Bulls n Bears Daily Market Commentary : 30 September 2020

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Bulls n Bears Daily Market Commentary : 30 September 2020

 


 

 


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

 


ZSE commentary

 

Market Turnover ZWL$47,727,435.55 with foreign buys at ZWL$487,950.00and
foreign sales were ZWL$26,173,102.00 Total trades were 245.

 

The ZSE All Share Index closed the month higher at 1,638.17 points after
showing gains of 54.83 points . Gains were helped by CBZ HOLDINGS  which
strengthened by $8.7010 to close at $52.9010, FBC HOLDINGS  was up by
$1.5844 to end at $15.4335 and BINDURA NICKEL CORPORATION traded higher at
$4.1002 after advancing $0.4002. INNSCOR AFRICA rose by $0.2068 to settle at
$19.8877 while PADENGA HOLDINGS LIMITED gained by $0.0923 to $13.1000.

 

Gains were offset by SEED CO LIMITED which traded $1.6004 lower at $19.3996,
ZB FINANCIAL HOLDINGS eased $0.3501 to $15.6025 and NAMPACK  went down by
$0.2378 to $1.0005. DELTA CORPORATION dropped by $0.1301 to $16.8755.
MASIMBA HOLDINGS LIMITED lost $0.1000 to $1.9000. 


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

 

Global Currencies & Equity Markets

 

 

Zambia

 

Zambia Currency Hits Record Low and Eurobonds Plunge

Zambia's Eurobonds extended declines and its currency weakened to a record
against the dollar after a group of bondholders rejected the government's
request for a six-month suspension of interest payments.

 

The announcement on Wednesday, a day after the southern African nation held
a webcast to try convince creditors to approve the freeze while it drafts a
restructuring plan, suggests any deal with creditors will take longer to
reach than the speedy resolution the government outlined on Tuesday.
Zambia's next coupon payment is due on Oct. 14.

 

A committee of bondholders said in a statement that its "members are unable
to provide a positive response to the consent solicitation request at this
time given the absence of clarity on a number of issues." Newstate Partners
is advising the committee, which represents 14 investors holding 40% of
Zambia's $3 billion in Eurobonds, and is in "close contact" with lenders
holding another 30%.

 

Zambia's Eurobonds extend declines after holders reject standstill

Zambia, the first African nation to seek debt relief from bondholders since
the onset of the pandemic, aims to reach agreements with creditors by the
end of a six-month interest standstill it's seeking, Finance Minister Bwalya
Ng'andu said on Tuesday's webcast.

 

But he provided scant details on how the country plans to reduce its debt
burden and negotiate relief from its main creditor, China. Zambia said it
will treat all creditors on the same basis, but a deal with China is crucial
as the country negotiates with the International Monetary Fund over an
economic program, said Kevin Daly, investment director at Aberdeen Standard
Investments, which owns Zambian bonds.

 

Zambia's 2027 Eurobonds extended losses, falling 3.6% on Wednesday to 48.42
cents in the dollar. That's the lowest on a closing basis since June 18. The
kwacha, which traded above 20 per dollar on Tuesday for the first time on
the onshore market, slipped 0.1% to 20.0175 per dollar by 3:42 p.m. in
Lusaka.

 

Dwindling Reserves

The nation has over the past decade taken on nearly $12 billion of debt even
as growth slowed and foreign-exchange reserves dwindled. The pandemic
accelerated the crisis, prompting the government last week to request an
interest-payment holiday from holders of its $3 billion in Eurobonds while
it plans a debt restructuring together with its adviser, Lazard Freres.

 

Zambia Seeks Rapid Deals With IMF and Commercial Creditors

 

Ng'andu's time frame to reaching deals with creditors and the IMF might be
overambitious. Eurobond holders want the government to first reach a deal
with the International Monetary Fund over an economic program, and a general
election scheduled for August next year may complicate that. Neighboring
Mozambique took about three years to restructure its Eurobonds after
starting talks with investors in 2016.

 

A spokesman for Zambia's finance ministry didn't immediately respond to
Bloomberg's message requesting for comment. Ng'andu said on Sunday the
government didn't want to default, and had budgeted for external debt
payments in case bondholders didn't agree to a standstill.

 

 

 

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.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

 

 

Global Markets 

 

Dollar ticks up after indecisive Trump/Biden debate

The dollar ticked up in Europe on Wednesday, recovering some losses after a
two-day fall, as traders weighed the implications of a bad-tempered first
debate between President Donald Trump and his challenger, Joe Biden.

 

The dollar index crept just above the 94 mark against a basket of currencies
after two days of losses that followed the U.S. currency reaching a
two-month high last week.

 

The euro was down 0.3% against the dollar at $1.1706.

 

Overall the dollar was set for its worst quarter since the spring of 2017
with a fall of about 3.3% as hopes for a swift recovery from the COVID-19
economic crash made investors exit safe havens and buy into riskier
currencies.

 

Market action following the debate however showed some nervousness as
uncertainty over the outcome of the U.S. presidential election remains high
after a chaotic encounter in which the candidates battled over the
president's leadership on the coronavirus pandemic, the economy and taxes.

 

U.S. stocks futures and European stocks traded lower hours after the debate
which, according to political betting odds, gave the Democratic challenger a
slight edge over the incumbent.

 

Many market participants were cautious about linking currency moves to the
debate.

 

Traders also watched for progress in talks about further U.S. fiscal
stimulus to soften the coronavirus blow.

 

Economic indicators have recently painted an uneven picture of the economic
recovery in Europe, but Wednesday's data were generally positive.

 

German retail sales rose more than expected in August, raising hopes that
household spending will power a recovery in the third quarter.

 

European Central Bank President Christine Lagarde also grabbed investors'
attention as she set the scene for aligning the ECB's strategy with that of
the Federal Reserve, possibly including a commitment to let inflation
overshoot after it has been low for too long.

 

The dollar rose 0.28% against the Swiss franc at 0.9218 franc, after falling
as low as 0.9191 franc overnight.

 

Switzerland's KOF leading indicator hit a 10-year high in September, rising
for the fourth time in a row as the economy extended its recovery from the
coronavirus.

 

China's yuan held steady even after twin surveys showed strong factory
activity, backing recent signs of a rebound in broad sectors of the world's
second-biggest economy.

 

The offshore yuan steadied at 6.8111 per dollar.

 

Against the yen, the dollar was stable at 105.64 yen, below a two-week high
of 105.74 overnight.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

 

Copper Rises After Upbeat Chinese Economic Data

China accounts for roughly half of global copper demand, making its
manufacturing sector a primary driver of prices

 

Copper prices have risen about 8% for the year. A copper smelter in Jinhua,
China, in July.

 

Copper prices climbed Wednesday, advancing back toward a multiyear high hit
in mid-September after data showed China's economic recovery is gathering
momentum.

 

Most actively traded copper futures for December delivery added 1.3% to
$3.028 a pound, moving back toward a recent peak of $3.116 hit on Sept. 18.

 

The industrial metal has risen about 8% for the year and recovered roughly
40% in the past six months following an early-year selloff. Prices tumbled
after the Chinese economy shut early during the coronavirus crisis but have
benefited with economic activity in the world's biggest commodity consumer
rising lately.

 

 

China accounts for roughly half of global copper demand, making its
manufacturing sector a primary driver of prices. Copper is a key component
of everything from electric vehicles to smartphones.

 

 

Figures Wednesday showed China's official manufacturing purchasing managers
index rose more than expected in September, the latest data point indicating
an upbeat recovery in China after new coronavirus cases in the country
generally stopped rising. A separate private gauge of manufacturing activity
also pointed to a healthy rebound driven in part by government stimulus.-wsj

 

 

 

Gold, silver see price declines despite keener uncertainty

(Kitco News) - Gold and silver prices are lower in early U.S. trading
Wednesday, despite some more risk aversion in the marketplace at mid-week. A
rebound in the U.S. dollar index today is working against the precious
metals markets. The metals traders appear to be focusing more on the
direction of the USDX recently. December gold futures were last down $11.20
at $1,891.90 and December Comex silver was last down $0.545 at $23.91 an
ounce.

 

The just-released ADP national employment report for September showed a rise
of 749,000 jobs, which beat expectations for a gain of 600,000. This report
precedes the U.S. economic data point of the week, which is Friday morning's
monthly jobless report for September from the Labor Department. The key
non-farm payrolls number is forecast at up 875,000 and the unemployment rate
is forecast at 8.2%.

 

Global stock markets were mostly weaker overnight. U.S. stock indexes are
set to open the New York day session lower. The first U.S. presidential
debate between President Donald Trump and Joe Biden that took place in
Cleveland, Ohio Tuesday night produced unprecedented acrimony but probably
did not move the needle much regarding changing voters' minds. Still, the
rancor from both sides that included President Trump saying he did not trust
the mail-in voting process and not committing to urge his supporters to
remain calm if he lost the election served to inject more uncertainty into
an already unsettled marketplace.

 

Rising Covid-19 infections in major countries heading into colder weather
and more inside activities in the Northern Hemisphere have raised more
concerns about a second wave of the virus again shutting down businesses and
damaging economies.

 

The U.S. government slapped a $920 million fine on investment bank JP Morgan
Tuesday, as the firm admitted to manipulating precious metals and Treasury
markets. That's the largest fine ever levied by the U.S. for the
manipulation, called "spoofing," in which big trading orders are entered but
then quickly cancelled. This news can be seen as at least a partial
redemption for a vocal group of metals market watchers who have claimed for
many years that JP Morgan has had a heavy hand in manipulating the gold
market.

 

The important outside markets early today see the U.S. dollar index firmer
after being under pressure Monday and Tuesday. Nymex crude oil prices are
weaker and trading around $38.85 a barrel, as the oil market bulls are
fading this week. Meantime, the yield on the U.S. Treasury 10-year note is
trading around 0.65% today.

 

Today is the last trading day of the month and of the quarter, making it a
more important day from a technical chart perspective.

 

U.S. economic data due for release Wednesday includes the weekly MBA
mortgage applications survey, the ADP national employment report, revised
corporate profits and the third estimate of second-quarter GDP. Also on tap
is the ISM Chicago business survey, pending home sales and the weekly DOE
liquid energy stocks report.

 

Technically, the December gold futures bulls have the overall near-term
technical advantage but prices are still trending down on the daily bar
chart. Bulls' next upside price objective is to produce a close in December
futures above solid resistance at $1,925.00. Bears' next near-term downside
price objective is pushing futures prices below solid technical support at
$1,800.00. First resistance is seen at this week's high of $1,904.80 and
then at $1,910.00. First support is seen at Tuesday's low of $1,880.80 and
then at the September low of $1,851.00. Wyckoff's Market Rating: 6.0

 

December silver futures bulls have the overall near-term technical
advantage. However, prices are still trending lower on the daily chart.
Silver bulls' next upside price objective is closing prices above solid
technical resistance at $25.00 an ounce. The next downside price objective
for the bears is closing prices below solid support at the September low of
$21.81. First resistance is seen at this week's high of $24.545 and then at
$25.00. Next support is seen at Tuesday's low of $23.51 and then at $23.00.
Wyckoff's Market Rating: 6.0.

 

 

 

 

 

 

 

 

 

 

 

 


 

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
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
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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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