Bulls n Bears Daily Market Commentary : 04 November 2020

Wed Nov 4 17:32:41 CAT 2020

 <http://www.bullszimbabwe.com> Bullszimbabwe.com         <mailto:bulls at bulls.co.zw> Views & Comments        <http://www.bullszimbabwe.com> Bullish Thoughts        <http://www.twitter.com/BullsBears2010> Twitter         <https://www.facebook.com/BullsBearsZimbabwe> Facebook           <http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn          <mailto:info at bulls.co.zw?subject=Unsubscribe> Unsubscribe

Bulls n Bears Daily Market Commentary : 04 November 2020

 <http://www.zb.co.zw/> 

ZSE commentary

Market swings into the red…

The ZSE slipped back into the red in midweek session reversing previous day’s gains. Three of the benchmark indices in our review closed pointing southwards as the ZSE Top Ten Index took the greatest knock of 0.81% to close at 966.45pts. The mainstream All Share Index let go 0.54% to 1496.97pts while, the Industrials shed 0.56% to 4926.69pts. Major casualty of the day was conglomerate Innscor which trimmed 6.59% to $19.5350, trailed by brick manufacturer Willdale which retreated 4% to settle at $0.24000. Dairibord slipped 3.98% to $8.0017 while, banking group First Capital lost 3.38% to $0.5204. Ariston capped the top five fallers on a 1.74% slide to $1.3000.

Leading the upside of the market was Axia with a 5.50% growth to $3.9478, followed by SeedCo that put on 2% to end pegged at $17.0000. Construction group Masimba ticked up 1.96% to $2.6000 while, conglomerate Meikles rose 1.06% to $15.3610. Fast foods group Simbisa added 0.68% to $6.2243 and completed the top five winners set. The market closed with a negative breadth of eight as fourteen counters retreated against six that gained. Activity aggregates faltered as volume of shares traded fell 8.90% to 6.36m while, value outturn dropped 39.67% to close at $31.45m. Econet and Truworths claimed 55.06% and 11.94% of total volumes traded, respectively. Anchoring the value aggregate was Econet and Meikles with a combined contribution of 75.58%. Local purchases accounted for 93.75% of turnover while, sales contributed 67.25% of the same. 

Global Currencies & Equity Markets

South Africa

Rand steadies against the dollar

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

A stronger risk-on tone and a US dollar selloff were apparent from the start of European trading yesterday according to NKC Research.

The rand rode the risk appetite wave as market participants positioned ahead of the US election outcome.

At the close of local trade, the rand quoted 1.22 percent stronger at R16.02/$, after trading in range of R16.01/$ - R16.23/$. The rand steadied this morning after whipsawing overnight. The expected range of the rand against the dollar today is R16.00/$ - R16.40/$.

South African bourse

The JSE All Share (+0.59 percent) traded on the front foot yesterday as global markets prepared for the US election outcome. Gains in large technology and gold stocks helped push the JSE higher. In the overall emerging market sphere, the MSCI Emerging Market Index (-0.56 percent) traded lower.

Brent crude oil

The Brent oil price continued to recover yesterday buoyed by an uptick in global stock markets. That said, a tightening in Covid-19 restrictions across Europe kept a lid on crude gains. At the close of local trade, benchmark Brent crude futures quoted 4.66 percent higher at $40.18pb. Crude prices traded softer during Asian trade this morning.-BUSINESS REPORT ONLINE

Nigeria

Naira stabilizes at black market as CBN continues its intervention in forex market

Forex turnover rose sharply by 122% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intra-day trading on Tuesday, November 3.

Also, the naira remained stable against the dollar, closing at N463/$1 at the parallel market on Tuesday, November 3, 2020, as BDCs get another round of dollar supply from CBN.

This is also as businesses that were 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 get back to full activity.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N463/$1 on Tuesday. This was the same rate that it exchanged for on Monday, November 2.

·         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.

NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N386/$1.

·         This represents a 37 kobo drop when compared to the N385.63/$1 that it exchanged for on Thursday, November 2.

·         The opening indicative rate was N386 to a dollar on Tuesday. This represents a 25 kobo gain when compared to the N386.25 that was recorded on Monday.

·         The N393.49 to a dollar is the highest rate during intraday trading before it closed at N385.63 to a dollar. It also sold for as low as N383/$1 during intraday trading.

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 121.9% on Tuesday, November 3, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $104.22 million on Monday, November 3, 2020, to $231.35 million on Tuesday, November 3, 2020.

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

·         The sharp 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 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.

 <mailto:info at bulls.co.zw> 

Global Markets

Pound-Dollar Rate Drops 1.0% as Republicans Look Set to Hold Senate and Block the 'Blue Wave'

The Dollar has stabilised back to levels close to where it was on election day, suggesting markets taking the outcome in their stride and might not be overly concerned with whether Donald Trump or Joe Biden win.

Donnelly has produced the following graphic to confirm markets are actually relatively unfazed by the prospect of either Biden or Trump taking the White House:

Markets comparison

He explains this relative sanguine approach has more to do with the importance of the Senate race than that for the Presidency.

Were the Democrats to have take the Senate, the prospect of a sizeable stimulus would have increased significantly, even with Trump in the White House. This is largely a result of the market understanding fiscal 'hawks' in the Republican Senate as being the major blockage to generous stimulus.

At the time of publication the Republicans are just 3 seats shy of a majority in the Senate:

Financial and foreign exchange market volatility has risen considerably in the mid-week trading session and could remain elevated for many hours more after U.S. President Donald prematurely called himself the winner of the presidential election and signalled the potential for the election to enter a protracted legal battle.

The 'safe haven' U.S. Dollar was bought heavily in mid-week trade after Trump told supporters, "we will win this, as far as I am concerned we already have"; he added he plans to go to the U.S. Supreme Court and wants all the voting to stop. "Frankly, we did win this election," he said.

The rally in the Dollar follows on from a slump seen on Tuesday, when markets positioned for a potential 'blue wave' outcome.

The declaration lby Trump ooks unfounded given the simple observation counting continues, but it does signal the potential for the race to descend into a messy, protracted legal fight.

At the time of publication, President Donald Trump looks to be favoured against Democrat contender Joe Biden in some betting markets which makes for a significant shift in fortunes, having defied polls by pulling off an upset and winning the all-important state of Florida.

Meanwhile, reports suggest that some key swing states - the very states that will decide the outcome - are unlikely to report today.

This could introduce some uncertainty into foreign exchange markets and ultimately support the U.S. Dollar which alongside the Yen and Franc tends to benefit from times of heightened investor nerves.

The Pound-to-Dollar exchange rate has reversed the previous day's surge that came on the back of a complacent market that looked to front-run a clear sweep of the White House and Senate by the Democrats and is now down 1.0% on the day at 1.2984, the Euro-to-Dollar exchange rate is meanwhile down a percent at 1.1639.

A look at the Dollar's performance on the day confirms it to be the best performer in the G10 space:

Safe haven U.S. Dollar

It is reported that Michigan and Pennsylvania - two key states likely to determine the outcome of the race - face severe reporting delays, with no official result likely this morning.

Markets had apparently been looking for a clean sweep by Biden and the Democrats, but this now looks unlikely. "It may take a little longer," Biden said in a statement, as crucial swing states he hoped to flip like Arizona, Georgia, North Carolina and Wisconsin, remaining too close to call at the time of publication.

Losers are likely to include emerging market currencies that tend to perform during times of elevated investor confidence, such as the Rand and Turkish Lira.

The 'commodity dollars' such as the Canadian, New Zealand and Australian Dollars are also highly levereged to sentiment and would therefore also likely underperform should tensions over the outcome of the vote rise.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price hovering around $1,900 as markets expect contested results

(Kitco News) - A closer than expected U.S. election has taken some wind out of gold's sails, but analysts warn investors not to count the precious metal out just yet as safe-haven demand can still drive prices higher.

According to some political pundits, it could take until the end of the week before the U.S. presidential race is officially called as some states still have to count mail-in and advance ballots.

Political analysts say that it could take time to get the results from Pennsylvania, Michigan, Wisconsin, Georgia.

The gold market appears to be settling in for a contested election as prices pushed off Tuesday's lows and are hovering around the $1,900 an ounce level. December gold futures last traded at $1,896 an ounce, down 0.75% on the day.

Although gold prices can still move higher, expectations of a surge in momentum have started to disappear, replaced by visions of the status quo. Heading into Tuesday's election, many analysts were expecting Democrats to ride a blue wave into Washington, taking control of Congress and the White House. Economists were forecasting that Democrats would unleash major stimulus measures to support the economy that has been devastated by the COVID-19 pandemic.

While a contested election is expected to be positive for gold, some analysts say that the market might not see the same time of gains associated with more stimulus measures.

Chantelle Schieven, head of research at Murenbeeld & Associates, said that gold prices stabilizing around $1,900 an ounce is an indication that investors continue to take a wait-and-see approach to the election.

As to how high gold prices could go in this scenario, Schieven said that she could see prices test the top of their recent ranges, around $1,950 an ounce. Although still bullish, Schieven's outlook is a far cry from record highs some analysts were expecting with a Democratic victory.

Adam Button, chief currency strategist at Forexlive.com agreed that although gold prices should go higher as results are contested, the precious metal really needs new stimulus spending to get back above $2,000 an ounce.

Button added that the best chance gold has to get back to its August highs is if Trump remains president and has to deal with a split Congress.

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 

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:         <http://www.bullszimbabwe.com> www.bullszimbabwe.com  

Blog:            <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bullszimbabwe.com/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:      <http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimbabwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA> www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

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.

(c) 2020 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:  <mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77 344 1674

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201104/409c0b87/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 34378 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201104/409c0b87/attachment-0001.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.jpg
Type: image/jpeg
Size: 28737 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201104/409c0b87/attachment-0003.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 21694 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201104/409c0b87/attachment-0004.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201104/409c0b87/attachment-0005.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: oledata.mso
Type: application/octet-stream
Size: 130910 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201104/409c0b87/attachment-0001.obj>