Bulls n Bears Daily Market Commentary : 29 April 2021

Thu Apr 29 16:20:15 CAT 2021

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Bulls n Bears Daily Market Commentary : 29 April 2021

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ZSE commentary

The ZSE closed today’s session in the positive buoyed by gains in mid-tier stocks. Turnover declined by 16.96% to ZW$110.27 million from a trade of over 5.78 million shares which exchanged hands in 356 trades. Star Africa was the most active stock at 36 trades followed by Simbisa and Delta. The market breadth was positive after 23 stocks appreciated against 11 that depreciated in a total of 40 stocks which traded. First Mutual Holdings was the most liquid counter as it anchored both volume and value aggregates trading over 1.8 million shares with a value of ZW$39.87 million. The benchmark All Share Index was up 0.86% and the Top 10 Index was up by a 0.30%. The Top 15 Index added 0.09%. The Medium Cap Index traded higher to 11 314.28 appreciating by 1.83% with a month to date gain of 5.21%, whilst the Small Cap Index

shaded a marginal 0.26% to close at 43 160.67.

Leading the risers pack of the day was Lafarge  which added 20.00% after its new plant was commissioned yesterday. Get Bucks Microfinance  also added 20.00% to 48c. The packaging manufacturer Nampak was 18.64% up to 1900c. African Distillers added 8.70% to 5000c. First Capital Bank  appreciated by 8.67%. Leading in the shakers pack was Star Africa  which pared 12.38% followed Zimplow shading 10.16%. Unifreight and First Mutual Holdings pared 8.33% and 4.09% respectively. Please find a summary of the marketactivity as shown below; The Old Mutual Top Ten ETF closed at 175.42c up 0.61% after 63 743 units with a value of ZW$112 457.11 in 14 trades exchanged hands..-wealthaccess

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Global Currencies & Equity Markets

AFRICA-FX-Kenyan, Nigerian currencies seen range-bound

Kenya's and Nigeria's currencies are expected to trade within existing ranges in the coming week, analysts and traders said. Tanzania's currency is seen holding steady, while Uganda's is expected to firm.

NAIROBI (Reuters) - Kenya's and Nigeria's currencies are expected to trade within existing ranges in the coming week, analysts and traders said. Tanzania's currency is seen holding steady, while Uganda's is expected to firm.

NIGERIA

The naira is seen range-bound next week as the central bank tries to boost forex sales through direct interventions to local firms and foreign investors, traders said.

The currency NGNFX=BDCN traded within a range of 410.46 naira to 422 naira on the over-the-counter spot market on Thursday after the central bank last week re-priced its futures rate upwards and sold dollars to foreign investors.

The naira was quoted at 485 per dollar on the black market NGNFX=BDCN on Thursday, a level it touched last week. It remains flat on the official market NGN=D1, which is backed by the central bank, at 381 naira, where it has been stuck since last July.

TANZANIA

Tanzania's shilling TZS= is expected to hold steady next week as demand for the U.S. dollar from oil and manufacturing importers will be offset by inflows from foreign direct investments.

Commercial banks quoted the shilling at 2,310/2,324 on Thursday, the same levels recorded a week earlier.

KENYA

Kenya's shilling KES= is also expected to be range-bound in the coming week, depending on the level of demand for dollars from importers, especially on the energy side as companies meet their end-of-month obligations, traders said.

On Thursday, commercial banks quoted the shilling at 107.75/107.95 against the dollar compared with last week's close of 108.40/108.60.

UGANDA

The Ugandan shilling UGX= is seen extending its gains in the coming days amid low appetite for hard currency from importers.

At 0845 GMT, commercial banks quoted the shilling at 3,590/3,600, compared to last Thursday's close of 3,605/3,615.

Demand from importers is expected to remain flat, a trader at one commercial bank said.

ZAMBIA

The kwacha ZMW= is likely to continue trading on the back foot against the dollar in the week ahead as demand for hard currency, driven by factors including debt servicing, continues to surpass supply.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 22.2740 per dollar, marginally down from a close of 22.2300 at the close of business last Thursday.

Zambia National Commercial Bank (ZANACO) said in a weekly note, although the central bank was likely to continue with foreign exchange injections, that market conditions still pointed to a troubled Kwacha..

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Global Markets

Dollar left defenceless by dovish Fed, euro muscles higher

SYDNEY (Reuters) – The dollar was on the defensive near nine-week lows on Thursday as a decidedly dovish outlook from the U.S. Federal Reserve gave a green light for the global reflation trade.

The setback allowed the euro to crack major trendline resistance at $1.2114 and power up to the highest since late February at $1.2135. The break opened the way to bull targets at $1.2196 and $1.2242.

Fed Chair Jerome Powell quashed speculation about an early tapering of asset buying, saying it was “not time yet” to begin talking of it, and employment was still a long way short of where it needed to be.

Even the outperformance of the U.S. economy had a sting in the tail for the dollar as it sucked in imports and drove the trade deficit to record highs in March.

It could also temper any reaction to an upbeat U.S. GDP report due later on Thursday, where market forecasts are for annualised growth of a whopping 6.1%.

The closely-watched Atlanta Fed’s “GDP Now” estimate is that GDP expanded by 7.9%, suggesting considerable upside risk.

The Fed’s dogged dovishness was a marked contrast to the Bank of Canada which has already begun to taper its asset buying, sending the dollar sliding to a three-year trough on the loonie at C$1.2303.

Another notable break lower came against the Norwegian crown, where the dollar hit its lowest since October 2018 at 8.1645 crowns.

The crown has been carried higher by rising oil prices as the global economic recovery boosts demand for commodities, a trend that is also benefiting the Australian and New Zealand dollars.

The dollar also shed much of the week’s gain on the yen, falling back to 108.45 from Wednesday’s top of 109.07. A holiday in Japan could keep it contained in Asian hours.

Against a basket of currencies, the dollar was down at a near nine-week low of 90.554, and a long way from the rally peak of 93.439 hit at the end of March.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rates today: On MCX, prices fell below ₹46909 per 10 gram  

Gold extended its losses to the sixth day day when futures on MCX were down 0.4% to ₹46909 per 10 gram. Silver futures rose 0.6% to ₹69,450 per kg but were off day's highs. In the previous session, gold had declined 0.42% while silver had slumped 1.75%. Last week gold rates in India had risen to two-month high of ₹48,400 and have corrected thereafter following decline in international prices.

After strong gains last year during which gold had hit a new high of ₹56,200, the precious metal has struggled this year amid rising US bond yields and optimism about economic recovery as vaccinations gain pace.

Gold tends to benefit from widespread stimulus measures from central banks because it is viewed as a hedge against inflation. Overnight, the Fed said it will continue with asset purchases and described inflation pressures as likely “transitory."

On the other hand, gold's rise could be capped due to weaker investor interest and concerns about Indian demand amid higher price and virus related restrictions, say analysts.

Overnight, US President Joe Biden, in his first speech to Congress, said laid out a sweeping $1.8 trillion package for families and education.

Among other precious metals, silver gained 0.6% to $26.34 per ounce while platinum was up 0.3% at $1,222.93. On gold traders' radar will be US GDP data due tonight.

Asian equity markets were higher today after the Federal Reserve painted a rosy picture of the US economic outlook, reiterating a pledge to stick to its guns with an ultra-low monetary policy.

Copper hits 10-year high above $10,000 a tonne

Copper, the world’s most important industrial metal, has traded above $10,000 for the first time in a decade as the rebound from the coronavirus pandemic unleashes a surge of demand from China and the developed world that could not be matched by supply.

After a wobble in March due to concerns about fresh lockdowns in Europe and a strengthening US dollar, copper has resumed the powerful rally that started a year ago when it sank to $4,300 a tonne.

The price has climbed 11 per cent since the start of the month and is now closing in on the record high of $10,190 set during a commodity boom in 2011. It reached $10,008 on Thursday.

Copper is used in everything from household appliances to electric vehicles and wind turbines. As the most cost-effective conductive metal, it is expected to play a crucial role in the shift away from hydrocarbons to more sustainable sources of energy, including solar and wind.

This has fuelled talk of a copper supercycle, or a prolonged period of strong demand that pushes prices to record new highs. In a recent report, Goldman Sachs declared copper as the “new oil” and said green demand will match, then quickly surpass, the incremental demand China generated in the 2000s.

However, the recent run in the price of copper reflects a coronavirus-induced supply-demand imbalance that could result in a 500,000-tonne reduction in refined metal stockpiles this year, according to Max Layton, analyst at Citi.

Outside of peak construction periods, it is highly unusual to see a significant draw of refined inventories. One occasion was in the first half of 2011 when copper hit a record high, and the other in 2003 and 2004 when China’s industrialisation started to gather pace.

On the supply side, copper production has been disrupted by coronavirus-related lockdowns and restrictions.

Escondida, the world’s biggest copper mine, recently reported an 8 per cent drop in production to 821,000 tonnes in the nine months to the end March. It also warned of a tough operating environment across Chile because of escalating Covid-19 infections.

While the increase in copper prices will eventually lead to new supply, it will take time before that comes on line. It takes about 10 years to bring a new copper mine into production and two to three years to expand an existing mine, according to analysts

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

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!

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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 other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of 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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