Bulls n Bears Daily Market Commentary : 05 February 2021

Fri Feb 5 16:42:36 CAT 2021

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Bulls n Bears Daily Market Commentary : 05 February 2021

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

ZSE commentary

The All Share Index appreciated 2.73% to close at 4012.47 points. The Top 10
Index and the Top 15 Index registered 1.98% and 2.22% gains respectively.
The Medium Cap Index was up by 4.24% while the Small Cap index went up by
5.71% by close of trading. The ZSE market capitalization was at ZWL$481.67
billion as it rallies to hit the $500 billion dollar mark.

Gains for the day were registered in Edgars and Unifreight which
strengthened by 20% to close at 138c and 19.95% to close at 114.25c
respectively. Proplastics added 19.85% to close at 2385c and Lafarge settled
at 1880c after gaining by 19.75%. Gains were offset by losses recorded in
CBZ  which closed the day at 9239.50c following a decrease of 9.90% and Dawn
shaded 2.23% to 40.33c. Other losses were also recorded in Masimba which
edged down by 1.84% to 1600c, while Zimre shaded 1.78% to 264.21c and the
sugar manufacturing giant Hippo was 1.40% down to 10000c.

On the ETF market, the Old Mutual TOP 10 fund saw 3 trades valued at
ZWL$60,778.80 from 33 766 units traded. This led to a gain of 13.02% to 180c
as the top 10 index gained 1.98%. Total turnover was at ZW$101,648,498.88 in
485 trades. Star Africa was the most active with 51 trades. The market
breath was positive after 27 stocks appreciated while 10 depreciated. Total
trades were 485 with 5 counters remaining unchanged and 9 with
zero.-wealthaccess

Global Currencies & Equity Markets

South Africa

South African Rand Gains as Traders See Signs of Fiscal Reprieve

The rand is headed for its biggest weekly gain since mid-December as
investors warmed to signs that South Africa's fiscal deficit may be lower
than expected as tax revenue overshoots.

The rand traded 0.2% firmer at 14.9833 per dollar by 8:34 a.m. in
Johannesburg, bringing its gain this week to 1.2%, the best performance
among emerging-market currencies after Turkey's lira. Bond yields extended a
drop to the lowest in almost three years.

South African tax collections are expected to overshoot budget estimates,
which could take some pressure off the National Treasury as it tries to rein
in a fiscal deficit that's ballooned due to the coronavirus pandemic. Debt
issuance is also higher than budgeted, with the government taking advantage
of strong demand to boost weekly sales.

Expectations for some improvement in S. Africa's budget are helping the rand

Tax revenue for the first nine months of the fiscal year was 10.6% lower
than in the same period in the previous year, but better than the 17.9%
shortfall predicted for the full year in October's medium-term budget policy
statement.

Rashaad Tayob, a money manager at Abax Investments Ltd. in Cape Town said
with revenue better than expected, it could be feasible to reduce issuance
at the weekly nominal and inflation-linked bond auctions by as much as 2
billion rand ($134 million), from 8.6 billion rand currently. The Treasury
said this week it won't cut the amount in the current fiscal year.

Maintaining the current issuance of bonds would mean banks and pension funds
would find it difficult to absorb it all, keeping the yield curve steep,
Tayob said. Still, the Treasury may want to keep funding levels high.

Nigeria

Naira falls at NAFEX window as lower dollar supply piles more pressure on
forex market

The exchange rate between the naira and the dollar depreciated substantially
closing at N397.63/$1 at the NAFEX window.

On February 4, 2021, the exchange rate between the naira and the dollar
depreciated substantially closing at N397.63/$1 at the NAFEX (I&E Window)
where forex is traded officially.

This is as dollar supply dropped by 9.3% as demand piles more pressure on
the foreign exchange market.

Also, the exchange rate at the black market where forex is traded
unofficially maintained its stability at N480/$1. The exchange rate at the
parallel market closed at N480/$1 on the previous trading day of February 3,
2021.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar Morphs Into Risk-On Currency Amid U.S. Growth Hopes

Soaring hopes for the U.S. economic recovery seem to be transforming the
dollar from a haven asset to the risk-on currency of choice.

The Bloomberg Dollar Spot Index is on track for its strongest gain since
October this week. It's rising in tandem with global equities after three
weeks of divergence. Their inverse correlation has now weakened to minus
0.46 from a peak of minus 0.73 in July.

The dollar's turnaround is shaking up a consensus on Wall Street that a
strengthening recovery would weigh on havens such as the dollar. The
opposite appears to be happening, as the prospect of more-generous U.S.
government spending and rising Treasury yields have spurred the currency.

Currency Strategists Reassess Bearish Dollar Calls

It's still early days to call a trend, and hedge funds and asset managers
remain bearish, according to aggregated data from the Commodity Futures
Trading Commission.

Dollar's inverse correlation with global stocks has been weakening

The rally has rippled across global markets, with the greenback breaking
major resistance lines versus other currencies. It stormed through the
100-day moving average against South Korea's won.

The dollar also climbed above its 200-day moving average against the yen --
the traditional safe haven that is often used to fund carry trades -- for
the first time since June on Friday.

Dollar-Yen Breaks Through Key Milestone With Room to Run: Chart

So far this year the dollar has already advanced 2% versus the yen, to
105.36. This contrasts with calls for a drop toward the key psychological
threshold of 100 yen among forecasters such as Goldman Sachs Group Inc. and
JPMorgan Chase & Co.

Dollar breaks above key resistance levels against yen and won

The outlook for a further rise in Treasury yields could accelerate gains in
the greenback.

The U.S. 10-year will climb to 1.50% by year-end from its current levels
around 1.14%, according to DBS Group Holdings Ltd., which sees the world's
largest economy as well-placed to recover from the pandemic.

And a widening yield differential over Japan should help propel the dollar
to 108 by the end of June, said Masafumi Yamamoto, chief currency strategist
at Mizuho Securities Co.

In his view, the combination of U.S. fiscal stimulus, slowing coronavirus
infections and vaccine distribution is "a perfect storm."

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price sinks below $1,800 to 2-month low

Gold prices slipped on Thursday as both the dollar and US Treasury yields
strengthened, while the markets still await clarity on the US fiscal
stimulus measures.

Spot gold dropped below the $1,800/oz mark for the first time since late
November, down 2.5% to $1,787.95/oz by 11:30 a.m. EST. US gold futures also
declined 2.5% to $1,788.60/oz in New York.

Meanwhile, gold's sister metal silver also retreated - falling 2.9% to
$26.13/oz - with the market facing correction following the Reddit-fueled
retail buying frenzy that sent prices to an 8-year high earlier this week.

Stronger dollar, yields

Making bullion more expensive for those holding other currencies, the dollar
scaled a two-month peak, while 10-year Treasury yields rose to a three-week
high.

Gold is considered a hedge against inflation from large stimulus measures,
but higher yields challenge that status because they increase the
opportunity cost of holding non-yielding bullion.

Investors are also focused on the $1.9 trillion US coronavirus aid plan
passed by the US House without Republican support.

After ending 2020 with two consecutive months of outflows, gold-backed ETFs
once again saw inflows ($1 billion, or 13.8t) during the month of January,
according to new data released Thursday by the World Gold Council.

Global AUM for gold ETFs now stands at $226 billion (3,765t), just 4% shy of
the intra-month record set in November 2020 ($244 billion).

Buying into ETFs was a major factor in gold's strong performance in 2020,
with WGC data showing a massive 120% surge in inflows to 877.1t for the
year.

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
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