Bulls n Bears Daily Market Commentary : 20 October 2020

Tue Oct 20 16:18:26 CAT 2020

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Bulls n Bears Daily Market Commentary : 20 October 2020

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ZSE commentary

CBZ leads ZSE rebound…

The ZSE rebounded in Tuesday’s session spurred by gains in top capitalised stock CBZ which advanced 8.33% to close at $41.1637. The primary All Share Index gained 1.11% to close at 1,499.75pts while, the Industrial Index extended 1.22% to 4,940.56pts. The blue chips Index rose 1.87% to 972.23pts. Fidelity life and Willdale surged a similar 20% to settle at respective prices of $1.3800 and $0.2400. Powerspeed jumped 16.13% to end pegged at $1.8000 while, banking group FBC ticked up 3.57% to close at $14.5000. Leading the fallers’ pack was Axia that shed 4.90% to $3.7943, trailed by Nampak that let go 4.76% to $1.0000. Nickel miner Bindura slipped 2.46% to $3.7000 weighing down the Mining Index to 3,573.47pts after trimming 2.03%. Beverages group Delta retreated 1.98% to close at a vwap of $14.8864 having traded an intraday low of $14.7500. Completing the top five shakers of the day was telecoms giant Econet that went down 1.71% to $4.3695.

Sixteen counters faltered against thirteen that gained leaving the market with a negative breadth of three. Volume of shares traded rallied 61.87% to see 13.64m shares exchange hands while, turnover ticked up 13.46% to $77.79m. Top volume drivers of the day were Mashonaland (28.01%), Econet (20.29%) and OKZIM (14.50%). Anchoring the value outturn of the day were Innscor, Econet, Delta, OKZIM and CBZ which claimed a combined 73.19% of the aggregate. Local purchases claimed 90.86% of turnover while, sales were 63.96% of the same. Elsewhere, property concern ZPI released HY20 results where a PAT of $936.69m was reported which was a 61.31% rise from prior comparable period in inflation adjusted prices. -efesecurities

Global Currencies & Equity Markets

South Africa

South Africa's rand falls on caution over U.S. coronavirus aid

JOHANNESBURG,  (Reuters) - The South African rand weakened against the dollar in early trade on Tuesday as broader risk sentiment was curbed by caution ahead of a deadline to reach an agreement for a U.S. coronavirus stimulus package.

At 0615 GMT, the rand ZAR=D3 traded at 16.5675 versus the U.S. dollar, 0.29% weaker than its previous close.

The rand's advance in the recent weeks — against a backdrop of a weak local economy — has mainly been driven by offshore sentiment, particularly the outlook for further monetary and fiscal stimulus from the world's major economies.

U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin "continued to narrow their differences" in a telephone conversation on Monday, her spokesman Drew Hammill said.

Pelosi hopes that by the end of Tuesday there will be "clarity" on whether a coronavirus stimulus bill can be passed before the Nov. 3 presidential election, he said.

With no data releases locally this week, the focus remains on Finance Minister Tito Mboweni's medium-term budget policy statement next week — with markets looking for details on how a massive public works and job-creation drive in response to the coronavirus crisis will be funded.

In fixed income, the yield on the benchmark government bond due in 2030 ZAR2030= was up 1.5 basis points to 9.295%, reflecting weaker prices.

Nigeria

Naira depreciates at NAFEX window as banks limit forex transactions for unofficial market

Forex turnover dropped by 24.7% as Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N385.83/$1 during intraday trading on Friday, October 16.

Also, the naira remained stable against the dollar, closing at N462/$1 at the parallel market on Friday, October 16, 2020, as banks limit foreign exchange transactions by both individuals and corporate organizations on the unofficial black market to curb speculation according to Reuters

This is also despite the continuation of the protest against the special anti-robbery unit (SARS) by the Nigerian youth which has limited movement in major cities across the country especially Lagos.

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 against the dollar to close at N462/$1 on Friday. This was the same rate that it exchanged for on Thursday, October 15.

 <mailto:info at bulls.co.zw> 

China

China digital currency: Shenzhen consumers spend 8.8 million yuan in largest trial of digital yuan

China's largest test of its sovereign digital currency ended with 8.8 million yuan (US$1.3 million) being spent in over 62,000 transactions during the week-long trial in Shenzhen.

The Shenzhen government confirmed 47,573 people from the 50,000 selected by lottery received the digital 'red packets', each containing 200 yuan (US$30), after a total of 1.9 million residents applied to take part in the 10 million yuan (US$1.49 million) giveaway.

In total, 62,788 transactions were made at the 3,389 designated shops in the Luohu district of the city last week.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

A total of 901,000 yuan of additional credit was also transferred into the official Digital Renminbi app, which is not yet available to the public, with users still able to use any of the extra funds they added to their accounts at the designated shops even though the trial has finished.

More than 110 petrol stations in Shenzhen will also be able to process payments made in the digital currency later this month, according to the state-backed 21st Century Business Herald newspaper.

The sovereign digital currency is entering an already very crowded payments market in China, with smartphone apps WeChat Pay and Alipay already dominating the electronic payments sector.

Businesses reported minimal differences in processing payments with the digital currency compared to existing mobile payment products, according to reports by Chinese media, although they did note that it does not cost them an additional service free unlike both WeChat Pay and Alipay.

What is China's sovereign digital currency and why is it not like bitcoin?

Huang Yiping, a professor of economics at Peking University, said there is a fundamental difference between the sovereign digital currency and existing mobile payment services, such as WeChat Pay and Alipay, as there is "zero cost" when making payments via the digital yuan and they can be made without connecting to the internet.

Huang also said, in a recent interview with the state-backed China National Radio, that the digital yuan will definitely overlap with the existing mobile payment providers, or even replace them to a certain extent.

The Chinese sovereign digital currency, known as Digital Currency Electronic Payment, has been in the works for several years, with several trials already taking place in four cities, namely Suzhou, Shenzhen, Chengdu and Xiongan, as well as at the venues for the 2022 Winter Olympic Games in Beijing.

A total of 3.13 million transactions in the sovereign digital currency had been processed before the Shenzhen trial, according to Fan Yifei, deputy governor at the People's Bank of China.

 <mailto:info at bulls.co.zw> 

Commodities Markets

The gold price hovers at $1900 leading into the EU open

(Kitco News) - Gold (-0.15%) once again is fighting with the $1900 level overnight leading into the EU open. Heading into the US election there seems to be lots of hesitation and the price looks like it's reached equilibrium for now. Silver trades just above flat this morning and is testing a support level $24.32 per ounce. Both gold and silver looked like they had some upside momentum early on Monday's session but this fizzled out much like the risk-on sentiment during the US session. 

Overnight the Nikkei 225 (-0.44%) and ASX (-0.72%) followed on from the negative tone in the US to close lower. The fiscal stimulus still seems to be the main theme at the moment. The latest comments came from US chief of staff Medows who said the sides have moved closer but "nobody is popping the champagne corks yet". US Senate leader McConnell speaking, says will vote on stimulus this week so hopefully, we will get a resolution. Lastly, Pelosi and Mnuchin spoke to media outlets on Monday and encouragingly 'continued to narrow their differences'.

In FX the antipodeans were the underperformers as both RBA and RBNZ central bankers jawboned their currencies overnight. NZD/USD trades just over half a percent lower after RBNZ governor Orr said that monetary policy has limits and that the RBNZ needs to operate with a medium-term focus. AUD/USD (-0.34%) is slightly better of after RBA's Kent stated the monetary policy board is considering the case for further easing.

Oil Prices Fall As OPEC+ Discusses Demand Developments

Oil prices were slightly down early on Monday as an OPEC+ panel is meeting virtually to discuss the latest supply and demand developments, while underwhelming economic data from China and stricter measures to fight COVID-19 in Europe weighed on oil market sentiment.

As of 08:32 a.m. EDT on Monday, WTI Crude was down 0.20 percent at $40.78 and Brent Crude traded down 0.26 percent on the day at $42.81.

Prices held relatively steady in the morning as investors await the outcome of the monthly meeting of the Joint Ministerial Monitoring Committee (JMMC) at which several OPEC+ ministers are discussing the latest market developments amid speculation whether the group should proceed with easing the cuts as of January, considering that the second COVID-19 wave sweeping through Europe and threatening to derail economic and oil demand recovery. The JMMC panel is not expected to take any action, but comments during and after the meeting could swing oil prices in either direction.

Economic data out of China was not constructive for oil prices today, as economic growth in the third quarter—while accelerating from Q2—missed analyst expectations.

-Oilprice.com

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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!

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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