Bulls n Bears Daily Market Commentary : 02 November 2020

Mon Nov 2 16:59:58 CAT 2020

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Bulls n Bears Daily Market Commentary : 02 November 2020

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ZSE commentary

Market losses extend into the new month…

The ZSE commenced the new month of November in the red as the All Share Index and the Industrials let go a similar 0.03% to close at 1,476.41pts and 4,851.18pts respectively. The resources index dropped 0.15% to 3,786.61% as losses in RioZim outweighed gains recorded in Bindura. Mash topped the fallers’ list on a 15.89% dip to $0.5050, trailed by RioZim that succumbed 12.82% to $8.5000. Property concern FMP shed 4.35% to $2.2000 as hotelier African Sun declined 3.72% to $1.5693. Fintech group Cassava slipped 3.59% to end pegged at $3.8564 and completed the top five shakers of the day.

The ZSE Top Ten Index added 0.03% to 937.59pts on rebounding banking group CBZ. Hippo headlined the loss mitigating pack with a 7.58% jump to $15.0000 while, banking group First Capital followed on a 7.50% gain to $0.5375. Apparel retailer Truworths charged 7.07% to trade at $0.1650 while, nickel miner Bindura firmed 2.99% to $3.9500, closing well offered at $3.8000. Completing the top five winners of the day was crocodile skin producer Padenga which added 1.47% to $13.2000. Gainers of the day outnumbered fallers by a count of one to establish a positive market breadth. Volume of shares traded dropped 65.17% to see 2.80m shares exchange hands while, turnover dipped 67.06% to $11.19m. Medtech was the top volume driver of the day with a 74.71% contribution to the outturn. Value aggregate was anchored by CBZ and ZB that claimed 57.65% and 18.94% of the total apiece. Foreign outflows amounted to $0.51m as no inflows were recorded in the session. 

Global Currencies & Equity Markets

Nigeria

Naira appreciates at black market as forex liquidity is boosted with huge dollar supply

At the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N462/$1 on Friday.

Forex turnover rose significantly by 194.2% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intra-day trading on Friday, October 30.

Also, the naira appreciated against the dollar, closing at N462/$1 at the parallel market on Friday, October 30, 2020, as businesses open up after relaxation of the curfew initially imposed to curtail the widespread violence that followed the hijacked #EndSARS protests and also the public holiday to mark Muslim festival.

This is also as businesses shut down due to the outbreak of violence in Lagos and some parts of the country during the protests against the special anti-robbery unit (SARS) and police brutality by the Nigerian youths.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira appreciated against the dollar to close at N462/$1 on Friday. This represents a N3 gain when compared to the N465/$1 that it exchanged for on Wednesday, October 28.

·         The local currency had strengthened by about 7.8% within the one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.

·         The CBN has sold over $500 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.

·         However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.

·         The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.

·         Despite the drop in speculative buying of foreign exchange, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

·         This represents a 33 kobo drop when compared to the N385.67/$1 that it exchanged for on Wednesday, October 28.

·         The opening indicative rate was N386.63 to a dollar on Friday. This represents a 74 kobo drop when compared to the N385.89 that was recorded on Wednesday.

·         The N393.44 to a dollar is the highest rate during intraday trading before it closed at N386 to a dollar. It also sold for as low as N383/$1 during intraday trading.

According to the data tracked by Nairametrics from FMDQ, forex turnover rose significantly from $73.01 million on Wednesday, October 28, 2020, to $214.78 million on Friday, October 30, 2020.

The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.

·         The huge increase in dollar supply after the previous trading day’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.

·         As part of the measure to check forex abuse and check illegal transactions, the CBN last month directed the freezing of accounts of about 38 companies.

·         The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.

·         Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.

·         The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

South Africa

Rand oscillates as markets digest Eskom financial loss

JOHANNESBURG – Get the latest market update and top stories from our newsrooms across South Africa, Africa and the world.

The latest Forex news is on hand to help you including the rand to dollar rate.

The South African currency swung between gains and losses as global second-wave concerns, uncertainty pertaining to the United States elections and domestic economic woes countered carry allure according to NKC Research.

Power parastatal Eskom announced on Friday that it made a net loss of R20.5 billion ($1.3 billion) over the 2019/20 financial year (April – March), somewhat smaller than the loss of R20.9 billion recorded over the prior financial year.

Eskom, however, warned it expects to make a loss of R26.2 billion in the current financial year, citing the additional strain of Covid-19.

The bailout-dependent parastatal owes at least R484 billion, placing its debt burden equivalent to almost 10 percent of GDP.

At the close of local trade, the rand quoted 0.59 percent firmer at R16.30/$, after trading in the range of R16.19/$ - R16.45/$. The rand was little changed during Asian trade this morning. The expected range of the rand against the dollar today is R16.00/$ - R16.40/$.-BUSINESS REPORT ONLINE

 <mailto:info at bulls.co.zw> 

Global Markets

U.S dollar up, Currency traders focus on U.S election

The U.S. Dollar Index that tracks the greenback against a basket of major currencies was up 0.16%.

The U.S dollar was fired up at the first trading session amid currency traders setting their eyes on the U.S election scheduled to hold tomorrow, coupled with a rising number of COVID-19 cases worldwide continuing to weigh on investor bias.

What we know

The U.S. Dollar Index that tracks the greenback against a basket of major currencies was up 0.16% to trade at 94.188 by 6 am GMT.

What this means

It is key to note that the greenback held onto gains from last week, seeing its largest weekly upside since late September during the previous session, as all investors flock en masse to the safe-haven currency.

The U.S. Dollar Index tracks the American dollar against a basket of other major currencies (like the Japanese Yen, British Pound Sterling, Swedish Krona, and Euro).

Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay fewer dollars in meeting such obligations.

What they are saying

Stephen Innes, Chief Global Market Strategist at Axi, in an email to Nairametrics spoke on the prevailing fundamentals that are expected to affect the U.S dollar price movements in the coming days.

That said, Currency traders are presently keeping their bets on the U.S dollar amid the odds, and this shows the election remains very close to calling the winner, as President Trump closes in on Joe Biden’s opinion poll lead, according to different polling outlets seen by Nairametrics.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold gains as caution sets in ahead of U.S. election

Gold prices rose on Monday as investors remained wary of the results of upcoming U.S. presidential elections and as a surge in COVID-19 cases and renewed lockdowns in some nations raised economic concerns.

Spot gold rose 0.5% to $1,886.66 per ounce, while U.S. gold futures were up 0.4% to $1,887.60.

Gold prices fell about 1.2% last week.

Investors are prepared for short-term trading turmoil and major long-term policy shifts, on the eve of Tuesday’s U.S. election.

The dollar, often seen as a rival safe-haven to gold, edged 0.1% higher against a basket of currencies.

Europe’s total COVID-19 cases crossed the grim milestone of 10 million on Sunday, prompting countries such as Britain and Portugal to enact fresh lockdowns.

Silver gained 1.2% to $23.92 an ounce, palladium rose 0.3% to $2,217.74 and platinum was up 0.3% at$851.14.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Bindura

AGM

Virtual

05/11/2020 | 14:00

Natfoods

AGM

Royal Harare Golf Club

09/11/2020 | 8:45am

Afdis

AGM

virtual

13/11/2020 | 12:20pm

Zimbabwe

National Unity Day

Zimbabwe

22/12/2020

Christmas Day

25/12/2020

Boxing Day

26/12/2020

New Year’s Day

01/01/2021

Invest Wisely!

Bulls n Bears 

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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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