Bulls n Bears Daily Market Commentary : 18 November 2020

Wed Nov 18 16:53:27 CAT 2020

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Bulls n Bears Daily Market Commentary : 18 November 2020

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

ZSE commentary

ZSE continues to surge…

The market continued to firm in the mid-week session buoyed by gains in selected heavies. The primary All Share Index put on 2.74% to 1,632.50pts while, the Industrials gained 2.82% to close at 5,400.75pts. The ZSE Top Ten Index added 3.74% to end pegged at 1,071.43pts while, the Mining Index was stable at 3,391.21pts for the third consecutive session. National Foods led the risers of the day after surging 19.52% to $60.0000 while, beverages group Delta followed on a 17.82% jump to $22.7323 having traded an intraday high of $23.1500 to close with bids at that level. Telecoms giant Econet garnered 17.06% to $4.8128 as Mash climbed 5.95% to $0.5750. Construction group Masimba capped the gainers’ list on a 5.72% rise to $2.8500.

Banking group CBZ lost a further 4.94% to settle at $37.0750 while, Zimplow let go 2.50% to $4.8749. Hotelier African Sun shed 2.20% to $1.8387 while, Dairibord trimmed 0.89% to $8.9000. Completing the top five shakers of the day was MedTech that slipped 0.75% to close at $0.0790. Thirty-three counters registered were active in Wednesday’s session with sixteen risers, eight fallers and nine that traded unchanged, to see the market close with a positive breadth of eight. Volume of shares traded ballooned 271.61% to 48.60m while, turnover swelled 42.16% to $98.18m. Activity aggregates were anchored by a block trade in Mash which claimed 71.40% of total volumes traded and 20.32% of turnover. Other notable value drivers were Simbisa, Innscor and Econet with a combined contribution of 59.44%. Foreign inflows improved 99.96% to $9.08m while, outflows grew 132.41% to $74.75m to record a net funds outflow position.-efesecurities

Global Currencies & Equity Markets

South Africa

South Africa's rand eases as vaccine cheers fades

JOHANNESBURG (Reuters) - South Africa's rand eased early on Wednesday, as cheer over COVID-19 vaccine developments faded and investors looked ahead to a rates decision by the local central bank later this week.

At 0600 GMT, the rand was 0.1% weaker at 15.3950 per dollar, little changed from its closing level overnight, as investors opted for caution and favoured safe havens with surging novel coronavirus cases in Asia as winter set in.

A spike in infections have driven record hospitalisations and fresh restrictions on gathering in the United States, while new outbreaks vex authorities in Japan, South Korea and Australia.

Locally, with only retail sales for September due for release ahead of Thursday's lending rates decision -- the last for the year -- and credit ratings reviews by Standard & Poor's and Moody's due on Friday, trade on the rand was also cautious.

The South African Reserve Bank (SARB) is likely to leave the repo rate at a record low at its Nov. 19 meeting and over the coming year too, a Reuters poll of economists found. But a small chance of a cut has kept bulls in wait-and-see mode.

Bonds were slightly firmer in early deals. The yield on the benchmark 2030 government issue was down 1.5 basis points to 8.815%.

Nigeria

Naira remains stable at black market as dollar shortages persist

Forex turnover dropped by 47.2%, as Nigeria’s exchange rate at the NAFEX window appreciated against the dollar to close at N384.80/$1 during intra-day trading on Tuesday, November 17.

Also, the naira remained stable against the dollar, closing at N475/$1 at the parallel market on Tuesday, November 17, 2020 as increased demand over dollar shortages persists.

This is despite the allocation of about $1 billion to Bureau De Change (BDC) Operators since September by the CBN.

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 to close at N475/$1 on Monday.

This was the same rate that it exchanged for on Monday, November 16.

·         The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.

·         This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.

·         The CBN has sold about $1 billion 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 appreciated against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N384.80/$1.

·         This represents a N1.20 gain when compared to the N386/$1 that it exchanged for on Monday, November 16.

·         The opening indicative rate was N386.33 to a dollar on Tuesday. This also represents a 83 kobo drop when compared to the N385.50 that was recorded on Monday.

·         The N393.30 to a dollar was the highest rate during intra-day trading before it still closed at N384.80 to a dollar. It also sold for as low as N380/$1 during intra-day trading.

·         Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 47.2% on Tuesday, November 17, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $111.38 million on Monday, November 16, 2020, to $58.85 million on Tuesday, November 17, 2020.

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

·         The continuous drop in dollar supply 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.

·         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.

·         A financial expert and Managing Director of Financial Derivatives had stated that he expects the exchange rate at the parallel market to likely depreciate to N470-N475/$1 in November and December due to low oil prices that will further limit foreign exchange supply.

·         Some members of MPC of the CBN have expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is as obligation of manufacturers to their foreign suppliers continues to increase in the face of dollar shortages.

 <mailto:info at bulls.co.zw> 

Global Markets

Turkey's lira lags EMEA FX ahead of crucial rate move, new virus curbs

The Turkish lira eased on Wednesday after the imposition of tighter coronavirus restrictions, while investors looked ahead to a central bank meeting on Thursday on hopes of a sharp interest rate hike that could temper rising inflation.

The lira staged a sharp rebound last week after plunging to record lows this year, on optimism that Ankara would follow more orthodox policies after a leadership overhaul and market-friendly comments from President Tayyip Erdogan.

The currency weakened 0.5% to 7.709 per dollar at 0838 GMT underperforming most of its peers in Europe, the Middle East and Africa for the day, but Turkish stocks jumped more than 1% boosted by solid gains in the financial sector.

The introduction of partial lockdowns on weekends and new virus curbs in the tourism-dependent economy dampened risk appetite, but focus remained on the crucial rate decision at the first central bank meeting under new governor Naci Agbal.

The bank is expected to hike its policy rate to 15% on Thursday from 10.25%, according to a Reuters poll.

Other regional currencies, strengthened against a broadly weaker dollar, with Russia’s rouble leading gains, as it benefited from a rise in global crude prices, the country’s main export item.

Government bond auctions were also in focus, with the Russian finance ministry offering three OFZ treasury bonds later on Wednesday.

South Africa’s rand advanced 0.5% ahead of its own central bank meeting on Thursday, with the South African Reserve Bank expected to leave the repo rate at a record low at its meeting on Thursday and over the coming year too, as inflation is expected to quicken in coming months.

Central European currencies ticked higher against the euro, with the Polish zloty and Czech crown rising 0.4% and 0.2% each.

Markets have barely reacted to Hungary and Poland blocking the adoption of the 1.1 trillion euro 2021-2027 EU budget and recovery fund on Monday over a clause which makes access to money conditional on respecting the rule of law.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Despite a weaker dollar gold and silver struggle to shine

(Kitco News) - Gold and silver both trade 0.09% higher overnight leading into the European open in a pretty lacklustre Asian session. The risk sentiment was mixed after a weak handover from Wall Street. The Nikkei 225 fell 1.10% while the ASX (0.51%) and Shanghai Composite (0.22%) gained. 

In terms of news, Bank of Japan's Governor Kuroda says the central bank will not be ending easy monetary policy any time soon. This is obviously positive for gold but we need to see if the Fed has the same intentions. Sticking with central banks the RBNZ says they are investigating a potential leak prior to the November monetary policy statement. Leaks are nothing new but it is important that everyone respects the media embargo period before the central bank has a chance to release the data themselves. There were some comments from Fed Chair Powell who said now is not the right time to put away the emergency Fed measures. US fiscal stimulus talks are also set to start again as House Speaker Pelosi and Senate minority leader Schumer sent Senate leader McConnell a letter calling on him to kickstart talks.

On the Brexit front, there are reports that the UK and France may have reached a deal on fishing rights. This was one of the biggest stumbling blocks in the talks and now a deal could be reached as soon as next week. 

In the FX space, the greenback has struggled overnight with the likes of NZD, JPY and GBP capitalising. The most interesting move came in the crypto space as BTC/USD rocketed toward 18K but then met some resistance. The digital currency has settled at 17,944 this morning. In the commodities complex, lumber (5.78%) continues to perform well and zinc (1.95%), copper (1.18%), lead (0.54%) and tin (0.30%) are all trading higher off the back of a weaker dollar. 

Looking ahead to today's session highlights include UK CPI, EU CPI, Canadian CPI, US building permits, DoE crude oil inventories. There are also comments from  FOMC Member Bullard, Williams, Evans, ECB President Lagarde, BoC Gov Council Member Wilkins, BoE MPC Member Haldane and ECB's Enria.

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 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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