Bulls n Bears Daily Market Commentary : 07 September 2020

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Bulls n Bears Daily Market Commentary : 07 September 2020

 


 

 


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ZSE commentary

 

ZSE extend gains in Monday trades


The ZSE sustained its rising streak in week-opener as the mainstream All
Share added 4.96% to 1,574.12pts while, the Industrials swept past the
5000pts mark to reach an all-time high of 5,153.10pts. The blue chips index
rose 4.96% to 1,087.24pts while, the Mining Index improved 0.40% to
3,824.04pts. Headlining the riser’s list was logistics group Unifreight that
surged 19.91% to $0.1295, trailed by banking group FBC that jumped 19.19% to
end pegged at $9.5000. Beverages group Delta topped 16.17% to close at a
vwap of $25.2486 while, conglomerate Innscor followed on a 11.93% lift to
$21.3655. Ariston capped the risers of the day after gaining 8.69% to end at
$1.5000. Other significant advancers were SeedCo (6.54%), Econet (5.59%),
OKZIM (2.65%) and Cassava (1.30%).

 

Star Africa dipped 4.85% to $0.1708 while, crocodile skin producers Padenga
let go 0.31% to $14.0060. Financial services group ZB trimmed 0.10% to
$11.0000 while, Turnall completed the four shakers of the day after shedding
0.04% to close at $0.8047. A positive market breadth of twenty-one was
registered in the session as twenty-five counters rose against four fallers.
Daily turnover declined 33.67% to $67.45m while, volume of shares traded
went up 0.56% to 17.80m shares. The top volume driver of the day was apparel
retailer Edgars that claimed 54.79% of total volumes. Anchoring the value
aggregate was Innscor (26.62%), Edgars (12.32%) and Delta (10.66%). Local
purchases claimed 95.63% of total value while, sales accounted for 44.25% of
the same.-efesecurities <mailto:info at bulls.co.zw> 

 

Global Currencies & Equity Markets

 

 

South Africa

 

South African Rand: Green Shoots of Economic Recovery Could Allow Further
Gains says Investec

The South African Rand is forecast to extend its multi-week recovery into
the the end of the year according to South African lender Investec, with
gains driven by an ongoing recovery in the global economy that is propping
up Emerging Market currencies as well as a rebound in South African economic
growth.

 

Estimates show that the domestic economy should contract by an unprecedented
50% quarter on quarter (seasonally adjusted annualised) basis in the second
quarter, which will allow for a statistical recovery in the third quarter
that Investec estimate to be 16.3% qqsaa.

 

Bishop cites manufacturing production as being one engine of economic
recovery, with survey data showing the country's largest economic sub-sector
expanding by a substantial 16.8% month on month in June, while electricity
production rose 8.3% m/m in June and 10.2% m/m in May.

 

Elsewhere, a back up of orders and work in the construction sector saw
activity shoot up, with buildings completed rising 206.4% m/m in May in
515.7% in June.

 

However, June versus March this year is -62.5% lower.

 

The international backdrop of a falling U.S. Dollar and rising commodity
prices is meanwhile expected to underpin the recovery in the South African
economy and its currency.

 

Investec forecast the U.S. Dollar-Rand exchange rate to end 2020 at 16.50.
The Pound-to-Rand exchange rate is forecast to end the year at 20.44 and the
Euro-to-Rand exchange rate at 18.73.

 

At the time of writing the Dollar-Rand exchange rate is at 16.72, the
Pound-Rand exchange rate at 22.00, and the Euro-Rand exchange rate at 19.76.

 

 

 

Nigeria

 

Nigeria’s forex devaluation timeline – 2020

Speculations started March 12 that the naira might be devalued. This is a
timeline of every decision taken since the first devaluation.

 

Since the first quarter of the year, Nigeria has faced an exchange rate
crisis triggered by a drop in oil prices. It started after two of the
world’s largest oil producers, Saudi Arabia and Russia disagreed on how to
proceed as regards oil supply cuts, triggering a price war that pushed oil
prices to crash to as low as under zero dollars.

 

In March, the world fully became aware of the existential threat that was
the Covid-19 pandemic that has since affected millions of people globally
and killed hundreds of thousands. These twin events have had a telling
effect on Nigeria’s economy. As an economy highly dependent on crude, the
oil price war meant Nigeria earned less from crude oil sales cascading to an
even larger problem, Forex.

 

With oil prices down, pressure on Nigeria’s exchange rate grew leading to
speculations of a devaluation to reflect the true value of the naira. Thus
began one of the most significant deluges of policy pronouncements and flip
flops on the management of Nigeria’s foreign currency.

 

In this tracker, Nairametrics collates a timeline of all the forex-related
policy decisions and denials that have occurred since March 2020. This
timeline is updated regularly as new information becomes available.

 

 

September 6, 2020

 

A memo circulating online indicates the central bank has instructed banks to
Post-No-Debit on account of 38 companies.

 

A Post-No-Debit (PND) is basically an instruction to banks not to allow any
withdrawals or transfers from the bank account of account owners,
essentially blocking the account from outflows. It is usually drastic a
measure taken to allow for investigation and possible to reclaim any illegal
inflow into an account.

 

 

The CBN did not state why the accounts were flagged but sources inform
Nairametrics that it is due to suspicion of forex infractions.

 

September 3, 2020

 

Nigeria’s central bank pumped in $50 million into the FX market on Monday in
a bid to test demand and supply and more importantly, the price of naira
against the dollar.

 

$50 million was sold to foreign investors on the spot and forward market in
what it termed a “test trade to gauge the level of dollar demand” in the
market.

 

 

August 28, 2020

 

The Central Bank of Nigeria (CBN) has barred operators of Payment Service
Banks (PSBs) from accepting foreign exchange deposits and to accept any
closed scheme electronic value (airtime) as a form of deposit or payment.

 

This was disclosed by the apex bank in the reviewed guidelines for licensing
and regulations of PSBs released on Thursday on its website.

 

August 27, 2020

 

Nigeria’s Central Bank issued a circular authorizing and instructing dealers
to sell forex to end users at N386/$1.

 

app

In a circular titled, “Weekly Exchange Rate for Disbursement of Proceeds of
International Money Transfer Service Operations” the Apex bank detailed the
applicable exchange rate of proceeds of IMTOs for the period, August 31,
2020.

 

August 26, 2020

 

Coronation ads

The Central Bank of Nigeria (CBN) to go tough on exporters who are guilty of
forex non-repatriation. This is part of the CBN’s ongoing efforts to resolve
the prevalent forex crisis in the country by increasing forex liquidity.

 

To this end, the CBN directed banks to submit the names, addresses, and Bank
Verification Numbers (BVNs) of all the exporters who have failed to
repatriate their export proceeds. Necessary ‘action’ would be taken against
such defaulters, the CBN said in a statement.

 

The statement further noted that the Central Bank Governor, Godwin Emefiele,
gave the directive on August 25, 2020, while virtually attending a Bankers’
Committee meeting.

 

August 24, 2020

 

Central Bank of Nigeria (CBN) issued a circular removing buying
agents/companies or any third parties from accessing its SMIS forex window
through FORM M forex purchases.

 

In a circular dated August 24, 2020, the apex banks instructed that
“Authorized Dealers are herby directed to desist from the opening of Form M
whose payment is routed through a buying company/agent or any other third
parties” effectively eliminating third parties or middlemen from transacting
in forex deals in its official SMIS window.”

 

August 6th, 2020

 

Information on the website of the CBN revealed the apex bank had adjusted
the official exchange rate to N380/$1 from N360.1/$1. The adjustment
occurred on Thursday, August 6th, 2020.

 

This suggests the CBN may have unified the exchange rate in line with the
promise made by Godwin Emefiele, the Governor of the Central Bank of
Nigeria.

 

July 13, 2020

 

CBN restricted access for the importation of maize through the official CBN
forex window.

 

It hinged its decision on the need ‘to increase local production, stimulate
a rapid economic recovery, safeguard rural livelihoods and increase jobs
which were lost as a result of the ongoing COVID-19 pandemic.’

 

July 3, 2020

 

CBN reportedly instructed bidders at its Secondary Market Intervention Sales
(SMIS) to increase their bidding price to N380/$1 floor. The SMIS is the
market where importers bid for forex using Letters of Credit and Form M.

 

The apex bank allegedly informed banks that they will only accept bids from
N380/$1 and above and no longer N360/$1 meaning those who bid lower will not
get any forex allocation.

 

Transaction success in this market is based on bids with those who bid
higher than the floor as they are often in an advantageous position to
secure forex.

 

June 23, 2020

 

The Governor of the Central Bank, Godwin Emefiele, confirmed that the CBN
will continue to pursue unification around its Nafex rate. The NAFEX rate is
the forex window where Investors and Exporters transact dollars on
market-determined prices. The CBN Governor said this at an Investors
Conference with the Federal Government of Nigeria by CitiBank.

 

May 21, 2020

 

The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, warned
businesses and individuals against patronizing the parallel market,
popularly called the black market.

 

He warned them to stop using black markets for foreign currency exchange,
following the liquidity crisis triggered by low oil prices and a shortage of
dollars.

 

May 19, 2020

 

The Central Bank of Nigeria (CBN), in its quest to stabilize Naira injected
funds to the currency market through the Wholesale Secondary Market
Interventions.

 

The auction was earlier put on hold by the CBN due to the COVID-19 pandemic
and dwindling foreign exchange reserves standing at less than $34 billion.

 

May 18, 2020

 

The Central Bank of Nigeria (CBN) tasked industrial conglomerates operating
in the country to support efforts of the government to grow the nation’s
economy and return it to its green days.

 

The CBN boss warned that the apex bank would not support the importation of
items that could be produced in Nigeria. According to him, the bank could
not spend its foreign exchange reserves on what would not boost the economy
and generate jobs for Nigerians.

 

May 10, 2020

 

The Central Bank of Nigeria (CBN) has assured foreign investors that
repatriating their funds from the country is secured despite forex related
revenue shortages due to the drop from the sale of crude oil globally.

 

In the statement, CBN Governor, Godwin Emefiele explained that the apex bank
had put in place policies to ensure an orderly exit for those that might be
interested in doing so and also urged investors to be patient as such
repatriations are processed, owing to the Bank’s policy of orderly exit of
investments.

 

April 29, 2020

 

The Central Bank of Nigeria (CBN) resumed sales of dollars to SMEs that need
foreign exchange for essential imports, as well as Nigerian students in
foreign schools who need to pay their school fees.

 

According to a brief statement that was signed by the CBN’s Director of
Corporate Communications, Isaac Okoroafor, the apex bank provides over $100
million per week for the two categories of dollar consumers mentioned above.

 

April 27, 2020

 

CBN adjusted the exchange rate for import duty payment from N326/$ to
N361/$.

 

With this development, the Nigeria Customs Service (NCS) was directed to
effect an increase in duty payable on cargoes imported through the ports.

 

March 27, 2020

 

Central Bank of Nigeria (CBN), in a note issued to Bureau De Change
operators (BDCs) in the country, suspended the sales of foreign currency for
two weeks.

 

However, this does not affect dollar transactions in the Investors &
Exporters (I&E) window. Thus, portfolio investors, as well as businesses
that still require FX for foreign transactions settlement, can access the
I&E window.

 

March 24, 2020

 

The CBN announced it was collaborating with the Nigerian Financial
Intelligence Unit (NFIU) to uncover speculation and would charge such
dealers for economic sabotage. The bank added that market fundamentals did
not support devaluation.

 

March 22, 2020

 

The Central Bank of Nigeria (CBN) halted the sale of dollars to the Nigerian
National Petroleum Commission (NNPC) by oil companies, including
International Oil Companies (IOCs) that operate within the shores of the
country.

 

The apex bank explained that the move to stop the sale of dollars is in line
with its commitment to improving foreign exchange supply to the economy as
the impact of the novel Coronavirus (COVID-19) pandemic bites harder on the
economy.

 

March 20, 2020

 

Central Bank of Nigeria devalued its official exchange rate from N307/$1 to
N360/$1. The apex bank reflected this change on its website signaling a
confirmation.

 

March 10, 2020

 

The Central Bank of Nigeria (CBN) fined Bureau De Change (BDC) operators
over various infractions in the foreign exchange market.

 

Over 100 BDC operators were fined N5 million each for various infractions in
the foreign exchange market.

 

March 12, 2020

 

The Central Bank of Nigeria (CBN) debunked speculations making the rounds
and suggesting that the naira is finally about to be devalued.

 

According to a statement, the apex bank blamed “unscrupulous players in the
foreign exchange market” for spreading the rumour.

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Asia

 

Malaysia’s Currency Faces Two Key Risks After Beating Asia Peers

The Malaysian ringgit has defied the odds to outperform most of its Asian
peers. Now investors will be watching to see if it survives the trials of
September.

 

A three-month rally in the currency could come to a halt when FTSE Russell
announces a decision on whether it’ll retain ringgit bonds in its World
Government Bond Index. A lesser risk is also brewing in the form of an
expected rate cut from Bank Negara Malaysia.

 

The ringgit’s surprising strength in the face of months of political turmoil
has been a vote of confidence for Prime Minister Muhyiddin Yassin who is
looking to revive spending to pull the economy out of its biggest slump
since 1998. If Malaysian bonds are removed from FTSE’s index, debt inflows
could dry up, depriving the currency of a key source of support.

 

MYR looks to extend gains after bullishly breaching resistance versus dollar

Like most of its Asian peers, the ringgit has benefited from a weak dollar
and robust demand for higher-yielding debt. It has gained more than 3% since
the start of July to outperform all but one of its Asian peers.

 

The ringgit bullishly breached resistance at its March high against the
greenback, and may head toward 4.05 before year-end. The currency traded at
4.1475 on Friday.

 

But what happens from here would depend much on FTSE’s decision which is due
Sept. 24. Goldman Sachs Group Inc. said last year outflows could reach $6
billion should the nation be dropped.

 

Investors will also be watching Bank Negara Malaysia’s policy meeting on
Thursday, with four of 14 economists in a Bloomberg survey expecting a
25-basis point cut. The remaining 10 see no change.

 

At its last review on July 7, the central bank said it would “continue to
utilize its policy levers as appropriate” to support growth, fueling
speculation of more easing.

 

Below are the key Asian economic data and events due this week:

 

·         Monday, Sept. 7: China trade balance, Indonesia foreign reserves

·         Tuesday, Sept. 8: Australia business confidence, Japan labor cash
earnings, BoP current account balance and 2Q GDP

·         Wednesday, Sept. 9: Australia consumer confidence and home loans,
New Zealand business confidence and 2Q manufacturing activity, China CPI and
PPI, South Korea unemployment rate

·         Thursday, Sept. 10: Bank Negara Malaysia rate decision; Australia
consumer inflation expectations, New Zealand credit card spending, Japan
core machine orders, Philippines trade balance

·         Friday, Sept. 11: New Zealand manufacturing PMI, Japan PPI,
Malaysia and India industrial production

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

 

Gold dips on dollar gains, with central banks in focus

(Reuters) - Gold eased on Monday as the dollar made gains, although economic
uncertainties kept it from falling further as investors awaited developments
from central

banks.

 

Spot gold was down 0.1% to $1,929.87 per ounce at 1228 GMT, while U.S. gold
futures edged up 0.1% to $1,935.10, with U.S. markets shut for the Labor Day
holiday.

 

The dollar index rose 0.3%, making gold more expensive for those holding
other currencies.

 

Global central banks have cut interest rates to tackle the coronavirus
crisis, with gold gaining over 27% this year as lower interest rates lower
the opportunity cost of holding non-yielding bullion.

 

Investors now focused on the European Central Bank’s policy decision on
Thursday.

 

Meanwhile, coronavirus cases in the world’s second-largest bullion consumer
India rose above Brazil into second place behind the United States.

 

Elsewhere, silver fell 0.3% to $26.80 per ounce, while platinum rose 0.3% to
$897.40 and palladium was up 0.2% at $2,302.44.

 

 

Copper rises as solid Chinese exports lift recovery hopes

(Reuters) - Copper prices advanced on Monday as solid exports data from top
consumer China signalled a faster and more balanced economic recovery in the
world’s

second-biggest economy, although gains were capped by lower-than-expected
imports.

 

Three-month copper on the London Metal Exchange had risen as much as 1.7% to
$6,822.50 a tonne earlier in the session. It was up 0.6% at $6,752 a tonne
by 0731 GMT.

 

The most-traded October copper contract on the Shanghai Futures Exchange
closed up 1.6% at 52,240 yuan ($7,647.49) a tonne. Earlier in the session,
the contract climbed as high as 52,840 yuan a tonne.

 

China’s exports rose for the third consecutive month in August, eclipsing an
extended fall in imports, as more of its trading partners relaxed
coronavirus lockdowns in a further boost to the recovery in the world’s
second-biggest economy.

 

FUNDAMENTALS

* China’s copper imports eased in August from the previous month’s all-time
high, customs data showed on Monday, as an arbitrage window to bring in
overseas metal shut and demand from key consumption sectors slowed.

 

* Workers at Chile’s state-owned miner Codelco said they would take “action”
against what they describe as threats to their jobs.

 

* PT Freeport Indonesia expects its annual copper and gold sales to jump
next year as it transitions to operating in its underground mine.

 

* LME aluminium rose 0.6% to $1,798 a tonne, while nickel eased 0.2% to
$15,265 a tonne.

 

ShFE aluminium rose 1.4% to 14,480 yuan a tonne and zinc declined 0.7% to
19,805 yuan a tonne.

 

 

 

 


 

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
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opinions expressed and recommendations made are subject to change without
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