Bulls n Bears Daily Market Commentary : 12 October 2020

Mon Oct 12 17:01:14 CAT 2020

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Bulls n Bears Daily Market Commentary : 12 October 2020

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

ZSE commentary

ZSE rebounds in week opener.

The market rebounded in week opener reversing losses accumulated last week
to see three of the benchmark indices in our review close in the black. The
mainstream All Share Index added 0.21% to end at 1,537.54pts while, the
Industrials improved 0.30% to 5,055.99pts. The blue chips index went up
0.16% to 1,006pts. Life assurer Fidelity headlined the risers of the day on
a 19.79% surge to $1.1500, trailed by ART which garnered 9.26% to $2.2475 on
paltry shares. Banking groups FBC and ZB put on 5.61% and 3.81% to close at
respective prices of $15.5000 and $15.0000, respectively. Fast foods group
Simbisa completed the top five gainers of the day on a 3.71% gain to
$6.2500.

Brick manufacturers Willdale was the major casualty of the day after
succumbing 10.91% to $0.2000. Medtech let go 10.79% to $0.0703 while, SeedCo
shed 5.60% to settle at a vwap of $17.4148. The Mining Index slipped 2.24%
to 3,856.18pts weighed down by RioZim and Bindura that retreated 3.55% and
1.96% to close at $8.8889 and $4.0000 apiece. Fallers outweighed gainers by
a count of two leaving the market with a negative breadth. Activity
aggregates were mixed in Monday's session as volume of shares traded
ballooned 116.94% to 29.31m shares while, turnover dipped 70.50% to $10.68m.
Truworths was the top volume and value driver of the day after claiming a
chunk of 84.03% of the former and 30.23% of the latter. Other notable value
drivers were Delta, Innscor and Mash which contributed a combined 46.01% of
the aggregate.-efesecurities

Global Currencies & Equity Markets

South Africa

South Africa Rand's Recovery against the Pound Forecast to Remain Intact

The South African Rand's ongoing recovery against the British Pound and
other major developed market currencies is seen extending over the
short-term courtesy of a supportive technical configurations, meanwhile
analysts at Goldman Sachs say the demand by investors for high-yielding and
high-risk financial assets should also aid further gains.

>From a technical perspective, momentum favours the South African currency
against Sterling.

The Pound-to-Rand exchange rate has been in decline since early August when
a rally topped out around 23.00 and subsequently reversed, indeed a look at
the daily chart indicates a trend line that is consistent with a short-term
negative outlook:

GBP to ZAR downtrend intact

Should losses extend over coming days and weeks then an initial target at
20.77, the July 22 low, comes into view. We see some decent support for
Sterling around this vicinity, noting that a falling GBP/ZAR exchange rate
has arrested declines in this area on three occasions in 2020.

If you are looking to buy Rand and would like to capture current levels for
use in the future, please see what tools are available to you here.

The Rand suffered significant losses at the start of the year when 'risky'
emerging market assets were sold off in favour for safer investments, but
the subsequent recovery in confidence has seen investors return to the Rand.

This trend could well continue according to analysts at Goldman Sachs, who
have told clients this week they are initiating a new recommendation that
investors buy the Rand.

Goldman Sachs says that the likelihood of a strong win by Joe Biden in the
November U.S. election combined with the likely approval of a vaccine
provide the fundamental rationale for betting on further upside in the Rand.

The Wall Street bank has noted Biden's commanding lead in both the national
and battleground-state polls.

Election outcome simulations

But, it is not just Biden who is being tipped to win the White House,
polling also points to the prospect of the Democrats taking control of the
Senate, ensuring full control of the legislative agenda.

Markets appear to be of a view that a 'blue wave' outcome would be
beneficial for stocks and investor sentiment owing to the prospect of a
powerful fiscal support package being the first major gift of a Democrat
administration.

Such a package, while desired by both Republicans and Democrats, is
currently hamstrung by divergent views on its scale and makeup, while some
analysts note the Democrats are increasingly seeing the strategic benefits
of not gifting Trump a support package this close to the vote.

Goldman Sachs cite event prediction markets and prominent public models that
now put the odds of a "blue wave" at greater than 60% for being positive on
the outlook for stocks and other 'risky assets'. However, it is not just
U.S. politics that matter for the outlook, a 'silver bullet' to end the
covid-19 pandemic is also seen as highly supportive.

They recommend buying the South African Rand, Mexican Peso and Indian Rupee
against the Dollar as a result.-poundsterlinglive

Nigeria

Naira Gains N8 As Equities Make N778bn

The naira appreciated by N8 in the last one week at the parallel market and
the equities market recorded major gains of N777.9 billion as oil prices
picked up.

The All Share Index (ASI) grew by N778 billion to N14.9 trillion at the
close of business on Friday as investors saw opportunities in crude oil
upbeat and new push to stabilise the global oil market.

Brent rebounded to $43.21/barrel from previous week's close of
$40.65/barrel, despite rising COVID-19 cases.

The benchmark stock index, ASI, soared past 13 per cent in the past month,
and is also the best-performing market in the world as at last Tuesday.

It is currently on the longest winning run since July 2017 as local and
foreign investors continue to hunt for higher yields.

Speaking at the last Monetary Policy Committee meeting in Abuja, Central
Bank of Nigeria (CBN) Governor Godwin Emefiele said as a lead indicator, the
improvement in the equities market indices signposts the commencement of a
broad-based economic recovery.

The naira and equities market rebound came after Organisation of the
Petroleum Exporting Countries (OPEC) and its allies agreed to ensure that
proactive and preemptive measures are taken to support the global oil
market.

OPEC's 2020 World Oil Outlook showed that the pandemic may prove the tipping
point for peak oil demand.

It predicted that global oil demand will grow at relatively healthy rates
during the first part of the forecast period before demand plateaus during
the second half.

But the external reserves remained pressured as they decreased five basis
points week-on-week to $35.7 billion on October 7, data from the Central
Bank of Nigeria (CBN) showed.

At the official window, the CBN spot rate remained unchanged at N379 to a
dollar while the parallel market rate strengthened by N8 week-on-week to
N457 to a dollar.

The Nigerian Autonomous Foreign Exchange (NAFEX) rate depreciated by 83 kobo
week-on-week at the Investors and Exporters (I&E) window to close at N385.83
to a dollar.

Report by Afrinvest West Africa said turnover at the I & E window slipped
36.4 per cent week-on-week to $329.2 million, from the $517.5 million
recorded in the previous week.

The aggregate value of the open contracts at the FMDQ Securities Exchange FX
Futures Contract segment improved by 0.6 per cent ($66.4 million)
week-on-week and settled at $11.2 billion.

The oil prices recovery also triggered dominance of the bulls at the
domestic equities market where the All Share Index rose by 5.6 per cent to
28,415.31 points; market capitalisation hit N14.9 trillion with N777.9
billion week-on-week gain; while year-to-date return settled at 5.9 per
cent.

 <mailto:info at bulls.co.zw> 

Global Markets

US Dollar Flat As Investors Weigh Fiscal Stimulus Talks, Wait for Inflation
Data

The US dollar is kick off the trading week relatively flat, hovering at its
lowest level in three weeks. With not much economic data to work with,
investors are weighing fiscal stimulus in Washington and the 2020
presidential election in a couple of weeks. Will traders adopt a
wait-and-see approach to the greenback for the remainder of October?

On Sunday, President Donald Trump urged Congress to approve a stripped-down
version of the fiscal stimulus and relief package. The White House is
recommending a $1.8 trillion bill that would include direct payments to
Americans to help mitigate the damage from the coronavirus pandemic. But the
Democrats want a $2.2 trillion bill to be given approval.

For weeks, the dollar has been impacted by on-again, off-again negotiations
between the administration and Democrats. The president went as far as
calling off talks unless legislation that only contained $1,200 checks and
other financial aid was delivered to his desk. But then he restarted
negotiations the next day as financial markets plummeted.

Meanwhile, with less than a month until Election Day in the US, investors
are betting on former Vice President Joe Biden winning. This, according to
analysts, would be bullish for the stock market in the short-term because
his administration would likely approve a larger economic package. The
flurry of presidential polls show Biden with a significant lead over the
incumbent, but the swing states, such as Ohio, Pennsylvania, Florida, and
Iowa, are tighter.

Uncertainty from the coronavirus pandemic continues to affect the buck. The
nation is nearing eight million cases and 220,000 deaths from COVID-19, and
health authorities are warning of a resurgence amid the cold and flu season.
It is unclear just how far away the nation is from a vaccine, and neither
side has proposed a solution to eradicate or diminish the highly infectious
respiratory illness.

On the data front, the next several days will be dominated by inflation
numbers. On Friday, September retail sales, industrial production, and
manufacturing output will also be released.

The US Dollar Index, which measures the greenback against a basket of
currencies, was unchanged at 93.05. The index is coming off a weekly loss of
0.5%. Year-to-date, the index has fallen about 3.5%.

The USD/CAD currency pair dipped 0.02% to 1.3116, from an opening of 1.3122,
at 14:13 GMT on Monday. The EUR/USD tumbled 0.16% to 1.1813, from an opening
of 1.1827.

If you have any questions, comments, or opinions regarding the US Dollar,
feel free to post them using the commentary form below.-earnforex.com

 <mailto:info at bulls.co.zw> 

Commodities Markets

Silver Pulls Back Towards $25.00

Silver Is Under Some Pressure After The Recent Upside Move Silver faced
resistance at $25.50 and declined towards $25.00 while the U.S. dollar
remained flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above 93.20 but
failed to gain sufficient upside momentum and declined towards 93.10. If the
U.S. Dollar Index moves towards 93.00 and settles below this level, silver
will get additional support. Weaker U.S. dollar is bullish for silver as it
makes it cheaper for buyers who have other currencies.

Gold is also pulling back after the upside move that was made during the
previous trading session. The nearest resistance for gold has emerged at
$1930. In case gold manages to settle above this level, it will head towards
$1950 which will be bullish for silver and other precious metals.

Gold/silver ratio has recently made an attempt to settle below 76 but
rebounded closer to 77. The nearest resistance level for gold/silver ratio
is located at the 20 EMA at 77.80. In case gold/silver ratio gets above this
level, it will head towards the 50 EMA at 78.40. This scenario will be
bearish for silver.

Technical Analysis

Silver managed to get above $25.00 but failed to settle above $25.50. RSI
remains in the moderate territory so there is plenty of room to gain
additional upside momentum.

In case silver gets above $25.50, it will head towards the resistance at
$25.85. A move above $25.85 will open the way to the test of the next
resistance area at $26.20 - $26.30.

If silver manages to get above this resistance area, it will gain additional
upside momentum and head towards the next resistance area near $27.00.

On the support side, the previous resistance level at the 50 EMA at $24.60
will serve as the first support level for silver. If silver gets below this
level, it will gain downside momentum and move towards the next support at
$23.30. There are no important levels between $23.30 and $24.60 so this move
may be fast.

>From a big picture point of view, silver is currently pulling back after a
significant upside move, and its upside trend remains intact.

Gold falls from 3-week peak on smaller U.S. stimulus bets

Gold falls from 3-week peak on smaller U.S. stimulus bets bill dented the
appeal of bullion, which is used as a hedge  against likely inflation.

Spot gold fell 0.3% at $1,924.41 per ounce by 10:14 a.m. EDT (1414 GMT),
after hitting its highest since Sept. 21 at $1,932.96. U.S. gold futures
rose 0.2% of $1,930.70.

The U.S. government and bond market is closed on Monday for Columbus Day.

The possibility of a smaller U.S. coronavirus stimulus bill is weighing on
gold, said Phillip Streible, chief market strategist at Blue Line Futures in
Chicago.

The Trump administration on Sunday called on Congress to pass a
stripped-down coronavirus relief bill using leftover funds, as negotiations
on a broader package ran into resistance.

Gold has gained over 26% so far this year helped by stimulus from
governments and global central banks as it considered a hedge against
inflation risks and currency weakening.

Meanwhile, Wall Street's main indexes opened higher on optimism about a
fiscal stimulus deal in Washington.

Investors were also keeping a close eye on the upcoming U.S. elections,
where Democrat Joe Biden is seen as more likely to win.

Among other precious metals, silver slipped 0.2% to $25.07 per ounce,
platinum fell 0.9% to $878.50, while palladium edged 0.3% higher to
$2,446.73.

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
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
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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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