Bulls n Bears Daily Market Commentary : 27 November 2020

Fri Nov 27 17:31:54 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 : 27 November 2020

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

ZSE commentary

Market recovers in penultimate session…

The ZSE recovered in the penultimate session of the month, breaking its four-day losing streak. The mainstream All Share Index gained 1.01% to close at 1,581.69pts while, the Industrial Index added 0.72% to 5,230.94pts. The Mining Index jumped 11.76% to 3,325.30pts, spurred by Bindura that garnered 14.75% to $3.4422, albeit scrappy shares. The market closed with a positive breadth of four as sixteen counters gained against twelve that faltered. Construction group Masimba surged 19.89% to $5.0494 while, Hippo put on 19.78% to close at $21.8000. Packaging group Nampak added 18.96% to settle at $1.2500 while, banking group ZB gained 16.67% to end pegged at $17.5000.

The blue chips index let go 0.92% to 998.65pts as demand continued to wane in selected heavies. Life insurer Fidelity succumbed 19.95% to $1.2008 while, crocodile skin producers Padenga dipped 6.02% to $15.0371as selling pressure persists. Retailer OKZIM trimmed 3.17% to $5.4219, where demand could be established while, First Capital let go 2.21% to settle at $0.6068. Cable manufacturers Cafca slipped 1.52% to $61.0554 on a rare trade to complete the top five laggards of the day. Volume of shares exchanged ballooned 836.04% to 35.94m while, turnover expanded 509.29% to $136.74m. Top volume and value leaders of the day were Powerspeed, Masimba and OKZIM which collectively claimed 90.26% of the former and 73.29% of the latter. Foreign inflows declined 32.18% to $3.52m while, outflows enhanced 80.43% to $11.34m leaving the market with a net funds outflow position of $7.82m. efesecurities

Global Currencies & Equity Markets

South Africa

Rand dips, after motion of no confidence

JOHANNESBURG - The rand stepped on to the back foot as traders awaited the PPI release while the external backdrop deteriorated somewhat as rising infections countered vaccine optimism-related risk appetite according to NKC Research.

On the local political front, the speaker of the lower house authorised a vote on a motion of no-confidence – brought by the African Transformation Movement (ATM), which has only two seats in the 400-member National Assembly – against President Cyril Ramaphosa next week. The main opposition, the Democratic Alliance, indicated that it did not support the motion.

At the close of local trade, the rand quoted 0.68 percent weaker at R15.22/$, after trading in range of R15.10/$ - R15.24/$. The rand traded steady overnight. The expected range of the rand against the dollar today is R15.00/$ - R15.40/$.

Brent crude oil

The Brent oil price drifted weaker amid thin trading yesterday as the market corrected following this week’s impressive rally. At the close of local trade, benchmark Brent crude futures quoted 0.50 percent lower at $48.11pb. Crude prices were unchanged during Asian trade this morning.-BUSINESS REPORT ONLINE

Nigeria

Naira crashes across forex markets as CBN Governor hits at black market

At the black market, the Naira depreciated against the dollar to close at N487/$1 on Wednesday.

Forex turnover dropped by 68.2%, as the Naira’s exchange rate at the NAFEX window depreciated significantly against the dollar to close at N393.25/$1 during intra-day trading on Wednesday, November 25.

Also, the naira crashed further against the dollar, closing at N487/$1 at the parallel market on Wednesday, November 25, 2020, as the CBN Governor who alleged that the black market is a tainted market used for bribe and corruption, said the Nigerian official exchange rate should not be determined by the rate at the parallel market.

The CBN, a few days ago relaxed its earlier policy on banning third parties from having access to foreign exchange routed through Form M.

Parallel market: According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira depreciated against the dollar to close at N487/$1 on Wednesday.

This represents an N4 drop when compared to the N483/$1 that it exchanged for on Tuesday, November 24.

·         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 into 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 an N7.75 gain when compared to the N385.50/$1 that it exchanged for on Tuesday, November 24.

·         The opening indicative rate was N386.29 to a dollar on Wednesday. This represents a 33 kobo drop when compared to the N385.96 that was recorded on Tuesday.

·         The N395 to a dollar was the highest rate during intra-day trading before, it still closed at N393.25 to a dollar. It also sold for as low as N383/$1 during intra-day trading.

·         Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 68.2% on Thursday, November 19, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $163.87 million on Tuesday, November 24, 2020, to $52.09 million on Wednesday, November 25, 2020.

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

·         The drop in dollar supply after some trading days of improvement 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 an obligation of manufacturers to their foreign suppliers that continues to increase in the face of dollar shortages.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar On The Ropes, Aussie Unfazed By China Tariffs

It was a relatively subdued session in global markets yesterday with US traders being away on holiday. Most stock indices closed flat and currency pairs generally traded in narrow ranges, with no real headlines to steer the price action and volatility in short supply.

The dollar remains near its recent lows, unable to stage a successful rebound even amid continued disagreements on the EU budget and reports that the Brexit talks are stuck in the mud. The showdown between Poland and Hungary against the rest of the EU seems to be getting worse, though this has not really trickled into the euro yet.

It could be that investors view this standoff as just another drama scene in the endless European soap opera, which ultimately will be resolved but only after lots of kicking and screaming.

What’s next for euro/dollar?

For now, it is difficult to envision much further upside in euro/dollar from here. The pair is trading above the $1.19 region once again but without a breakthrough in the Brexit saga or another tsunami of QE by the Fed next month, it is hard to see what will push the price even higher, especially with the ECB ‘defending’ the $1.20 handle lately.

Relative EU/US economic performance and FX positioning are two other elements to consider. Gone are the days when Europe was expected to ‘out-recover’ America. The euro area will almost surely contract sharply again in Q4 due to the lockdowns, whereas the US may suffer much less growth-wise. Additionally, while long-euro speculative positions have been unwound a little lately, they remain at stretched-long levels.

The bottom line is that euro/dollar has been stuck in a range between $1.16 to $1.20 for four months now, and an upside break doesn’t look imminent here without some jet fuel from Brexit or the Fed.

Aussie shrugs off China tariffs, gold stabilizes

In the latest escalation in trade tensions, China slapped tariffs on Australian wine today ranging from 107% to 212%, which is a staggering amount. The move follows a series of intensifying hostilities between the two trading partners, with China furious that Australia supported a global inquiry into the origins of the coronavirus.

About one third of all Australian exports go to China, so this diplomatic brawl could have dire economic implications. The aussie hasn’t reacted much to all this and continues to ride the vaccine euphoria, but this is still something to keep a close eye on. Australia literally relies on China to absorb its exports, so the aussie might not stay immune for long if this skirmish worsens.

In the commodity theatre, gold prices seem to have established a short-term floor just above the $1800 region and the 200-day moving average. For now, bullion’s fate lies with the Fed’s next move and the rollout of vaccines. If $1800 is violated too, there may be stronger hands waiting around the $1750 zone, which encapsulates the 50-week moving average.

Meanwhile, crude oil is taking a breather at elevated levels, waiting for Monday’s OPEC meeting. A sell-the-fact reaction seems quite likely if the cartel only delivers the simple three-month extension that markets have largely priced in already.

Brexit crunch time

Today, all eyes will be on the Brexit saga. EU negotiators will travel to London for talks, so headlines over the weekend and gaps in sterling on Monday are certainly plausible. The latest updates suggest there hasn’t been any progress lately, though some political intervention from Boris Johnson could change that.

Finally, US markets will only open for a half day, so liquidity will be thinner-than-usual.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Flat gold price on a very quiet Friday

(Kitco News) - Gold futures prices are near steady in early U.S. trading Friday. Gold bulls are working to stabilize the yellow metal. Prices hit a nearly five-month low on Tuesday. Gold and silver bulls have been wounded this week by better risk appetite in the global marketplace. December gold futures were last down $0.70 at $1,804.80 and December Comex silver was last down $0.192 at $23.17 an ounce.

Global stock markets were also mostly flat overnight, amid no major news developments the past 48 hours. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Following the U.S. Thanksgiving holiday on Thursday, Friday is usually one of the slowest U.S. trading days of the year. The NYSE and Nasdaq stock markets close early today.

The U.S. dollar index is near steady early today. The other important outside market sees January Nymex crude oil futures prices weaker and trading around $45.40 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.86%.

There is no major U.S. economic data due for release Friday.

Technically, the December gold futures bulls have lost their overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at this week’s high of $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at the overnight high of $1,817.00 and then at $1,825.00. First support is seen at this week’s low of $1,797.10 and then at $1,775.00. Wyckoff's Market Rating: 5.0

December silver futures bulls have the slight overall near-term technical advantage but have faded. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the October low of $22.625. First resistance is seen at $23.65 and then at $24.00. Next support is seen at this week’s low of $22.935 and then at $22.625. Wyckoff's Market Rating: 5.5.

Silver still capped by $23.50 as prices consolidate within short-term pennant

Spot silver prices trade broadly flat on Thursday amid thinned market conditions given the US Thanksgiving holiday.

XAG/USD has been consolidating within a short-term pennant over the past two days around a longer-term uptrend.

Spot silver prices (XAG/USD) trade pretty much flat on the day just above $23.30. The precious metal is off extremes; gains were capped at $23.50 on Thursday morning but the buyers came in ahead of $23.20. That marks two days now that silver has been unable to rally past $23.50. Thursday’s consolidative price action is in fitting with a broader sense of market quiet with US participants largely absent due to Thanksgiving holidays.

XAG/USD consolidates within short-term pennant as it tests long-term uptrend

Spot silver prices are in the process of forming another short-term pennant structure, with the upper bound a downtrend linking the Tuesday Asia session highs with Wednesday and Thursday’s highs. The lower bound is an uptrend linking Wednesday and Thursday lows.

Should silver’s short-term pennant break to the downside, this would likely coincide with a break of Thursday and Wednesday lows around $23.20 and $23.10 respectively, and that would open up a test of weekly lows just below the psychological $23.00 mark.

It is also worth noting that silver is also currently consolidating around an uptrend that links the September and October lows at $21.68 and $22.60 respectively. Such a move as described above would signal a break this longer-term trendline and bring these October and September lows into the equation as the most important downside levels to watch over the coming weeks.

Conversely, in the bullish scenario where this longer-term uptrend hold up and eventually leads to an upside break of silvers short-term pennant, the most immediate level of resistance to note would be the 19 November low at $23.69. Beyond that, the door would be open to a move back to the psychological $24.00 level, and then a potential test of the 21 and 50 day moving averages which reside close to $24.20.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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/20201127/4796f8c3/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/20201127/4796f8c3/attachment-0002.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/20201127/4796f8c3/attachment-0004.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.png
Type: image/png
Size: 643173 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201127/4796f8c3/attachment-0003.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 41145 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201127/4796f8c3/attachment-0005.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image005.jpg
Type: image/jpeg
Size: 21694 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201127/4796f8c3/attachment-0006.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image006.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20201127/4796f8c3/attachment-0007.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/20201127/4796f8c3/attachment-0001.obj>