Bulls n Bears Daily Market Commentary : 27 October 2020

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Bulls n Bears Daily Market Commentary : 27 October 2020

 


 

 


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ZSE commentary

 

General Beltings block trade highlights the market…

A special bargain traded worth $60m in General Beltings highlighted today’s session as 231.94m shares exchanged hands. The trade claimed 97.96% of total volumes and 72.93% of the value aggregate. The other notable value driver was Padenga that accounted 10.20% of the outturn. Volume of shares traded ballooned 3590.58% to 236.76m while, turnover jumped 41.17% to $82.37m. Foreign inflows amounted to $0.045m while, outflows stood at $3.28m to register a net funds outflow position for the day. Advancing counters outweighed fallers by a count of four, leaving the market with a positive breadth. NTS headlined the winners’ pack having surged 19.90% to end pegged at $0.2290 on paltry shares while, Truworths added 17.19% to $0.1541. SeedCo Limited grew 5.96% to $16.000 post the release of a further cautionary statement in which the company advised investors of negotiations to integrate their operations under SeedCo International which is listed on the VFEX.

 

The Mining Index gained 14.76% to 3,465.63pts spurred by gains in Riozim and Bindura that advanced 17.47% and 14.07% to close at $9.7500 and $3.4221 respectively. Top capitalized stock CBZ succumbed 19.91% to $35.8000 while, Zimplow retreated 2% to $4.9000. Banking group FBC shed 1.66% to settle at $14.2586 while, crocodile skin producers Padenga trimmed 1.03% to $14.0044. Retailers OKZIM lost a further 0.97% to end pegged at $4.5646. The primary All Share Index let go 3.02% to close at 1,469.18pts while, the Industrials slipped 3.52% to 3,465.63pts. The blue chips Index was down 5.58% at 929.76pts. -efesecurities

 

 

Global Currencies & Equity Markets

 

Nigeria

 

Naira maintains stability in forex markets, dollar supply improves despite curfew

Forex turnover improved significantly by 154% as Nigeria’s exchange rate at the NAFEX window remained stable against the dollar to close at N386/$1 during intraday trading on Friday, October 23.

 

Also, the naira remained stable against the dollar, closing at N463/$1 at the parallel market on Friday, October 23, 2020, as more states across the country impose curfew due to outbreak of violence.

 

This is also as businesses shut down due to the outbreak of violence in some parts of the country including Lagos during the protest against the special anti-robbery unit (SARS) and police brutality by the Nigerian youth.

 

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 N463/$1 on Friday. This was the same rate that it exchanged for on Thursday, October 22.

 

·         The local currency had strengthened by about 7.8% within the one week in September 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 measure

·         The CBN has sold over $500 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 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.

 

 

NAFEX: The Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Friday, closing at N386/$1.

 

·         This was the same rate that it exchanged for on Thursday, October 22.

·         The opening indicative rate was N386 to a dollar on Friday. This represents a 13 kobo gain when compared to the N386.13 that was recorded on Thursday.

·         The N393.13 to a dollar is the highest rate during intraday trading before it closed at N386 to a dollar. It also sold for as low as N380/$1 during intraday trading.

 

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased significantly by 154.3% on Friday, October 23, 2020.

 

According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $77.62 million on Thursday, October 22, 2020, to $197.42 million on Friday, October 23, 2020.

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

·         The increase in dollar supply after a record drop 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.

·         As part of the measure to check forex abuse and check illegal transactions, the CBN last month directed the freezing of accounts of about 38 companies.

·         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.

·         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.

·         According to Reuters, currency traders said that the naira is expected to be stable this week as banks limit foreign exchange transactions by both firms and individual buyers on the unofficial black market to curb speculation.

 

 

 

 

South Africa

 

 

South African Rand’s Rally Raises the MTBPS Stakes as Resistance Looms on Charts 

The Rand rallied against almost all major emerging and developed market currencies on Tuesday while extending a week-long unbroken run higher against the greenback, nascent gains have raised the stake relating to Wednesday's budget update, which is now even more of a risk to the South African currency. 

 

South Africa’s Rand ceded ground to the Norwegian Krone on Tuesday but was higher against all other major developed market currencies while having swept the board of opposition from emerging world contemporaries after surviving Monday’s softening of risk appetite and the resulting falls in global stock markets.

 

The Rand had risen more than 5% against the Dollar in the month to Tuesday, taking the South African currency back below 16.10 against the greenback and to its joint highest since mid-September and mid-March, but the greenback has now found support and the Rand collided with resistance on the charts. 

 

USD/ZAR was below 16.10 Tuesday and testing its September low at 16.08 after weakness in the U.S. Dollar and signs of a faster-than-anticipated South African economic recovery weighed heavily on the exchange rate through summer and into Autumn. 

 

Given the proximity of Wednesday's budget update from Finance Minister Tito Mboweni, it’s not clear the Rand will be able to hold such lofty heights for much longer. The minister will update parliament, the country and markets at 13:00 London time on Wednesday's.

 

Whether or not it USD/ZAR continues lower or reverses up toward its 200-day moving-average at 16.77 could depend greatly on the size of the anticipated increase in debt-to-GDP unveiled by Finance Minister Mboweni this week, as well as on whether the government sticks with commitments made in June to balance the books by 2023/24.

 

Mboweni set out ambitious targets in June including for South Africa to run a primary budget surplus by 2023/24 and stabilise its debt-to-GDP ratio at 87.4% of GDP that year, despite a budget deficit that was expected to more than double from around 6.8% of GDP in 2019 to over 15% in 2020. 

 

But since June there’s been speculation that South Africa’s debt-to-GDP ratio could rise much higher than 87% in the coming years, potentially taking it above 100% in the absence of corrective revenue raising measures and spending cuts. 

 

Whether or not Mboweni retains the balanced budget target will be key to the Rand’s trajectory on Wednesday and heading into the next weekend, although any sharp increases in Treasury’s debt-to-GDP forecasts would risk rendering that impossible. 

 

South Africa was already stripped of its last remaining ‘investment grade’ credit rating in March, technically pushing it into ‘junk territory’ in a decision that had preemptively weighed on the currency for months beforehand, although the country’s rating can still be cut further from current levels. 

 

A reduced credit rating could incite increases in market financing costs for the government, making current spending levels even less affordable and so demanding even greater spending cuts that could crimp the economy’s recovery out of its coronavirus crater in the coming years. 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

 

 

Global Markets

 

US dollar slump quickly halted

There was a momentary effort to sell the US dollar early in New York trade but it's quickly lost steam and reversed.

 

The FX market is in a bit of a holding pattern more broadly as we watch poll and virus numbers. The big news in Europe was China dropping the counter-cyclical portion of its yuan management mandate. As Anthony Barton explains, this will allow for larger moves in the currency.

 

The PBoC's function for the USDCNY mid-point fix was "closing price + movements of a basket of currencies + counter-cyclical factor." Removal of the factor pushes the rate towards a market based mechanism (which the PBoC wants).

Yuan weakness isn't what the market wants to see right now but it's not getting enough attention.-forexlive.com  

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

 

Gold price today: Yellow metal rises, crucial resistance at Rs 51,050-51,200

Rising coronavirus cases in the US turned investors cautious and they appear to have returned to safe-haven buying towards gold.

 

Gold prices rose in early trade in the domestic futures market on October 27, in line with the trends in international markets as the US dollar softened and rising COVID-19 cases made investors look away from riskier equities.

 

A weaker dollar, concerns over rising cases of coronavirus and an uptick in demand in spot markets helped gold shine.

 

At 0940 hours, MCX December gold contracts were trading higher by 0.29 percent at Rs 51,080 per 10 gram. December silver futures were trading 0.81 percent higher at Rs 62,405 per kg.

 

Gold and silver settled on a mixed note in the domestic market in the previous session. Gold settled at Rs 50,930 per 10 gram with a gain of 0.18 percent and silver at Rs 61,906 per one kilogram with a loss of 0.87 percent.

 

Rising coronavirus cases in the US turned investors cautious and they appear to have returned to safe-haven buying towards gold.

 

Weakness in domestic and international equity markets also supported gold prices.

 

As per a Reuters report, Asian stock markets fell on October 27 as soaring global coronavirus cases and slow progress on a US stimulus deal hammered investor sentiment and took a toll on Wall Street.

 

Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart, said that downbeat US new home sales data also supported gold prices. New 9,59,000 home sales were reported against expectations of 10,25,000.

 

Jain expects both the precious metals to remain volatile ahead of US elections, volatility in the dollar index and the second wave of coronavirus.

 

Trading strategies

 

Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart

 

Gold is expected to hold key support of $1,884 per troy ounce and silver also holds the support of $24 per troy ounce in the international markets.

 

Gold is having support at $1,892-1,884 per troy ounce and resistance at $1,920-1,933 per troy ounce and silver is having support at $24.24-24 and resistance at $24.70-25.

 

On MCX, gold has support at Rs 50,780-50,600 and resistance at Rs 51,050-51,200. Silver has support at Rs 61,300-60,800 and resistance at Rs 62,500-63,300 levels.

 

Any dip in the prices of gold around Rs 50,600 and silver around Rs 61,300 would be an opportunity to buy.

 

Sriram Iyer, Senior Research Analyst at Reliance securities

 

International bullion prices gained in early Asia trade on Tuesday, supported by a weaker dollar and concerns stemming from the surging coronavirus spread globally and its economic fallout.

 

Technically, LBMA GOLD Spot respected a resistance near $1,914 where it touched the low $1,891 levels, indicating a sideways momentum in a range of $1,888-$1,915 levels.

 

LBMA Silver Spot is holding a resistance near $25 levels where it halted a further upside movement and ended with more than 1 percent loss, indicating a sideways momentum in the counter where prices could trade in a range of $23.75-$25 levels.

 

MCX Gold December did not sustain above Rs 51,000 levels whereas it holds support near Rs 50,700 level, indicating a sideways momentum in the range of Rs 50,600-51,050 levels.

 

MCX Silver December is trading on a negative note where below Rs 63,000 it could see a downside pressure up to Rs 62,100-61,000 levels.

 

Hareesh V, Head, Commodity Research, Geojit Financial Services

 

Gold may edge higher on a weak dollar and a correction in global equities. Hopes of more fiscal stimulus measures and the unresolved US-China tensions will also offer lower-level support to the commodity. At the same time, possibilities of global economic recovery may dent the safe-haven demand of the commodity.

 

Technical Outlook (London spot): If the support of $1,840 remains undisturbed, we can expect rallies to continue, but it has to break $1,920 to continue major rallies. An unexpected drop below $1,820 would extend selling pressure later.

 

Anuj Gupta, DVP- Commodities and Currencies Research, Angel Broking

 

Weaker US Dollar amid worries over the implacable virus might drive the investors towards safe-haven gold.

 

As for today, traders can buy gold at Rs 51,000 levels with the stop loss of Rs 50,700 levels for the target of Rs 51,500 levels.

 

They can buy silver at Rs 62,000 levels, with the stop loss of Rs 61,300 levels and for the target of Rs 63,300 levels.

 

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.-moneycontrol

 

 

Copper eases on virus fears, U.S. stimulus uncertainty

(Reuters) - Copper prices dipped on Tuesday amid caution over surging global coronavirus infections and the uncertainty around a new U.S stimulus package ahead of the Nov. 3 presidential election.

 

Three-month copper on the London Metal Exchange fell 0.04% to $6,778.50 a tonne by 0435 GMT, while the most-traded December copper contract on the Shanghai Futures Exchange declined 0.8% to 51,500 yuan ($7,683.24) a tonne.

 

The United States, Russia, France and many other countries set records for daily infections, while a much-awaited U.S. stimulus is yet to be agreed, making investors stay on the sidelines ahead of the election.

 

FUNDAMENTALS

* LME aluminium rebounded 0.1% to $1,830 a tonne from a two-week low hit in the previous session and tin rose 0.6% to $18,155 a tonne after hitting its lowest since Oct. 5 on Monday.

 

* ShFE lead edged up 0.8% at 14,425 yuan a tonne, rebounding from a four-month low hit earlier in the session at 14,020 yuan a tonne, while zinc declined 0.3% to 19,700 yuan a tonne.

 

* Shipments from MMG Ltd’s Las Bambas copper mine in Peru have returned to normal after nearly a week of disruption.

 

 

 

 

 


 

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

 


Bindura

AGM

Virtual

05/11/2020 | 14:00

 


Natfoods

AGM

Royal Harare Golf Club

09/11/2020 | 8:45am

 


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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