Bulls n Bears Daily Market Commentary : 29 September 2020

Tue Sep 29 18:57:17 CAT 2020

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Bulls n Bears Daily Market Commentary : 29 September 2020

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

ZSE commentary

Heavies stimulate losses in penultimate session.

Waning demand in selected heavies helped swing the market back into the red
in Tuesday's session. The major casualty was banking group CBZ which plunged
19.94% as it settled at $44.2000, where demand could be established. Padenga
was also seen on the top five shakers list after a 8.07% loss to settle at
$13.0077 while, other heavy cap losses were recorded in Cassava (-0.06%),
Econet (-0.16&), Simbisa (-4.26%), OKZIM(-0.74%) and Axia(-0.03%). Nampak
was 16.89% down at $1.2383 with Turnall shedding 13.33% to end at $0.5200.
Brick manufacturers Willdale eased 8.33% to see it close at $0.2200.
Overall, seventeen counters fell against fifteen risers as five remained
unchanged. Mitigating loses for the day were gains led by hotelier African
Sun which surged 19.94% to $1.8950 while, mining house Riozim rebounded
13.90% as it closed at $11.3902. Gains in heavies Innscor and Seedco failed
to maintain the market in the black as the duo ticked up 10.82% and 8.46% to
settle at $19.6810 and $21.0000, respectively.

Resultantly, the mainstream All Share Index slumped 3.66% to 1583.34pts
while, the Industrials lost 3.86% to 5213.34pts. The Top Ten Index succumbed
6.14% to 1039.14pts as the Mining Index registered gains after a 3.13% rise
to see it closing at 3812.07pts. Activity aggregates slightly improved with
volumes exchanged ballooning 142.77% to 6.42m shares, yielding a value
outturn of $47.74m which was 203.13% up on yesterdays. Delta was the most
liquid stock of the day as it anchored both the value and volumes aggregates
with a 39.10% and 17.09% contribution in that order. Foreign inflows
accounted for a mere 1.02% of the day's turnover while,

outflows claimed 54.82% of the same, to register a deficit balance of
payments.-efesecurities

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

Global Currencies & Equity Markets

South Africa

South African Rand Volatility Seen Picking Up but Further Gains Favoured by
Analysts by Year-end 

The Rand continued its recovery off September lows on Tuesday and is still
widely expected to clock up further gains before year-end although
volatility could increase over the coming days as investors digest the first
of three U.S. election debates and its possible implications for the
November 03 ballot.

South Africa's Rand recovered its footing after an earlier wobble having
opened the session around 17.0 against the Dollar, before whip-sawing almost
20 cents either side of that marker in a demonstration of the volatility
that analysts have warned could proliferate over the coming days. 

Earlier volatility came alongside the second quarter unemployment report
while gains built latterly alongside falls in international oil prices.
South Africa's jobless rate fell from 30.1% to 23.3% in the second-quarter,
although Statistics South Africa said that "does not include discouraged
work seekers."  

The falling unemployment rate disguised some 2.2 million coronavirus-related
job losses that were not classified as such due to quirks of how officials
define unemployment. Similar is true of many developed countries, which
still purport boom era unemployment rates but are all facing millions of job
losses. 

Unemployment data came ahead of steep falls in oil prices, which are
supportive for currencies of oil-importing countries and may have had to do
with Libyan barrels returning to the market.

Tuesday's volatility also came ahead of the first U.S. election debate that
will see President Donald Trump go head-to-head with opposition candidate
Joe Biden of the Democratic Party during what will be the early hours of
Wednesday morning in both London and Johannesburg. 

Both are set to face inquisition over their records in present and past
offices as well as their plans for addressing some of Americans' priorities.

Biden enters with a healthy lead over the incumbent at the national level,
albeit one that has narrowed in so-called swing states, but the candidate is
viewed as slightly gaffe-prone while the incumbent has performed strongly in
prior debates and has a record for boisterousness. 

Many analysts say neither of the debates should matter much for the election
outcome given many Americans are believed to have already made up their
minds, although if they impact appetite for stocks they could also have a
short-lived impact on the Rand. The currency has always been sensitive to
the direction of global markets and more so amid the pandemic, although
GBP/ZAR has better reflected the S&P 500 in recent weeks than USD/ZAR has. 

The Pound-to-Rand rate has often risen and fallen with the S&P 500 when the
Brexit talks are under the spotlight as they have been this week, with
little more than a fortnight to go until the self-imposed October 15
deadline for a trade accord although there have been indications as well as
speculation that compromises could be in the pipeline. 

U.S. stock futures were down more than half a percent Tuesday and so too was
GBP/ZAR but if Wednesday's tv debate casts one candidate or the other as a
clear frontrunner, or if Washington makes progress in agreeing another
fiscal support package later in the week, recoveries for both could be seen.

However, Goldman Sachs forecasts a further prolonged recovery for the Rand
in the final quarter, which is expected to pull GBP/ZAR down from 21.74 to
20.18 by year-end while dragging USD/ZAR from 16.92 to 15.80.

Egypt

Egypt sells five-year dollar green bonds

(Reuters) - Egypt started marketing five-year U.S. dollar-denominated green
bonds on Tuesday at around 5.75%, a document showed, the first sale of green
bonds by a government in the Middle East and North Africa.

The deal is expected to be of benchmark size, which generally means at least
$500 million.

Proceeds from the debt sale, which will be completed later on Tuesday, will
be used to finance or refinance green projects in sectors such as
transportation, renewable energy and energy efficiency.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar remains world's currency of choice despite slide

The US dollar's slide during the coronavirus crisis has provoked much angst
about the future of the currency. 

Some have argued that its roughly 6 per cent drop on a trade-weighted basis
since April is just the start of a much sharper collapse in the currency's
value, one akin to the 1970s and 1980s when it fell more than 30 per cent.
Others have made a bolder claim: the dollar's status as the world's reserve
currency is in peril. 

But according to Adam Slater, lead economist at Oxford Economics, such fears
are overblown. Not only is further depreciation likely to be limited, but
the currency's standing as the world's currency of choice is secure.

The events of March underscore this point. During this period of extreme
volatility, all anyone wanted to hold was the buck. "When you get financial
stress globally and risk aversion globally, people move into dollar assets,"
said Mr Slater.

As coronavirus cases surge again and the threat of renewed lockdowns looms
large, there is ample reason for investors to continue seeking out safety.

Moreover, on many metrics, the dollar faces few rivals. Whether in terms of
its use in cross-border payments or its share of foreign exchange reserves
held by global central banks, the dollar's dominance is sweeping. Meanwhile,
IMF data show the euro's share of reserves flatlining around 20 per cent.

Further dollar weakness could reinforce this dynamic. According to Brad
Setser, senior fellow at the Council on Foreign Relations, a US think-tank,
export-heavy Asian economies tend to intervene in markets under these
circumstances to prevent their currencies from appreciating. What results is
more reserve accumulation by these central banks, not less. -ft

 <mailto:info at bulls.co.zw> 

Commodities Markets

Stocks, gold price bounce back; buy or sell now? Gary Wagner answers

Gold rallied more than 1% on Monday, bouncing back from last week's
declines. Equities markets are also seeing gains.

Gary Wagner, editor of TheGoldForecast.com, said that he prefers to buy into
strength.

The consolidating at the 100-day moving average initiated short-covering
orders for gold and a "buying the dip mentality", Wagner said.

Wagner does not recommend selling on this rally.

Gold and equities, which traditionally have moved in opposite directions
from one another, have been moving in tandem recently. Wagner attributed
this to monetary policy intervention.

Quantitative easing will entice equities traders to push stocks higher, as
well as gold investors to buy the metal on the back of inflation fears.

On equities, Wagner prefers the technology sector.-Kitco News

Copper rises 1% on China demand, U.S. stimulus hopes

London copper prices on Monday rose for a second straight session, climbing
1% on expectations of strong demand from top importer China and a U.S.
stimulus in the works.

Asian markets were powered by signs that China's economic recovery was
gaining momentum with pent-up demand, fiscal stimulus and surprisingly
resilient exports boosting sentiment across the region.

* Three-month copper on the London Metal Exchange rose 1% to $6,607.50 a
tonne, as of 0715 GMT and the most-traded copper contract on the Shanghai
Futures Exchange closed up 1.3% to 51,220 yuan ($7,507.84) a tonne.

* In August, data showed industrial output in China, the world's top
consumer of metals, accelerated the most in eight months.

* Democrats in the House of Representatives are working on a $2.2 trillion
coronavirus stimulus package.

* Still, a higher U.S. dollar, which makes greenback-priced commodities more
expensive for holders of other currencies, could weigh on prices.

* The dollar hovered near a two-month peak against a basket of currencies on
Monday as investors look to a barrage of upcoming economic data and
political developments in the United States before making any fresh bets on
the U.S. currency.

* Zambia will remove import duty on copper ores and concentrates to
encourage local processing, Finance Minister Bwalya Ng'andu said in a budget
speech delivered in parliament on Friday.

* Africa's second largest copper producer saw its export earnings from the
metal in the first half of the year fall 14.8% to $2.3 billion due to a drop
in prices, he added.

INVESTORS DIARY 2020

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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
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opinions expressed and recommendations made are subject to change without
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