Bulls n Bears Daily Market Commentary : 01 October 2020

Thu Oct 1 17:40:19 CAT 2020

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Bulls n Bears Daily Market Commentary : 01 October 2020

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

ZSE commentary

ZSE opens month in the red.

The market swung back into the red in month opener as the mainstream All
Share Index closed the session on a 0.11% loss, reversing yesterday's gains.
The Industrials was 0.05% lower at 5383.11pts with the less active Mining
Index easing 1.92% to settle at 4049.31pts. Slight gains registered in
selected heavies helped maintain the Top Ten Index in the black as it closed
0.20% higher at 1095.33pts. The risers and fallers were evenly distributed
at eleven, as nine remained unchanged in a session in which thirty-one
counters were active. Padenga topped the risers list on a 6.89% surge to
trade at $14.0032 while, Msimba trailed on an 5.26% rise to $2.0000. Simbisa
was 3.46% higher at $6.7400 while, retailer OKZIM was 3.01% up from
yesterday. Brick manufacturer Willdale added 1.31% to $0.2250 and completed
the top five risers.

Leading the losers list was Powerspeed which dropped 15.43% to $1.6069
while, conglomerate Meikles slumped 6.67% to $14.0000, albeit closing firmly
bid at that level. Banking group ZB lost 3.86% to settle at $15.0000 with
heavy cap Innscor letting go 3.735 to close at $19.1456 on weakening demand.
First capital continued to lose its glitter as it closed 2.73% lower to
$0.6139 on waning demand. Activity aggregates declined with volumes
exchanged dropping 88.52% to 1.53m shares, yielding a value outturn of
$12.45m which dipped 94.81% from prior session. Foreign participation was
depressed as inflows accounted for 0.83% of the day's turnover while,
outflows claimed 7.37% of the same.-efesecurities 

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

Global Currencies & Equity Markets

South Africa

South African Stocks Halt Slide as Strong Rand Lifts Banks 

(Bloomberg) -- South Africa's main stock index halts a two-day slide, rises
0.5% by 9:53 a.m. in Johannesburg as gold stocks drive miners higher, and a
stronger rand lifts banks.

Equity markets are climbing Thursday as signs of potential progress toward
fresh U.S. fiscal stimulus boost appetite for riskier assets. The MSCI
Emerging Market Index is 0.4% higher. The South African benchmark dropped
0.2% in the third quarter, lagging behind an 8.7% gain in emerging-market
peers. It fell 2.2% in September, sliding for a second month.

Diversified miners BHP Group Plc and Anglo American Plc join gold producers
in boosting gauge for mining stocks, with index climbing 1%

.         BHP +0.9%, Anglo American +0.8%, Gold Fields Ltd. +1.6%, AngloGold
Ashanti Ltd. +1.6%, Sibanye Stillwater Ltd. +1.5%, Impala Platinum Holdings
Ltd. +1.1%, Harmony Gold Mining Co. +1.3%, Anglo American Platinum Ltd.
+0.5%, Northam Platinum Ltd. +0.4%, African Rainbow Minerals Ltd. +0.8%

.         Index for banks stocks extends gains for a fourth day, tracking
the strengthening rand

.         FirstRand Ltd. +1.6%, Standard Bank Group Ltd. +2.1%, Absa Group
Ltd. +2%, Nedbank Group Ltd. +1.8%, Capitec Bank Holdings Ltd. +0.4%,
Investec Plc +1.2%

.         South African currency is 0.6% stronger against the dollar as of
10:02 a.m., rising for a fourth day

.         MTN Group Ltd. lifts the mobile telecommunications index up 1.4%,
as South Africa plans to auction off more than 8 billion rand ($483 million)
of high-speed internet spectrum following years of delays

.         MTN +2.6%, Blue Label Telecoms Ltd. +0.6%

.         NOTE: South Africa Starts $479 Million Sale of Internet Spectrum

.         Sasol Ltd. halts two-day slide, up +5.2%

.         NOTE: Sasol Advises Shareholders to Continue Exercising Caution

.         Nampak Ltd. surges a further 27%, adding to Wednesday's record 45%
jump, after the packaging company said it had reduced gross net debt

.         Foreigners remained net sellers of South African stocks for a
ninth day Wednesday, disposing of 1.51 billion rand worth of shares,
according to exchange operator JSE Ltd.-Bloomberg L.P.

Nigeria

Nigeria faces prolonged exchange rate crisis as oil prices remain stuck at
$40

Nigeria's current account deficit and the exchange rate could remain under
pressure longer than expected due to analyst outlook of the price of crude
oil.  

Crude oil prices have been stuck at $40 per barrel and could remain at these
levels for the next year. Analysts at OilPrice.com a leading news website
dedicated to the petroleum industry. 

According to its analysts, oil prices are likely to remain stuck at $40 due
to a resurgence in Covid-19 cases that have induced another subtle lockdown
in Europe. 

They also cite higher than expected crude oil stockpiles as another major
challenge gripping the industry with almost a billion barrels globally. 

A combination of these factors means oil prices could remain depressed
throughout this year and most of 2021, bad news for the Central Bank's
effort to continue to defend the naira and worse for a government that is
battling revenue shortfalls.  

How bad is it? First-quarter data from the central bank just before the
global outbreak of COVID-19 reveals Nigeria had a current account deficit of
over $4.8 billion largely due to a fall in oil export earnings. This
triggered the first wave of devaluation in March 2020.

The situation was made worse by Covid-19 as foreign investors stayed out of
the country starving the external reserves of the greenback. Foreign
portfolio investments in the money market fell to just $332 million a
whopping 90% drop in the second quarter of the year.

.         Nigeria has also waited agonizingly for the now elusive $1.5
billion World Bank facility which it had hoped will help shore up its
external reserves.

.         Reports indicate part of the conditions to draw down includes the
unification of the naira which led to the latest wave of devaluation by the
CBN. 

.         The COVID-19 pandemic has also limited dollar inflow from
remittances, which had been a reliable source of foreign exchange inflow for
the country.

The exchange rate received a temporary reprieve in the black market when the
CBN resumed dollar sales to BDCs and business travelers. The naira
strengthened subsequently but has since depreciated again., falling to
N470/$1 recently. 

What this means: With oil prices stuck at $40 per barrel, the CBN will find
it even harder to support the exchange rate in the near term. With foreign
investors inflow still in abeyance, it has a limited window to attract
forex, a situation that could lead to further devaluation.  

The latest dollar sales to BDC operators have so far failed to strengthen
the naira.

.         The CBN has also recently placed restrictions on forex transfer
between third parties which according to Nairametrics Research, is aimed at
curbing the actions of speculators.

.         Yet the exchange rate disparity continues to widen with the
parallel market now trading for N470/$1.

.         If oil prices remain stuck at around $40 per barrel, then the CBN
will likely consider another round of devaluation except it is able to
attract forex inflows from foreign investors, concessionary loans, or an
increase in local remittances.

.         The longer the oil price remains stuck at $40, the more depressed
the naira could be.

 <mailto:info at bulls.co.zw> 

United Arab Emirates

UAE currency exchange sector set for consolidation as remittances fall

Further consolidation is expected in the United Arab Emirates' remittances
industry, the world's second largest, as declining volumes and a switch to
digital transfers due to coronavirus-related movement restrictions endanger
smaller exchange houses.

Remittances from the Middle East and North Africa, which mainly comprise
money sent home by migrant workers in the wealthy six-member Gulf
Cooperation Council, are set to fall by 19.6% in 2020, the World Bank
forecasts.

Such broad involvement is understandable, given the size of the market. The
UAE's outbound remittances totaled $44.4 billion in 2018, second only to the
U.S. Saudi Arabia was third with $33.9 billion, while Kuwait, Qatar and Oman
were also in the top 20.

Consolidation

Stricter licensing requirements have caused the UAE's currency exchange
sector to consolidate, with the number of companies falling to 80 as of 2019
from a peak of 140 in 2017, according to Rashed A. Al Ansari, CEO of Abu
Dhabi's Al Ansari Exchange. His firm claims a 31% market share among
currency exchange companies and has 190 branches across the country.

In the UAE, remittances must be conducted via banks or exchange houses,
making it problematic for fintech entrants to the industry because they must
partner with established rivals. Britain's TransferWise Ltd., which declined
to comment to S&P Global Market Intelligence, received a license from Abu
Dhabi Global Market, the emirate's financial free zone, in late 2019.
Currently, around three-quarters of remittances go through exchange houses
and the remainder via banks.

For popular MENA currency corridors, such as the UAE dirham to Indian rupee,
fees are below the global average of 6.8%. Sending $200 from the UAE to
India on average cost 3.45% in fees in the second quarter, according to the
World Bank. The same transaction from the UAE to Pakistan cost 3.94%, while
other destination markets are similarly priced: Philippines at 2.67% and
Egypt at 3.53%. This quartet are the biggest destination remittance markets
from the UAE.

Digitization

The coronavirus pandemic has caused international money transfers to
decline. UAE outbound remittances fell 15.6% in March, the most recent
central bank data shows. Al Ansari forecasts his company's remittances will
decline no more than 10% in 2020 versus a year earlier.

However, he said the number of customers using the company's digital
services to remit money has more than doubled, with its app now accounting
for nearly 10% of remittances.

To open a local bank account, UAE residents must usually earn at least 5,000
dirhams a month, which rules out hundreds of thousands of manual and service
industry workers. They commonly receive their salaries on a pre-paid card
permitting a single free-of-charge cash withdrawal per month, and usually
take this cash to a mall where they can visit multiple exchange houses to
find the best rate to transfer most of their salary home.

But the shift to exchange house apps could become permanent. Such apps
engender greater customer loyalty - once a consumer has passed the necessary
know-your-customer requirements to send money through an exchange house's
app or a mobile wallet, they are much less likely to complete a similar
process again to enroll with a rival provider's app.

Some entities have created mobile wallets to woo low-income customers.

MoneyGram is the remittance provider for the mobile wallets of First Abu
Dhabi Bank PJSC, the UAE's largest bank by assets, the country's former
telecom monopoly Etisalat and its Qatari rival Ooredoo.

MoneyGram's Lines said COVID-19 has not necessarily impacted overall volumes
and revenue, depending on the size and scale and distribution and the
partners companies have.

As of Sept. 29, US$1 was equivalent to 3.67 United Arab Emirates
dirhams.-spglobal,com

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price rises to retake perch at around $1,900

Gold rose Thursday, contributing to a gain for the week, with investors
partly attributing the advance for the yellow metal to traders hedging bets
ahead of the important U.S. jobs report on Friday.

Bullion bulls have viewed gold during the coronavirus pandemic as one of the
easiest ways to hedge against a host of uncertainty fostered by the
public-health disaster that has forced central banks around the world to
adopt low-interest-rate policies to limit the harm to businesses.

Against that backdrop, December gold GCZ20, 0.94%  was up $7.40, or 0.4%, at
$1,902.90 an ounce, poised for a weekly rise of 2%. On Wednesday, gold
futures logged a 4.2% loss for September, but posted a 5.3% climb for the
third quarter, according to Dow Jones Market Data, tracking the most-active
contract.

December silver SIZ20, 2.07%, meanwhile, picked up 9 cents, or 0.4%, to
reach $23585 an ounce in Thursday dealings, after tumbling 3.9% in the
previous session. Prices had shed nearly 18% in September, but rallied by
26% for the quarter.

Concerns about a possible contested presidential election in the U.S. in
November, where the loser doesn't concede defeat immediately and/or the
winner isn't determined on Election Day on Nov. 3, also is seen as a
potential catalyst for gold buying.

Worries about the U.S. presidential election outcome were reinforced on
Tuesday after a closely followed debate between President Donald Trump and
challenger former Vice President Joe Biden descended into chaos and
acrimony.

A retrenchment of the U.S. dollar after a brisk weekly run-up last week also
has helped to buttress the value of assets pegged to the U.S. currency like
gold. A weaker dollar can make purchasing dollar-priced gold more compelling
to overseas buyers. The ICE U.S. Dollar Index DXY, -0.11% was headed for a
weekly slump of 0.9% after posting a 1.8% advance last week.

Still, for now, "the precious metals markets do not appear to have a large
amount of bullish buzz in place, with the very poor performance in the month
of September reminding the bull camp of the continuation of the 'downtrend'
that began in early August," analysts at Zaner Metals said in daily
commentary.

Gold prices extended their losses in the wake of data Friday showing that
the weekly number of Americans who applied for jobless benefits fell to
873,000, the lowest level since the start of the pandemic. However,
including an estimated 650,120 people who filed new claims under the
Pandemic Unemployment Assistance Act, the actual or unadjusted new claims
count was at 1.49 million.

Prices for the metals continued to decline as separate data revealed
consumer spending rose 1% in August, and the ISM manufacturing index dipped
to 55.4% in September from 56%.

Among other metals traded on Comex, December copper HGZ20, -4.85% fell 3.4%
to $2.929 a pound. January platinum PLF21, -0.13% shed 0.9% to $900.80 an
ounce, but December palladium PAZ20, 0.64% tacked on 0.1% to $2,333.50 an
ounce.-marketwatch

Copper price surges on booming Chinese factories

Copper leapfrogged the pivotal $3 a pound level on Wednesday after a key
gauge of the Chinese manufacturing sector, the world's top consumer of the
metal, showed new orders jumping to a nine-year high.  

Copper for delivery in December trading on the Comex market in New York
changed hands for $3.0415 a pound ($6,705 a tonne) in early afternoon trade,
up 1.7% from Tuesday's settlement. 

Capital Economics

Wednesday's move brings gains for 2020 to 9.1% and 57% since the covid-19
lows struck in March. A fortnight ago, the bellwether metal reached the
highest price since June 2018. 

Domestic and export orders booming

Capital Economics said China's September PMI readings suggest that "the
economy is now entering a period of above-trend growth, which is
indisputably good news for the prices of commodities, particularly
industrial metals."

Beijing's official manufacturing PMI jumped to a more than a two year high
of 51.5 (a reading above 50 indicates expansion), up from 51.0 in August,
while the survey by Caixin, which gives a clearer picture of activity
outside the state-owned sector, came in at 53. 

Caixin's new orders subindex expanded at a rate not seen since early 2011,
while new export business expanded at the fastest rate (54.8) since August
2017, which bodes well for a recovery in manufacturing in the rest of the
world.

The Wall Street Journal reported a measure from Citigroup that tracks end
uses of copper in the country in various sectors, including auto and
appliance makers, showing the three-month average reaching its highest level
since early in 2017.-mining.com 

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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
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for guideline purposes only and sourced from third parties.

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