy at the start of
the annual parliament meetingm, which had been widely expected.

The Chinese yuan was steady at 7.1387 per dollar.

Oil prices eased slightly but were headed for a fourth straight week of
gains, on more evidence that fuel demand is recovering as countries ease
business and social restrictions that were imposed to counter the
coronavirus pandemic.

U.S. crude futures ticked down to $33.53 per barrel, down 1.2% on the day
though they still still retained weekly gains of 13.6%. 

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Commodities Markets

Copper prices fall as U.S.-China friction intensifies

(Reuters) - Copper prices fell on Friday as mounting Sino-U.S. tensions and
concerns about a rebound from the coronavirus-led economic slump curbed risk
appetite and demand for metals.

Three-month copper on the London Metal Exchange (LME) was down 0.4% at
$5,369.50 a tonne, as of 0120 GMT, while the most-traded July copper
contract on the Shanghai Futures Exchange (ShFE) declined 0.9% to 43,810
yuan ($6,158.45) a tonne.

Asian shares were set for another retreat after China’s plans to impose a
new national security legislation on Hong Kong drew a warning from U.S.
President Donald Trump that Washington would react “very strongly” against
the attempt.

Tensions stoked worries that a U.S.-China “Phase 1” trade deal could be
threatened. China, the world’s biggest metals consumer, said it will not
start any trouble but will not flinch from any escalation either.

FUNDAMENTALS

* CHINALCO: Chinese state-owned firm Chinalco’s general manager called on
China to rein in “blind expansion” of copper smelting capacity.

* CONSTANCIA: Canadian miner Hudbay Minerals Inc expects a delay of up to
four months before it can start mining an extension at its Constancia copper
mine in Peru.

* OTHER PRICES: LME nickel dropped 2.3% to $12,480 a tonne, zinc fell 1% to
$1,964.50, while ShFE aluminium declined 0.2% to 12,825 yuan a tonne and
ShFE nickel decreased 1.6% to 102,790 yuan a tonne.

Colombia coal output down 7.2% in Q1 on low prices, coronavirus lockdown

(Reuters) - Coal production in Colombia, the world’s fifth-largest coal
exporter, fell 7.2% in the first quarter because of low prices and
coronavirus quarantine measures, the government said on Thursday.

The South American country produced 19.4 million tonnes of the fuel between
January and March, compared with output of 20.9 million tonnes in the same
period in 2019, the mines and energy ministry and national mining agency
said in a joint statement.

More than two months of coronavirus lockdown began in the country in March.
Though coal mining was exempt from a full shutdown, many mines reduced
operations at least initially.

Coal is fundamental for job creation, investment and income in the country,
the statement added. Colombia produced 82.2 million tonnes of coal in 2019.

Major players in the coal industry include Cerrejon, jointly owned by BHP
Group, Anglo American Plc and Glencore Plc, Drummond and Prodeco, which is a
unit of Glencore.

Gold production was up 7% compared with the first quarter of 2019, to 9.5
tonnes, thanks to a seven-year high in prices.

Nickel production was up 10.3% compared to the same period last year, to
22.7 million pounds.

Mining royalties in the first quarter totaled 518 billion pesos (about $136
million), with coal contributing 79%, nickel 10%, gold 9% and other minerals
2%.

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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