Bulls n Bears Daily Market Commentary : 15 September 2020

Tue Sep 15 16:37:49 CAT 2020

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Bulls n Bears Daily Market Commentary : 15 September 2020

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

ZSE commentary

Selected heavies weigh down ZSE. 

Losses in selected heavies dragged the market into the red with the primary
All Share Index letting go 1.51% to close at 1,701.05pts while, the
Industrials shed 1.92% to 5,577.44pts. The blue chips index trimmed 3.57% to
end at 1,158.57pts. Leading the laggards of the day was beverages group
Delta which dipped 14.62% to settle at $18.4290, trailed by agriculture
concern Ariston that slipped 8.17% to $1.6529. Conglomerate Innscor dropped
5.08% to $20.7696 while, banking group First Capital retreated 4.99% to
$0.9501. The top five fallers' pack was completed by crocodile skin
producers Padenga that lost 2.02% to $15.7741.

The Mining Index jumped 14.56% to 3,921.38pts spurred by gains in Bindura
which garnered 19.17% to $3.9265. Apparel retailers Truworths surged 20% to
end at $0.1920 while, financial services group ZB put on 19.86% to $13.8000.
MedTech jumped 12.02% to $0.0792 while, hotelier African Sun rose 9.82% to
$1.6500. Thirty-five stocks out of the tradable fifty-six were active in the
session as seventeen gained in value while, eleven fallers were recorded,
leaving the market with a positive breadth of six. The day's value outturn
amounted to $33.76m having declined 33.78% from prior levels while, volumes
of the day were at 6.03m shares after dropping 42.78%. Foreign participation
was skewed towards the sellers of $3.17m while, purchases amounted to $0.55m
leaving the market with a net funds outflow position. efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Ethiopia

Ethiopia is demonetizing its economy with new currency to tackle hoarding
and illegal trade

The Ethiopian government has unveiled a set of new bank notes as a part of
its efforts to curb cash hoarding, illegal trade activities, and illicit
financial flows in an already struggling economy.

Prime minister Abiy Ahmed disclosed the notes with denominations of five,
10, and 100 are changed, and a new 200 birr (~$5.50) note is being
introduced. Over 3.6 billion Ethiopian birr ($97 million) is being spent to
print the new currencies. Ordinary Ethiopians have just three months to
replace their old notes.

Local banks have long called for a change in currency via Ethiopia's Bankers
Association noting that over 113 billion Ethiopian birr lives outside of the
formal banking system exacerbating the liquidity problems commercial banks
have faced this year.

Although demonetization is an economic strategy used from time to time in
developing countries to stabilize the currency and ease inflation it is not
without its risks. Economists often warn if mishandled it could trigger
market chaos and uncertainty as citizens scramble to swap their notes.

Ethiopia last introduced a new denomination at the end of the
Ethiopian-Eritrean deadly civil war two decades ago.

The government has in recent years been forced to print currencies to
finance its budget deficit only sustained by foreign lenders. Broad money
supply has been increasing by 20% annually according to the National Bank of
Ethiopia over the last 15 years and skyrocketed from 104.4 billion Ethiopian
birr to almost 1 trillion birr this year.

Although this has helped the economy grow by raising the contribution of the
state through massive infrastructural investments, it has resulted in an
increase in cost of living. Last month, inflation rate topped 20%. Like most
developing economies, Ethiopia has been harshly hit by the pandemic. After
several years of rapid growth the World Bank and IMF have had to downgrade
their forecasts annual growth of 3.2% down from 7.2%.  In May, the country's
debt was downgraded to B2 from B1 after it stated its intention to take part
in the G20's Debt Service Suspension Initiative designed to help low income
countries focus on healthcare for their citizens.

Most transactions in Ethiopia are still cash-based as the informal sector
has a substantial share in the economy. To get round this, the National Bank
introduced a cash withdrawal and limits on withdrawal as of last month.
-QZ.com

Nigeria

Nigeria naira eases on black market after order to ban FX for food imports

(Reuters) - The Nigerian naira fell by 1.09% to 460 naira on the black
market on Monday after the president last week told the central bank to stop
dollar sales for food and fertiliser imports.

President Muhammadu Buhari on Thursday directed the central bank to stop
selling foreign exchange for those imports, similar to an order issued last
year.

Nigeria faces its worst economic crisis in four decades triggered by an oil
price crash induced by the novel coronavirus pandemic. The crisis has
slashed government revenues, weakened the currency and created large
financing gap for Africa's biggest economy.

The naira had firmed sharply two weeks ago on the black market after the
central bank resumed dollar sales to individuals and investors to try to
clear demand.

But sales have not being enough, traders say, with pressure piling up on the
currency. The country has spent 16.6% of its dollar reserve from last year
to $35.77 billion.

Dollar liquidity dried up on the spot market after foreign investors dumped
Nigerian assets following the oil price crash. However, a central bank's
forex sales has also been inadequate.

Volumes on the spot market, widely quoted by foreign investors and imports,
declined from a peak of $1.3 billion in February to a low of $3.9 million
last month.

On the official market supported by the central bank, the naira traded at
381 to the dollar, while it was quoted at 385.83 naira on the spot market on
Monday.

 <mailto:info at bulls.co.zw> 

Global Markets

Shares rise on vaccine hopes; Turkish lira skids on Moody's downgrade

(Reuters) - Emerging market stocks firmed on Monday as renewed hopes for a
coronavirus vaccine drove global equities higher, while a ratings downgrade
by Moody's sent Turkey's lira closer to a record low against the dollar.

Markets now await several central bank meetings this week, as policymakers
weigh measures to support economies affected by the COVID-19 pandemic.

MSCI's index of emerging markets shares rebounded from two weeks of losses
to rise 0.9% - on track for its biggest one-day gain since the beginning of
the month.

Unprecedented stimulus measures have helped emerging market shares recover
from year-lows hit in March, with most Asian indexes trading back at or
above pre-pandemic levels. Stocks in Turkey, Russia, South Africa and Poland
have made back between 30% to 55%.

Bolstering sentiment, AstraZeneca resumed the late-stage trial of its
experimental COVID-19 vaccine, one of the most advanced in development,
after getting the go-ahead from safety regulators. Illness in a study
subject last week had suspended the trial and cast doubts on an early
rollout.

An index of currencies of the developing world extended gains to a fourth
straight day, with the dollar a tad weaker ahead of the U.S. Federal
Reserve's policy announcement on Wednesday.

South Africa's rand firmed about 0.8%, while Russia's rouble rose 0.4%.
Russia's economy ministry said it now expects the rouble to average 71.2
against the dollar this year, compared with a previous forecast of 69.8.

Consensus forecast in a Reuters poll suggested Russia's central bank may
lower its benchmark rate to 4% in September, but some say it may opt to keep
the rate on hold. For South Africa, the central bank is seen pausing
following 300 basis points of cuts this year, while a modest 25 bps cut is
also a possibility.

The lira fell 0.2%, less than half a percent away from all-time lows, after
Moody's downgraded Turkey's long-term credit rating further into speculative
grade on Friday.

The rating agency cited a possible balance of payments crisis and inability
or unwillingness of the country's institutions to effectively address such
challenges.

Data on Monday showed Turkish industrial production rose higher than
expected in July, continuing to pick up pace since pandemic-induced
lockdowns were lifted in June.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Slowing investor demand looms over gold prices

(Reuters) - The rapid accumulation of gold by investors as the coronavirus
crisis erupted earlier this year has slowed, threatening the record-breaking
rally in prices of the precious metal.

Investors seeking safety in gold, which typically holds its value during
troubled economic and political times, have offset a collapse in jewellery
demand and helped push prices above $2,000 an ounce for the first time.

They have added about 959 tonnes of gold worth $60 billion at current prices
to their holdings in physically-backed Exchange Traded Funds (ETFs) so far
this year, according to data from the World Gold Council (WGC).

But in August and so far in September, ETF holdings saw net inflows of just
39 and 21 tonnes respectively, the WGC said, coinciding with gold's first
two monthly price falls since March.

European funds registered net outflows of about 11 tonnes in August -- their
first since November last year, mostly from German funds.

Gold consumption in Asia, where jewellery, bar and coin buyers account for
more than half of global demand, has plunged since the coronavirus struck.

But others think the pandemic-led economic gloom will further feed demand
for gold holdings in ETFs later this year.

Uncertainty surrounding the U.S. Presidential election in November is also
likely to be crucial for investor demand. The amount of gold held in North
American ETFs rose about 39 tonnes in August.

Gold gains as dollar softens ahead of Fed meeting

(Reuters) - Gold rose to its highest in nearly two weeks on Tuesday,
propelled by a softer dollar and expectations the U.S. Federal Reserve will
reinforce its accommodative monetary policy.

Spot gold rose 0.6% to $1,968.94 per ounce by 1157 GMT, having earlier
climbed to $1,971.71, its highest since Sept. 2. U.S. gold futures rose 0.7%
to $1,977.10 per ounce.

The dollar index slipped, making gold more attractive for buyers holding
other currencies, as participants awaited the Fed's two-day policy meeting
ending on Wednesday.

While the "most dovish scenario of the U.S. Fed is already reflected in the
price of gold," the central bank's guidance on how long it could keep rates
low and average inflation forecasts are crucial, said ABN Amro analyst
Georgette Boele.

Unprecedented monetary stimulus packages and a low interest rate environment
have led bullion to gain 29.7% so far this year and scale record highs above
$2,000 an ounce, as it is seen as a hedge against inflation and currency
debasement.

Elsewhere, platinum rose 1.4% to $967.14 per ounce, after hitting its
highest since Aug. 18 at $968.75.

Platinum could outperform gold by about 10%, if the World Platinum
Investment Council's forecasts for a supply deficit comes to pass and the
gold to platinum ratio breaks out of the 2.02-2.20 range, said Saxo Bank's
Hansen.

Silver gained 1.2% to $27.49 per ounce and palladium was up by 1.2% at
$2,340.66.

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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been compiled from sources believed to be reliable, but no representation or
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