Bulls n Bears Daily Market Commentary : 28 May 2020

Fri May 29 05:00:52 CAT 2020

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Bulls n Bears Daily Market Commentary : 28 May 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$49,656,942.70 with foreign buys at ZWL$13,142,402.12 and
foreign sales were ZWL $7,777,155.00 Total trades were 366.

The All Share index added another 59.08 points to close at 1,100.21 points
in a session mostly dominated by heavyweight gains. MEIKLES  gained $1.9829
to settle at $11.9400, SEEDCO  rose again by $1.8400 to $11.0800 and INNSCOR
was $1.1087 higher at $17.7117. CBZ  also increased by $0.9375 to $10.4475
and SIMBISA traded $0.9067 stronger at $6.9297.

Four counters lost groung in today’s session; MASHONALAND HOLDINGS retreated
further by $0.1014 to $0.70000, AFRICAN SUN  eased $0.0200 to $0.9317 and
MEDTECH   traded $0.0006 lower at $0.1699. The other counter to lose ground
was WILLDALE  which dropped $0.00001 to close at $0.1215

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Global Currencies & Equity Markets

South Africa

South African stocks push higher despite rising US-China tensions

(Reuters) - South African stocks firmed on Thursday with risk-on sentiment
remaining intact on optimism that global growth is recovering as economies
reopen after coronavirus lockdowns.

The Johannesburg All-Share index rose 1.77% to 51,389 points, while the
Top-40 index climbed 1.80% to 47,440 points, led by Northam Platinum and
Impala Platinum with prices of the metal nearly 1% by 1525 GMT.

Northam climbed almost 13% to a 2-1/2-month high, while miner Impala was up
almost 11%.

South African President Cyril Ramaphosa on Sunday announced a further easing
of the country’s lockdown from June 1, allowing the vast majority of the
economy to return to full capacity.

The government published guidelines on Thursday for how sectors will operate
under much relaxed restrictions.

The rand gave up earlier gains having touched its strongest level since
March 27. It traded at 17.4390 per dollar at 1542 GMT, down 0.43 from its
previous close of 17.3760.

In fixed income, the yield on the 2030 government bond was down 5 basis
points at 8.935%.

Nigeria

Nigeria's central bank unexpectedly cuts benchmark lending rate to 12.5%

(Reuters) - Nigeria’s central bank unexpectedly cut its benchmark lending
rate to 12.5% from 13.5%, the central bank governor said on Thursday, to
stimulate growth in Africa’s largest economy in the face of the coronavirus
pandemic.

It is the first rate cut since March 2019 and the largest since 2015.

Seven of the 10 members of the bank’s monetary policy committee backed a 100
basis point cut, two voted for 150 basis points and one for 200 basis
points, said the governor, Godwin Emefiele.

Africa’s top oil exporter faces economic distress from the coronavirus
outbreak and sharp falls in crude prices, which have triggered a steep
decline in growth.

Emefiele said the lower rate would “stimulate credit expansion to critically
important sectors”, which in turn would also stimulate employment and revive
economic activity for a quick recovery in economic growth.

Nigeria’s government expects the economy to contract by as much as 8.9% this
year, but Emefiele said the country could avoid a recession.

He said the economy could contract in the second and third quarters but
recover in the fourth with the fiscal and monetary policy measures put in
place by the authorities.

The decision surprised analysts. The central bank has kept interest rates
tight for the last two years to curb inflation, support the naira and
attract foreign investors to its debt market.

Annual inflation rose to 12.34% in April, its highest in more than two
years, as measures to curb the pandemic hindered economic activity.

AFRICA-FX-Kenya's shilling to weaken, Uganda's to strengthen

(Reuters) - Kenya’s shilling is expected to weaken against the dollar in the
week to next Thursday, while Uganda’s will strengthen, traders said.

KENYA

The Kenyan shilling could come under pressure from end-of-month dollar
demand from the energy sector and multinational companies paying dividends.

Commercial banks quoted the shilling at 107.00/20 per dollar, compared with
106.70/90 at last Thursday’s close.

TANZANIA

Tanzania’s shilling is expected to hold steady, with dollar demand from the
energy sector matching supply from mining exports.

Commercial banks quoted the shilling at 2,309/2,319 on Thursday, the same as
last week.

UGANDA

The Ugandan shilling is expected to firm, drawing support as the central
bank removes excess liquidity.

At 1016 GMT, commercial banks quoted the shilling at 3,775/3,785, compared
to last Thursday’s close of 3,785/3,795.

On Thursday the central Bank of Uganda took out a total of 839 billion
shillings ($221.96 million) from the interbank market.

ZAMBIA

The kwacha is expected to remain range-bound, supported by dollar sales
ahead of tax payments on June 10.

On Thursday, commercial banks quoted the currency of Africa’s second largest
copper producer at 18.2800 per dollar from 18.0440 at close a week ago.

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EMERGING MARKETS

Shares flat as Hong Kong tensions offset reopening hopes

(Reuters) - Emerging market shares struggled for direction on Thursday as
hopes for an economic recovery from pandemic-driven recessions were offset
by growing U.S.-China tensions over Beijing’s move to impose a new security
law on Hong Kong.

Stocks in Turkey, South Africa, Russia , Poland and Hungary rose between
0.7% and 2.6% on signs of a revival in activity across Europe and some parts
of Asia.

But the wider MSCI index of emerging market shares traded flat, weighed down
by losses for trade-sensitive South Korea and Taiwan.

China’s parliament overwhelmingly approved directly imposing a national
security law on Hong Kong, threatening the global financial hub’s special
status under U.S. law and potentially eliciting a strong response from
Washington against Beijing’s move.

The move also threatens to further dent economic activity even as the world
reels from the impact of the COVID-19 pandemic, although a raft of central
bank and government stimulus has so far helped put a floor under equity
markets.

Stocks in Hong Kong slipped 0.7%, while bankers and industry sources said
rich Chinese were likely to park less funds there on worries over the
security law.

Mainland China shares closed up 0.3% before the congressional approval of
the bill. The yuan traded 0.2% higher against a steady dollar.

Currencies of the developing world were also muted, with South Africa’s rand
easing from a two-month high hit earlier in the session and Turkey’s lira
falling 0.2% against the greenback. Declining oil prices saw Russia’s rouble
trade flat.

The Polish zloty firmed against the euro ahead of a central bank meeting
later in the day, with policymakers expected to hold rates steady at 0.5%.
The currency has outperformed its central European peers this month on hopes
of a faster economic rebound on the continent.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold gains 1% as US-China rift adds to economic woes

Reuters) - Gold climbed 1% on Thursday, rebounding from the previous
session's two-week low, as a deepening rift between the United States and
China and weak economic data fueled concerns about the global economy.

Spot gold gained 0.7% to $1,721.35 per ounce by 10:57 a.m. EDT (1457 GMT). 

U.S. gold futures rose 0.6% to $1,720.90.

The Trump administration is looking at options to punish China over its
tightening grip on Hong Kong, according to U.S. officials and people
familiar with the discussions.

The latest U.S. unemployment benefits data held above 2 million last week
for a 10th straight week, signaling a deeper economic hit from the pandemic.

Data on the housing market, manufacturing and consumer spending pointed to a
collapse in gross domestic product in the second quarter at a pace last seen
during the Great Depression. 

Fresh stimulus boosts also supported gold after Japan approved a $1.1
trillion package and the European Union unveiled one of 750 billion euros. 

SPDR Gold Trust  holdings, the world's largest gold-backed exchange-traded
fund, rose to 1,119.05 tonnes on Wednesday, a seven year high.      

Meanwhile, gold trading banks are preparing to significantly reduce their
positions on CME Group's COMEX exchange in New York, nine people familiar
with the plans said.             

Elsewhere, palladium  slipped 1.5% to $1,906.06 per ounce, platinum   rose
1% to $827.49 and silver  was 0.8% higher at $17.30.

Aluminium hits two-month high on China demand hopes

(Reuters) - Aluminium prices touched two-month highs on Thursday as hopes
for stronger demand in top consumer China buoyed sentiment, but an
oversupplied global market and large surpluses are expected to cap gains.

Benchmark aluminium on the London Metal Exchange (LME) was up 0.8% to $1,537
a tonne at 1700 GMT.

Prices of the metal used widely in the transport and packaging industries
earlier touched $1,538.50 a tonne, the highest since March 30.

“More aluminium is being produced than consumed,” said Julius Baer analyst
Carsten Menke. “Demand from key manufacturing sectors like autos will come
back only gradually and output cuts to balance the market are not really
happening.”

COSTS: Falling costs of inputs such as power, alumina and carbon have
allowed aluminium smelters to keep producing, despite low prices and losses.

CHINA: Expectations of stronger aluminium demand as industrial activity
ramps up in China have helped to buoy prices on the LME and on the Shanghai
Futures Exchange since early April.

INVENTORIES: Aluminium stocks in warehouses monitored by ShFE AL-STX-SGH
have dropped nearly 40% since the middle of March to about 322,000 tonnes.

However, stocks in LME-registered warehouse have climbed more than 50% to
more than 1.49 million tonnes over the same period.

TECHNICALS: Aluminium needs to hold above the 50-day moving average at
$1,520 for a sustained period before another upside attempt, which faces
resistance at $1,5445, a Fibonacci retracement level.

SPREADS: The premium for the cash contract over three-month tin MSN0-3 is at
an elevated $188 a tonne, indicating concern over nearby supplies on the LME
market.

Low LME stocks MSNSTX-TOTAL and large holdings of warrants and cash
contracts <0#LME-WHC> are behind those worries.

Three-month tin was up 1.3% at $15,500.

OTHER METALS: Copper was up 1.6% at $5,345.50, zinc added 0.8% to $1,936,
lead dipped 0.4% to $1,631.50 and nickel was up 1.1% at $12,250.

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
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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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