Bulls n Bears Daily Market Commentary : 02 August 2021

Mon Aug 2 15:35:57 CAT 2021

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Bulls n Bears Daily Market Commentary : 02 August 2021

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ZSE commentary

The ZSE opened the month of August in a session characterized by mixed
trading. Activity levels were low and total turnover declined significantly
to ZW$33.8 million from a trade of over 2.5 million shares. Activity levels
were slightly lower at 507 trades. Medtech was the most active stock at 79
trades followed by Star Africa and OK Zimbabwe at 44 and 37 respectively.
Medtech was the most liquid counter as it anchored volume traded trading 858
900 shares and Delta anchored value traded with a value of ZW$13.2 million
contributing 39% to total turnover. At close, the benchmark All Share Index
added a marginal 0.41% with 22 advancers and 11 losers while 3 counters
remained unchanged. The Top 10 Index was up by 0.50%. The Top 15 Index added
0.54%. The Medium Cap Index traded higher to 17 794.81 points appreciating
by 0.31% whilst the Small Cap Index shaded 0.11% to close at 236 973.49
points.

Leading the risers pack of the day was Get Bucks Microfinance Bank up by
19.83% followed by Art Corporation and First Mutual Holdings which added
4.88% and 3.57% respectively. General Beltings was up 2.95%. Leading in the
shakers' pack were Seed Co. and Medtech Holdings which shaded 8.92% and
4.56% respectively. Lafarge Cement Zimbabwe shaded 4.18%. The wine maker
African Distillers and Unifreight pared 2.50% and 2.18% respectively. The
Old Mutual Top Ten ETF closed at 191c down by 4.47% after 19 200 units with
a value of ZW$36 672 in 6 trades exchanged hands..- WealthAccess

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South Africa's rand falls, investors eye U.S. jobs data

JOHANNESBURG (Reuters) - South Africa's rand edged lower in early trade on
Monday, struggling for direction in the absence of local catalysts with
investors eyeing monthly U.S. jobs data due at the end of the week.

At 0610 GMT, the rand traded at 14.6200 against the dollar, 0.4% weaker than
its previous close.

The U.S. non-farm payrolls number due on Friday is "the key event of the
week", said Bianca Botes, director at Citadel Global.

The health of the labour market is an important prerequisite for the U.S.
central bank to taper monetary stimulus.

Last week, the rand clocked weekly gains thanks to a dovish tone from the
U.S. Federal Reserve meeting.

Riskier currencies such as the rand thrive on U.S. rates staying low because
they benefit from the interest rate differential that increases their appeal
for so-called carry trade, in which investors borrow in a low-yielding
currency to invest in higher-yielding assets.

In fixed income, the yield on the benchmark 2030 government bond was up 0.5
basis point to 8.83%, reflecting slightly weaker prices.

Nigeria

How to save naira from forex backlash, by experts

Unless urgent steps are taken by the Central Bank of Nigeria (CBN) to
address pressure points and engender enduring clarity in foreign exchange
(forex) management, the naira risk continuous fall and depreciation,
investment finance and economic research firms, warned yesterday.

The naira at weekend came down 2.5 per cent to close N517/$ at the parallel
market after touching about N525/$, following the immediate discontinuation
of forex sale to Bureau De Change (BDC) operators by the apex bank early
last week.

The experts agreed that the naira faces a tough future and the apex bank may
be walking itself into a repeat of the 2016 scenario when similar
uncoordinated decision led to more than 40 per cent depreciation in the
local currency.

This is as major banks yesterday confirmed that they had opened nationwide
dollar sales points with also an industry-wide four-step seamless dollar
purchase process.

Banks, such as Guaranty Trust, First Bank of Nigeria, United Bank for Africa
and Access Bank, have launched aggressive marketing communication to create
awareness on accessibility and process of obtaining dollar by retail users
nationwide.

Market pundits at Afrinvest West Africa; Cordros Capital, GTI Capital and
Cowry Asset Management among others said the naira could weaken further
unless the apex bank undertake a comprehensive review and take a holistic
approach to its forex management.

Afrinest listed five areas that must be addressed by the CBN to avoid a
repeat of the negative consequences that followed similar suspension for six
months in 2016.

In January 2016, the CBN suspended dollar sales to BDCs over similar
allegation of racketeering. It directive commercial banks to take up the
responsibility of facilitating forex sales to Nigerians for items not
included on its list of 41 banned items.

The decision failed because of insufficient forex supply to banks from CBN
and customers' apathy to banks' procedure kept demand pressure at the
parallel market elevated.

It was also compounded by a sharp decline in foreign capital flows as
foreign investors shunned Nigeria due to currency risk.

With these, the foreign reserves and the official exchange rate fell by 4.0
per cent and 43.7 per cent respectively to $26.5 billion and N283 per dollar
over the six months that the suspension lasted.

These developments fuelled a steep rise in inflation to 16.6 per cent at the
end of June 2016 from 9.6 per cent in January.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar languishes near one-month low as investors eye U.S. jobs, RBA

(Reuters) - The dollar hovered just above a one-month low on Monday, with
traders holding tight positions heading into a busy week that includes U.S.
jobs data and an Australian central bank decision.

The dollar index , which measures the greenback against six major peers,
stood at 92.065, down slightly from Friday, when it dipped as low as 91.775
for the first time since June 28.

The index dropped 0.88% last week, its worst performance since early May,
after Federal Reserve Chair Jerome Powell reiterated mid-week that rate
increases were "a ways away" and the job market still had "some ground to
cover." read more

Fed Governor Lael Brainard echoed those comments on Friday, saying
"employment has some distance to go."

The dollar index last month hit its highest since the start of April at
93.194 as traders positioned for a start to tapering as soon as this year.

Dollar net long positions rose to their highest level since early March of
last year in the week to July 27, according to Reuters calculations and the
latest data from the Commodity Futures Trading Commission.

Economists in a Reuters poll forecast a 926,000 job increase in July's
non-farm payrolls number, due Friday, which would be the biggest increase
for 11 months. The U.S. unemployment rate is forecast to fall to 5.7%, from
5.9% in June.

The dollar was little changed at 109.67 yen on Monday, and slightly weaker
at $1.1873 per euro .

National Australia Bank predicts the euro could rise toward $1.20 before
pushing even higher as euro-area growth quickens amid an accelerating
vaccination drive.

Sterling rose 0.11% to $1.39105, with a policy announcement by the Bank of
England due on Thursday.

The Aussie dollar was flat at $0.7347 before the Reserve Bank of Australia
(RBA) meets on Tuesday, when it is widely expected to backtrack on a
previous decision to taper stimulus, with protracted COVID-19 lockdowns
dragging on growth.

In cryptocurrencies, bitcoin slipped 0.36% to trade below $40,000, after
sliding 5.67% over the weekend.

Smaller rival ether experienced opposite fortunes, holding gains from the
weekend to trade around $2,550. It climbed as high as $2,699 on Sunday for
the first time in almost two months, up from as low as $1,717.17 less than
two weeks ago.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold loses its lustre as investors chase reflation trades

Investors swapped gold for assets tied to the post-pandemic economic
recovery in the first half of the year, leading to a 10 per cent drop in
demand for the precious metal, according to a new report.

The World Gold Council said the decline was driven by gold-backed exchange
traded funds, which had 129 tonnes of net outflows in the six months to June
- the biggest decline since 2014 - as investors become less bullish about
the metal and back reflation trades.

While sentiment towards gold picked up in the second quarter and consumer
buying increased, it was not enough to offset the heavy outflows seen
earlier in the year and gold demand fell 10 per cent year on year in the
first half of 2021 to 1,833 tonnes, the report said.

Gold has continued to disappoint, failing to ramp up despite rising concerns
about inflation and fears about a slowdown in growth due to the spread of
the more contagious Delta variant of coronavirus. Gold has usually been
viewed by investors as a hedge against broad-based price rises.

After rising to a year-high of $1,916 a troy ounce in May, it has fallen
back to $1,827. Year to date, the metal is down 6 per cent and remains
adrift of its record high of above $2,000 reached nearly a year ago.

Investors are turning to other commodities such as base metals that are tied
to economic growth, or other assets such as inflation-linked bonds, or
equities to hedge against inflation, Rebecca Patterson, director of
investment research at the hedge fund Bridgewater Associates, said in a
webinar last week.

Gold-backed ETFs only had "modest" inflows of 40.7 tonnes during the second
quarter, said the WGC, as some investors became more concerned about the
outlook for growth and inflation.

Consumer demand for gold in the form of jewellery, gold bars and coins has
rebounded this year, the report said. It added that central banks remained
strong buyers, purchasing a net total of 333.2 tonnes of gold in the first
half of the year - 39 per cent above the five-year average for the period -
driven by Thailand, Hungary and Brazil.

Copper futures rise on spot demand

NEW DELHI: Copper prices on Friday traded up by 0.15 per cent to Rs 758.65
per kg in the futures market on the back of a pick-up in the spot demand.

On the Multi Commodity Exchange, copper contracts for delivery in August
traded higher by Rs 1.10, or 0.15 per cent, to Rs 758.65 per kg in a
business turnover of 3,994 lots.

Analysts attributed the rise in copper prices to raising of bets by
participants driven by a pick-up in the spot demand.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

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
the securities of more established companies. Neither Faith Capital nor any
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for guideline purposes only and sourced from third parties.

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