Bulls n Bears Daily Market Commentary : 14 April 2021

Wed Apr 14 15:32:00 CAT 2021

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Bulls n Bears Daily Market Commentary : 14 April 2021

 <https://www.cbz.co.zw/> 

ZSE commentary

The ZSE closed firmly in the negative territory largely on heavyweight
losses. Turnover however declined to ZW$57.13 million from a trade of 3 649
600 shares which exchanged hands in 325 trades. Delta was the most active
stock at 38 trades followed by Ariston and Star Africa. The market breadth
was negative after 19 stock depreciated against 16 that appreciated in a
total of 39 stocks which traded. Medtech Holdings was the most liquid
counter as it anchored volume aggregate at 892 000 shares and Delta anchored
value aggregate at ZW$19.27 million.

The benchmark All Share Index was down by 0.86% and the Top 10 Index was
down by 2.09%. The Top 15 Index shaded 1.28% to 2 704.55. The Medium Cap
Index traded higher to 10 201.65 appreciating by 1.10%, whilst the Small Cap
Index shaded 1.55% to close at 46 853.50. Leading the risers pack of the day
was NMB Holdings  and Art Corporation with a 11.04% and 7.40% share
appreciation respectively. Simbisa Brands added 6.06% to 3000c. The
packaging manufacturer Nampak appreciated by 5.87%. Mashonaland Holdings
gained 5.80% to close at 189.93c. Leading in the shakers pack was Hippo
which pared 14.00% followed by the Edgars shading 10.43%. Ariston Holdings
and Proplastics pared 4.34% and 3.85% respectively. Please find a summary of
the market activity as shown below; The Old Mutual Top Ten ETF closed at
175.87c up 1.64% after 2 300 units with a value of ZW$4 045 in 4 trades
exchanged hands.-wealthaccess

 <https://www.firstmutual.co.zw/> 

Global Currencies & Equity Markets

South Africa

South African rand flat in early trading

(Reuters) - The South African rand was flat in early trade on Wednesday,
with traders cautious after an increase in inflation in the United States
and a delay in the local coronavirus vaccine programme.

At 0700 GMT the rand ZAR=D3 was 0.05% weaker at 14.5050 per dollar, little
changed from its overnight close of 14.5000.

The rand had eked out gains late on Tuesday after sliding to a session low
14.6800, but by early Wednesday in Asia it was struggling to attract bids
with investors weighing the Federal Reserve's next move.

Speculation that stronger U.S. inflation could propel the Fed to reduce its
quantitative easing and low interest rate policy earlier than it has pledged
has been a major driver of the dollar's rally in the first quarter.

The U.S. consumer price index jumped 0.6% in March but the dollar failed to
rise in response, instead weakening against most major currencies.

The South African government has suspended the rollout of Johnson &
Johnson's (J&J) JNJ.N COVID-19 vaccine after U.S. federal health agencies
recommended pausing its use because of rare cases of blood clots.

The country, the worst-hit on the African continent for recorded coronavirus
infections and deaths, with more than 1.5 million cases, has been slow to
procure and rollout vaccines.

Bonds were firmer, with the yield on the benchmark 2030 government issue
ZAR2030= down 7.5 basis points to 9.275%.

Zambia

Fitch Upgrages Zambia's Local Currency Issuer Rating to 'CCC'

Fitch Ratings has upgraded Zambia's Long-term Local-Currency (LTLC) Issuer
Default Rating (IDR) to 'CCC' from 'CC'.

The Patriotic Front government of President Edgar Lungu has in the recent
past prioritized debt repayments while engaging creditors for restructuring
of foreign debts.

Additionally, the government is resolved to secure a bailout package from
the International Monetary Fund (IMF) and has continued holding discussions
with the Breton Wood institution for possible support 

In a statement released on Monday, April 12, 2021 Fitch Ratings acknowledged
that government has continued to service its local currency debt and has
made no indication that it plans to include domestic debt in any potential
debt restructuring.

The Organization explained that this means an eventual re-structuring of
external debt could improve the overall public finance position and support
local-currency debt sustainability.

It further indicated that the 'CCC' rating still reflects a real possibility
of a local-currency default, given the country's weak public finances and
tight domestic financing conditions.

Meanwhile, Fitch said Zambia has an ESG Relevance Score of 5 for both
Political Stability and Rights and for the Rule of Law, Institutional and
Regulatory Quality and Control of Corruption, as is the case for all
sovereigns.

It explained that the scores reflect the high weight that the World Bank
Governance Indicators (WBGI) have in the proprietary Sovereign Rating Model
(SRM).

It explained that Zambia has a medium WBGI, in the 38th percentile,
reflecting a recent record of peaceful political transitions, a moderate
level of rights for participation in the political process, moderate
institutional capacity, established rule of law and a moderate level of
corruption.

And Fitch Ratings has disclosed that it will assign ratings based on a
forward-looking analysis of the sovereign's willingness and capacity to
honour Zambia's new foreign-currency debt obligations once the country
reaches an agreement with bondholders on restructuring its long-term
foreign-currency debt and completes the restructuring process.

 <mailto:info at bulls.co.zw> 

Global Markets

China's digital currency is a threat to dollar dominance

Markets have been gripped by cryptocurrency fever. The price of bitcoin has
attained new highs while debate has raged over the emergence of
cryptocurrency technology.

But these may be a sideshow for a big developing trend - the rapid
digitalisation of the renminbi.

This shift, combined with other macroeconomic and political factors, could
be the key that accelerates the decline of the dollar's dominance as the
world's leading reserve currency. It could also hasten the acceptance of the
renminbi as the main rival to the US currency.

Central banks around the world have been grappling in recent years with the
concept of digital currency technology. Few nations, though, are as
aggressive as China in their approach to developing a so-called central bank
digital currency.

Such a currency would be overseen by a central governmental authority,
removing the element of anonymity that is fundamental to the decentralised,
blockchain-ledger of popularised cryptocurrencies like bitcoin or ethereum.
The theoretical benefits of government oversight of these new digital assets
are numerous.

CBDCs allow for greater prevention of fraud or crime, enable instantaneous
international transactions, reduce transaction costs, permit greater
financial inclusion and aid the provision of direct fiscal stimulus to
individual citizens.

For China, adoption of a CBDC both within and beyond its borders would allow
its financial system to reduce reliance on the dollar and limit the role and
oversight of foreign financial institutions and regulators. While many
countries have started discussing the potential future application of CBDCs,
China has pushed ahead with development.

In April 2020, Beijing piloted a digital currency in four cities, allowing
commercial banks to run internal tests converting between cash and digital
money, account-balance checks, and payments. The pilot programme expanded to
28 major cities in August. Aiming for broad circulation in 2022, China plans
to test the digital currency in additional major cities, including Beijing
and Shanghai, this year.

This pioneering approach should accelerate the elevation of the renminbi on
the world stage. Some users outside China, particularly in the US, might be
reluctant to use a digital currency controlled by China. However, early
adoption in parts of Asia, Latin America and Africa is likely to proceed
significantly faster.

Global reserve currencies' relative importance historically is explained by
the macroeconomist Barry Eichengreen. Currencies are more prized as reserve
assets when they satisfy two conditions: first, when they are stable, liquid
and widely used in international transactions; and second, when they are
backed by a country to which another state has important security links.

China's development in recent years puts it on a clear path to satisfy these
criteria as its government has maintained relative policy stability. The
country accounted for 16 per cent of global output in 2019, but the renminbi
represented a little over 2 per cent of global reserves as of the second
quarter last year.

Lack of renminbi-denominated assets for foreigners to own has inhibited its
rise as a reserve currency. But now the renminbi will be supported by the
Chinese authorities opening their $15tn domestic bond market to foreign
participants. Greater demand for these bonds will push down yields, lowering
borrowing costs.

More important, if China captures the first-mover advantage to meet the
world's demand for use of digital currencies to settle international
financial transactions and own digital assets, the appeal of its CBDC could
rise sharply.

China has also made great strides in invoicing its trade in renminbi. The
security and geopolitical rationale for holding renminbi has become stronger
through such measures as China's Belt and Road Initiative financing of
projects in developing countries.

Covid-19 might also be a catalyst for the greater acceptance of the renminbi
as a global reserve currency. The economic carnage of the pandemic has sent
already large fiscal deficits ballooning and driven even more accommodative
monetary policy in the US.

This historically unique combination of impending massive fiscal and
vaccine-led growth, where short-term interest rates are anchored at zero,
will expand an already large current account deficit, putting further
pressure on the value of the dollar.

The digitalisation of the renminbi will add to these economic and
geopolitical factors. This will have a durable, transformative impact on the
international economy.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Rebounds as Yields Fall and Dollar Drops

Gold prices moved higher on Tuesday, rebounding as the dollar moved lower
and yields dropped. The decline in the 10-year yield came despite a larger
than the expected headline and core CPI report announced on Tuesday by the
Department of Labor. Treasury yields appear to be topping out which could
lead to a rally in the yellow metal.

Technical analysis

Gold prices moved higher but failed to capture resistance near the 50-day
moving average at 1,756. Support is seen near the 10-day moving average at
1,730. Additional support is seen near the June lows at 1,670. Short-term
momentum is negative as the fast stochastic generated a crossover sell
signal. The current reading on the fast stochastic is 77, down from an
overbought condition near 81, which reflects accelerating negative momentum.
Medium-term momentum has turned positive as the MACD (moving average
convergence divergence) index generated a crossover buy signal. The MACD
histogram is printing in positive territory with a declining trajectory
which points to consolidation.

Consumer Prices Surge

Consumer prices surged in March, buoyed by a strong economic recovery and
year-over-year comparisons when the Covid-19 pandemic was about to throttle
the U.S. economy. The consumer price index rose 0.6% from the previous month
but 2.6% from the same period a year ago. The year-over-year gain is the
highest since August 2018 and was well above the 1.7% recorded in February.
Expectations were for a rise of 0.5% monthly and 2.5% from March 2020.
Gasoline prices were the biggest contributor to the monthly gain, surging
9.1% in March and responsible for about half the overall CPI increase.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Independence Day

18/04/21

Public Holiday in lieu of Independence Day falling on a Sunday

19/04/21

BAT

AGM

Cresta Lodge, Msasa

30/04/21 10am

Workers Day

01/05/21

FCB

AGM 

virtual

06/05/21 : 3pm

NMB

AGM

virtual

1205/21 :  3:30pm

Africa Day

25/05/21

Counters trading under cautionary

ART

Seed co Int.

Dairibord

Starafrica

Medtech

Turnall

Seed co

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
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