Bulls n Bears Daily Market Commentary : 17 November 2020

Wed Nov 18 05:37:17 CAT 2020

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Bulls n Bears Daily Market Commentary : 17 November 2020

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

ZSE commentary

ZSE gains stretch.

Gains in selected heavies helped keep the market afloat in the Tuesday's
session with the All Share Index improving 0.67% to 1,588.95pts while, the
Industrials added 0.69% to close at 5,252.38pts. The Top Ten Index went up
0.45% closing at 1,032.85pts while, the Mining Index was stable at
3391.21pts. Twenty-one stocks registered price movements in the session
distributed as sixteen risers against five fallers, leaving the market with
a positive breadth of eleven. Headlining the winners' pack was Hippo which
garnered 11.80% to $17.8884, trailed by beverages group Delta which surged
11.58% to close at vwap of $19.2937. SeedCo Limited advanced 8.95% to
$16.5599 while, crocodile skin producers Padenga grew 8.02% to $15.9006.
Completing the top five gainers of the day was life assurer Fidelity that
put on 7.14% to $1.5000.

Top capitalised stock CBZ succumbed 11.16% to end pegged at $39.0000 while,
apparel retailers Truworths slipped 1.49% to $0.2054 reversing gains from
prior session. Dairibord shed 0.22% to $8.9800 while, conglomerate Innscor
let go 0.06% to $25.0091. Wrapping the day's fallers was packaging group
Nampak which lost 0.01% to settle at $0.8500. Volumes traded jumped 83.61%
to 13.08m shares, yielding an outturn of $69.06m which was a 123% balloon
from previous session. The top volume leaders of the day were Medtech, FBC,
Econet, Cassava and First Capital with a combined contribution of 78.44% to
the aggregate. FBC, Innscor and Econet were the top value drivers of the day
accounting for 41.58%, 18.85% and 12.17% respectively. Local purchases
accounted for 93.43% of turnover while, sales claimed 53.43% of the same.
-efesecurities

Global Currencies & Equity Markets

South Africa

South African Rand Takes Breather as Sentiment Softens and Rating Decisions
Loom 

The Rand slipped against many currencies on Tuesday as investors took a
breather following Monday's vaccine-induced rally but will be tested further
this week by a series of credit rating decision that could temper investor
appetite for the South African currency. 

South Africa's Rand was lower against all of its ten largest developed and
emerging market currencies as global stock markets softened in the wake of a
Monday rally inspired by Moderna's announcement that its coronavirus vaccine
candidate proved highly effective in clinical trials. 

Tuesday's price action echoed that seen in the prior week after a similar
announcement from Pfizer lifted risk assets sharply only for them to correct
lower and then consolidate over the balance of the week, although sentiment
wasn't helped this Tuesday when U.S. October retail sales came in below
market expectations.

The Rand had been an outperformer in prior session as the vaccine-related
boost to the global economic outlook lifted commodity prices, and so was an
obvious candidate for underperformance on Tuesday although the outlook for
it through the rest of the week is less certain. 

Moody's, Fitch and S&P are all expected to announce the results of their
latest credit rating reviews on Friday but with the pandemic threatening to
lift the national debt-to-GDP ratio from 63.3% in 2018/19 to 95.3% in
2023/24 there is a danger that downgrades could be announced this week.

Moody's and Fitch already have a negative outlook attached to ratings that
are already below 'investment grade' and Friday is the first scheduled
opportunity for them to respond to the costs of pandemic.

But with Moody's already having already cut its rating to 'junk' in March,
the implications for the Rand are less clear cut this time out. 

Credit rating changes can impact on investor appetite for a country's
assets, especially its government bonds, but South Africa has been a 'junk'
borrower at all of the major agencies since Moody's cut its rating to Ba1
from Baa3 and maintained a negative outlook in March.

That saw the country excluded from the FTSE World Government Bond Index in
April, which forced some investors into selling their government bonds while
preventing others from buying them. Fitch has since reduced the oulook for
its BB rating, although S&P left its neutral outlook unchanged. 

With credit rating concerns aside, the global environment is widely tipped
to dominate as a driver of the Rand, which has been swept higher in recent
months as a collapse of the U.S. Dollar and beginning of a global economic
recovery lifted commodity prices as well as positively correlated
currencies.  

Dollar declines are positive for commodity prices and so too are
expectations of a global economic recovery, which both benefit the Rand
given that South Africa is a commodity exporter. Commodity price gainst are
responsible for almost all of the improvement in the Rand's fundamental
value in recent months.

RMB forecasts USD/ZAR will trade between 15.0 and 17.1 during the final
quarter, aided by an improved valuation during periods of robust risk
appetite among investors while being weighed down by domestic factors like
concerns about the national finances and credit ratings in bouts of risk
aversion. 

Recent declines in fair value mean the South African Rand is still
fundamentally undervalued despite having risen nearly 7% against the Dollar
in the last month, which had reduced 2020's USD/ZAR increase to just 10.5%
on Tuesday. 

Nigeria

Free Naira Floating May Hurt Consumers, CBN Warned

Lagos - As the Central Bank of Nigeria (CBN) grapples with the twin
challenge of depleting external reserves and defending the naira, the Senior
Research Analyst at FXTM Global, Mr. Lukman Otunuga, has said a free float
of the naira will hurt consumers at this time.

He said COVID-19 had exposed the economy to a massive downside shock, but
added that the oil prices could rebound on vaccine hopes and noted that
Nigeria's economy could receive some support from the rise in the price of
gold.

Presenting Nigeria's macro-economic outlook for 2020 and beyond during a
virtual meeting with journalists yesterday, Otunuga who spoke from the
United Kingdom, based his points on some positive developments in the gold
sub-sector of the nation's economy.

He further said the development in the gold sub-sector was encouraging
diversification of the national economy, adding that the newly regulated
gold mining sub-sector was expected to create about 250,000 new jobs in the
country.

The FXTM analyst also stated that Nigeria might record an estimated $1.8b
economic loss from the 12 days #EndSARS protest.

While projecting that Nigeria's economic growth could expand to 1.7 per cent
in 2021, Otunuga stressed that economic diversification and infrastructure
development were key for the transformation of the country.- Daily Trust.

 <mailto:info at bulls.co.zw> 

Global Markets

U.S. dollar to plunge 20% in 2021 on vaccine rollout, loose monetary policy,
says Citi

(Kitco News) The U.S. dollar strength, which has been one of the main
obstacles to higher gold prices this fall, is about to reverse, according to
Citibank.

Vaccine rollout and loose monetary policy will weigh on the U.S. dollar next
year, with the currency at risk of falling 20%, Citi said in a note this
week.

At the time of writing, the U.S. dollar index was at 92.40, down 0.15% on
the day.

Citi's new forecast comes after markets digested two sets of positive
vaccine news - one from Pfizer/BioNTech a week ago and Moderna's
announcement on Monday.

On top of the potential vaccine rollout next year, there is the Federal
Reserve, which will continue to use all of its tools to support the U.S.
economy next year. The U.S. central bank also said that it will keep rates
low even if inflation expectations rise, which would potentially lead to the
U.S. yield curve steepening as well

Back in September, Citi published a report stating that it still saw gold
rising above $2,000 an ounce and hitting new record highs before the
year-end. Longer-term, Citi's outlook on gold is a positive one due to the
low-interest-rate environment. Citi noted that it views gold as still in the
middle of its current bull cycle.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold, silver slightly down in quiet session

(Kitco News) - Gold and silver futures prices are slightly lower in quiet
midday U.S. trading Tuesday. Trader and investor risk appetite is waning as
the raging Covid-19 pandemic is taking a steady toll on marketplace
psychology. However, such could not energize the gold and silver market
bulls today. Nor could a lower U.S. dollar index today. December gold
futures were last down $1.80 at $1,886.00 and December Comex silver was last
down $0.172 at $24.635 an ounce.

Global stock markets were mixed overnight, while U.S. stock indexes are
mixed to lower at midday. The Dow and S&P 500 stock indexes had reU.S.
dollar indexcord-high closes Monday. However, more and more U.S. states are
imposing restrictions on businesses and public gatherings, as Covid-19 rages
and many hospital beds are full or close to it. This atmosphere in the U.S.
and in Europe cannot help but dent trader and investor risk appetite heading
into holidays that are likely to see families separated. Despite the very
encouraging news on the vaccine front seen recently, there are dark days
that lie ahead for the U.S., Europe and other countries hard hit by the
pandemic.

It could also be that trader/investor sentiment has been somewhat dented by
reports the Trump administration is planning to take a very hard line on
China over the next two months, before Trump leaves office, including
reportedly taking some steps that the incoming Biden administration would
find hard to roll back. Just today, the U.S. Securities and Exchange
Commission (SEC) came out with a plan to require Chinese companies traded on
U.S. stock exchanges to have auditors overseen by the U.S. If the Chinese
firms won't comply they get shut out of U.S. stock exchanges.

The U.S. dollar index is lower again today. The greenback continues to
suffer on the foreign exchange market as the USDX is not far above its
recent low. The other important outside market sees crude oil prices weaker
and trading around $41.00 a barrel. The yield on the benchmark 10-year U.S.
Treasury note futures is currently trading at 0.88%.

Technically, December gold futures bulls have the overall near-term
technical advantage. Bulls' next upside price objective is to produce a
close in December futures above solid resistance at the November high of
$1,966.10. Bears' next near-term downside price objective is pushing futures
prices below solid technical support at the November low of $1,848.00. First
resistance is seen at $1,900.00 and then at $1,920.00. First support is seen
at this week's low of $1,861.50 and then at $1,848.00. Wyckoff's Market
Rating: 6.5

December silver futures bulls have the overall near-term technical
advantage. Silver bulls' next upside price objective is closing prices above
solid technical resistance at the November high of $26.135 an ounce. The
next downside price objective for the bears is closing prices below solid
support at the September low of $21.81. First resistance is seen at this
week's high of $25.155 and then at $25.50. Next support is seen at this
week's low of $24.555 and then at last week's low of $23.60. Wyckoff's
Market Rating: 6.5.

December N.Y. copper closed down 245 points at 319.75 cents today. Prices
closed nearer the session low today on profit taking from recent gains. The
copper bulls still have the solid overall near-term technical advantage.
Copper bulls' next upside price objective is pushing and closing prices
above solid technical resistance at 350.00 cents. The next downside price
objective for the bears is closing prices below solid technical support at
the November low of 302.85 cents. First resistance is seen at today's high
of 323.95 cents and then at this week's high of 326.25 cents. First support
is seen at today's low of 317.65 cents and then at 315.00 cents. Wyckoff's
Market Rating: 8.0.-Kitco

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Simbisa Brands

AGM

SAZ, Northend Close, Borrowdale, Harare as well as virtually on:
https:/escrowagm.com/eagmZim/Login.aspx

20/11/2020 | 8:15am

Axia Corporation

AGM

virtual https://escrowagm.com/eagmZim/login.aspx

24/11/2020 | 8:14am

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
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for guideline purposes only and sourced from third parties.

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