Bulls n Bears Daily Market Commentary : 14 October 2020

Wed Oct 14 15:56:11 CAT 2020

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Bulls n Bears Daily Market Commentary : 14 October 2020

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ZSE commentary

Market Turnover ZWL$96,744,393.00 with foreign buys at ZWL$4,106,670.00 and foreign sales were ZWL$23,639,063.00 Total trades were 217.

The All Share index lost another 23.74 points to close at 1,504.41 points. FBC HOLDINGS eased $1.5000 to $14.0000, CBZ dropped $1.3490 to close at $38.6017 and PADENGA

was $0.6118 weaker at $14.0758. MEIKLES  also decreased by $0.3416 to $15.3571 and FIRST MUTUAL LIMITED traded $0.2537 lower at $4.0463.

Losses were offset by gains in HIPPO VALLEY ESTATES which added $0.2500 to $13.7500, TURNALL rose by $0.1025 to $0.6225 and AFRICAN SUN traded $0.0500 firmer

at $1.5500. MASIMBA also increased by $0.0497 to $2.4500 and ZIMPAPERS was $0.0200 higher at $0.7200.

Global Currencies & Equity Markets

South Africa

South Africa's rand dips on vaccine trial halts, U.S. stimulus stalemate

JOHANNESBURG, (Reuters) - South Africa's rand weakened in early trade on Wednesday, as COVID-19 vaccine trial halts and lack of an agreement on additional U.S. fiscal stimulus prompted traders to shift to safer assets.

At 0630 GMT, the rand ZAR=D3 traded at 16.5050 versus the U.S. dollar, 0.2% weaker than its previous close.

Risk appetite waned after Johnson & Johnson JNJ.N said on Tuesday it is pausing a clinical trial of a coronavirus vaccine and Eli Lilly and Co LLY.N also said later in the day that it paused a coronavirus antibody treatment.

Sentiment was also marred by fading hopes of U.S. Republicans and Democrats reaching a compromise on a new round of fiscal stimulus, which would deal a blow to the economic outlook.

Traders also await South African President Cyril Ramaphosa's unveiling of an economic recovery plan on Thursday, ahead of the finance minister's Medium Term Budget Policy Statement on Oct. 28.

The budget statement was initially due on Oct. 21, but the Treasury requested for a postponement by a week, citing implications of the time frames for the finalisation of the government's economic recovery plan on the budget process.

In fixed income, and the yield on the benchmark government bond due in 2030 ZAR2030= was up 0.5 basis point to 9.42% - reflecting weaker prices.

Nigeria

Naira weakens at black market as external reserves loses $42 million in 1 week

The naira depreciated marginally against the dollar, closing at N461/$1 at the parallel market on Tuesday.

Nigeria’s exchange rate at the NAFEX window remained stable against the dollar to close at N386/$1 during intraday trading on Tuesday, October 13.

Also, the naira depreciated marginally against the dollar, closing at N461/$1 at the parallel market on Tuesday, October 13, 2020, as the external reserve drops by $42 million in 1 week.

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 N461/$1 on Tuesday. This represents a N1 drop when compared with the N460 that it exchanged for on Monday, October 12.

The local currency has strengthened by about 7.8% within the last one week at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders.

The CBN has sold over $450 million 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 failed to sustain the initial gains made, after the CBN announced plans to provide liquidity.

BDC operators have urged the apex bank to reconsider the margin allowed for the currency traders, as it was inadequate to meet their expenses.

We also noted that forex traders monitored during the previous week, appeared to hoard forex, as they anticipated further depreciation in the market.

There has been a drop in speculative buying of foreign exchange, although demand backlog by manufacturers and foreign investors still puts pressure, and creates a volatile situation in the foreign exchange market.

This was the same rate that it exchanged for on Monday, October 12.

The opening indicative rate was N386.38 to a dollar on Tuesday. This represents a 5 kobo drop when compared to the N386.33 that was recorded on Friday.

The N392.78 to a dollar is the highest rate during intraday trading before it closed at N385.83. It also sold for as low as N384/$1 during intraday trading 

According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $102.35 million on Monday, October 12, 2020, to $79.53 million on Tuesday, October 13, 2020.

The CBN had in the past few weeks moved to clear the huge backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.

The drop in forex 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 August was about $857 million, compared to $937 million in July.-nairametrics

 <mailto:info at bulls.co.zw> 

India

Rupee Clocks 1st Gain In Three Days, Up 4 Paise Against USD

The rupee managed to pare intra-day losses to settle higher by a marginal 4 paise at 73.31 against the US dollar on Wednesday, tracking upbeat Asian peers and late buying in domestic equities.

The rupee managed to pare intra-day losses to settle higher by a marginal 4 paise at 73.31 against the US dollar on Wednesday, tracking upbeat Asian peers and late buying in domestic equities.At the interbank forex market, the rupee traded in a narrow range. It opened at 73.39 against the US dollar and hit an intra-day high of 73.28 and a low of 73.47.

The Indian currency finally settled for the day at 73.31 against the greenback, higher by 4 paise over its previous close of 73.35 - logging its first gain in three days.The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.06 per cent to 93.47.However, brent crude futures, the global oil benchmark, rose 0.09 per cent to USD 42.49 per barrel.

On the domestic stock market front, the BSE index after trading in the negative territory for a better part of the session staged a strong comeback towards the fag-end of the day. It finished the session at 40,794.74, up 169.23 points or 0.42 per cent.Similarly, the broader NSE Nifty rose 36.55 points or 0.31 per cent to end at 11,971.05.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold gains on U.S. election uncertainty, economic worries

(Reuters) - Gold prices rose on Wednesday after the last session’s sharp drop spurred demand for the safe-haven metal from investors worried about global economic recovery and uncertainty surrounding next month’s U.S. presidential election.

Spot gold was up 0.4% to $1,899.11 per ounce by 1150 GMT, after shedding as much as 1.9% on Tuesday in reaction to the dollar’s jump.

U.S. gold futures rose 0.5% to $1,903.60.

Gold is considered a hedge against inflation and currency debasement amid the unprecedented levels of global stimulus to ease the economic blow from the pandemic.

But investors who trim risk assets also tend to shift into the dollar and fading hopes for a new coronavirus relief package in the United States and a pause in key COVID-19 vaccine trials boosted the U.S. currency’s appeal, limiting gold’s advance. [MKTS/GLOB]

The dollar hit a near one-week high against major currencies.

Investors also kept an eye on the U.S. presidential campaign, with polls showing Democrat rival Joe Biden leading the race.

On the technical side, “bullion will need to break through $1,920 to have the chance to once again challenge the psychological threshold of $2,000,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Elsewhere, silver rose 0.1% to $24.20 per ounce, platinum gained 0.4% to $868.35 and palladium climbed 1.5% to $2,349.43.

Copper drifts higher on Chile labour talks, U.S. stimulus hopes

(Reuters) - Copper gained on Wednesday as investors gauged potential threats to supply from Chile, while pricing in more U.S. stimulus spending after the election and steady demand from China.

Three-month copper on the London Metal Exchange added 0.4% to $6,715.50 a tonne in official trading after easing by 0.7% on Tuesday and rebounding about 50% since mid-March.

Copper was also supported by the threat of possible strikes in top producer Chile.

Supervisors at Chile’s Escondida mine and mine operator BHP will extend negotiations to stave off a strike at the world’s largest copper deposit.

That is one of six mines in Chile due to have labour talks in coming months, accounting for combined annual production of 2.7 million tonnes.

* Copper prices pared gains after data on Wednesday showed LME copper inventories MCUSTX-TOTAL continued to climb, rising by 16,725 tonnes to 169,925, the highest since July 10. They have jumped 131% since Sept. 25.

* Chinese domestic aluminium ingot prices SMM-ALU-ING climbed to their highest since Aug. 4 to 14,970 yuan a tonne.

* The difference between the cash aluminium contract on ShFE and the LME fell to 615.76 yuan a tonne, its smallest since April 17, deterring traders from importing the metal into China as part of an arbitrage trade.

* LME aluminium fell 0.2% to $1,853.50 a tonne in official activity, zinc dipped 0.02% to $2,416.50, lead declined 0.7% to $1,789.50, nickel advanced 0.7% to 15,152 and tin gained 0.2% to $18,285.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

–Zimplow

EGM

Virtual

15/10/2020 | 10:00 am

Falgold

EGM

1st Floor, KPMG Building, 133 Josiah Tongogara Avenue, Bulawayo

29/10/2020 | 10:00 am

Afdis

AGM

virtual

13/11/2020 | 12:20pm

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!

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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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