Bulls n Bears Daily Market Commentary : 04 January 2021

Mon Jan 4 15:20:42 CAT 2021

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Bulls n Bears Daily Market Commentary : 04 January 2021

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

ZSE commentary

The All Share Index opened the year 2021 with a loss of 6.97 points at 2 629.37 points (-0.26%). All the indexes on our review closed the day in the negative territory The Top 10 Index, Top 15 Index and the Small Cap Index registering 1.02%, 1.46% and 0.32% losses respectively. However, the Medium Cap Index added 1.33% by close of trading reversing some of the losses. The ZSE opened the year with a market capitalization of ZWL$314.19 billion.

Gains were spurred by General Beltings Holdings , Lafarge and First Mutual Properties which strengthened by 20.00% to close at 24c, 960c and 324c respectively. TSL added 19.79% to close at 1725c and Dairibord settled at 1310c after gaining by a margin of 19.41%. gains were offset by Dawn which closed the day at 59.07c following a decrease of 17.96%, Miekles edged down by 13.45%, Padenga shed 9.89% to 2101.47c, simbisa was 8.97% down to 1201.79c while SeedCo settled at 2300c after easing 8.20%. The first ever ETF to be listed on the ZSE traded today, a total of 4 732 234 units for a value of ZWL$4 742 728.82. OMTT.zw gained 0.22% to close at 100.22c Total turnover was at ZW$13 895 327.45 in 175 trades. CBZ led the turnover contribution at ZW$4 076 500. Among the counters that participated in trading, 14 counters declined against 16 that appreciated. Total trades were 175 with 7 counters remaining unchanged and 14 with zero volume.- wealthaccess

Global Currencies & Equity Markets

South Africa

Rand and stocks kick off new year on the front foot

JOHANNESBURG - The rand kicked off 2021 on a strong note in early Monday trade, as investors pinned their hopes on a Covid-19 vaccination programme, while firmer commodity prices lifted stocks.

At 0712 GMT the rand was 0.61 percent firmer at 14.5637 against the dollar from a Dec. 31 close at 14.6700.

Health Minister Zweli Mkhize said on Sunday that South Africa aims to get vaccines by next month but is still in talks with pharmaceutical companies and no deals have been signed yet, amid growing criticism of the government's response.

A resurgence in coronavirus infections has been driven partly by a new variant called 501.V2. Daily new cases hit a record 18,000 several days ago but have dipped slightly since.

Investors are still counting on central banks to keep money cheap while the global economy awaits a mass rollout of coronavirus vaccines to return to substantial growth.

A softening in the dollar also boosted emerging-market currencies.

South African stocks also firmed, lifted by commodity shares as gold prices hit an eight-week peak on Monday. Other commodities including oil, iron ore and copper also began 2021 on the front foot as vaccine rollouts and further fiscal support hopes spurred demand and boosted prices.

The Johannesburg All-Share index was 0.87 percent firmer at 0717 GMT, while the Top-40 index was up 0.99 percent.

Bonds weakened slightly, with the yield on the benchmark 2030 government issue up 0.5 basis points to 8.740 percent.

REUTERS

Nigeria

Naira falls to record low at NAFEX window as CBN adjusts exchange rate again

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N410.25/$1.

Forex turnover rose by 43%, as the Naira’s exchange rate at the NAFEX window hit a record low, depreciating significantly against the dollar to close at N410.25/$1 during intra-day trading on Wednesday, December 30.

Also, the Naira remained stable against the dollar – closing at N470/$1 at the parallel market on Thursday, December 31, 2020 – as the CBN moves towards exchange rate unification with the devaluation of the naira at NAFEX market.

The Association of Bureau De Change Operators (ABCON) has appealed to the Central Bank of Nigeria (CBN), to make BDCs payout agents for diaspora remittances.

·         According to information from Abokifx – a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the Dollar to close at N470/$1 on Thursday – the same rate that it exchanged for on Wednesday, December 30.

·         The local currency had strengthened by about 7.8% within one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers.

·         This is to boost the supply of dollars in the foreign exchange market and reduce the high demand for forex by traders.

·         However, the gains appear to have been completely erased with the recent crash of the exchange rate.

·         The CBN has sold over $1 billion to BDCs since they resumed forex sales on Monday, September 7, 2020.

·         This was expected to inject more liquidity into the retail end of the foreign exchange market and discourage hoarding and speculation.

·         However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.

·         Despite the CBN’s intervention, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

NAFEX

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N410.25/$1.

·         This represents a N16.25 drop when compared to the N394/$1 that it exchanged for on Wednesday, December 30.

·         The opening indicative rate was N392.88 to a dollar on Thursday. This represents a 7 kobo gain when compared to the N392.95 that was recorded on Wednesday.

·         The N412.05 to a dollar was the highest rate during intra-day trading before, it still closed at N410.25 to a dollar. It also sold for as low as N385/$1 during intra-day trading.

·         Forex turnover: Forex turnover at the Investor and Exporters (I&E) window increased by 43%  on Thursday, December 31, 2020.

·         According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $164.81 million on Wednesday, December 30, 2020, to $235.75 million on Thursday, December 31, 2020.

·         The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate their funds.

·         The increase in dollar supply after last week’s drop reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.

·         The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.

·         Total forex trading at the NAFEX window in the month of September was about $1.98 billion, compared to $843.97 million in August.

·         The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.

·         Some members of MPC of the CBN had expressed serious concerns over the increasing demand pressure in the country’s foreign exchange market. This is an obligation of manufacturers to their foreign suppliers, which continues to increase in the face of dollar shortages.

 <mailto:info at bulls.co.zw> 

Global Markets

COVID-19 proof risk sentiment drags dollar near 2018 lows

LONDON (Reuters) - The U.S. dollar held near mid-2018 lows on Monday as bullish sentiment across global markets prompted investors to buy riskier currencies such as the Chinese yuan, despite a resurgent pandemic.

Low U.S. interest rates, massive U.S. budget and trade deficits and a belief that rebounding world trade will drive non-dollar currencies higher have set the dollar on a downward course.

The dollar index posted its first annual los9s since 2017 last year. It has fallen roughly 13% from a three-year peak at the height of the pandemic panic in March.

It was last 0.14% weaker at 89.640 and not far above last week’s more than two-and-a-half-year low of 89.515.

Manufacturing activity expanded in Japan, South Korea and Taiwan, according to PMI surveys, the latest indication that manufacturers in the region continue to recover from the damage caused by the COVID-19 pandemic last year.

The Chinese yuan rose over 0.9% to a 30-month high of 6.4693 per dollar.

Chinese factory activity continued to accelerate in December, though the PMI missed forecasts at 53.0.

The safe-haven yen rose 0.4% to 102.90 per dollar, and looked to test resistance at 102.55, after Japanese Prime Minister Yoshihide Suga said his government was mulling a state of emergency in Tokyo as coronavirus cases rise.

The softening dollar boosted commodity prices and pushed bitcoin as well as several Asian currencies to milestone highs.

The Australian and New Zealand dollars each gained close to 0.4% to hold just below multi-year peaks. [AUD/]

The euro, which had dipped on New Year’s Eve profit-taking, rose 0.4% to $1.2270 while traders waited for a fresh batch of economic indicators throughout the region.

Sterling, still boosted by Britain’s trade deal with the European Union, gained to $1.3678, levels last seen in early 2018.

Investors are now focused on a runoff election in the U.S. state of Georgia on Tuesday that will determine control of the Senate.

Jeffrey Halley, a market analyst at Oanda warned his clients against sharp moves in the dollar after that election.

Minutes of the Federal Reserve’s December meeting due on Wednesday should offer more detail on discussions about making the Fed’s forward policy guidance more explicit and the chance of a further increase in asset buying this year.

The data calendar includes manufacturing surveys across the globe, which will show how industry is coping with the spread of the coronavirus, and the closely watched ISM surveys of U.S. factories and services.

Bitcoin on Monday was off Sunday’s record high of $34,800 at $32,340. An enormous rally has carried it up 800% since March as institutional investors seem to have turned buyers.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper rises on weak U.S. dollar, upbeat broader markets

(Reuters) - Copper and most other industrial metals rose on Monday as a weaker U.S. dollar boosted the appeal of the greenback-priced metals, with sentiment aided by gains in the commodities markets on hopes of a recovery in the global economy.

Three-month copper on the London Metal Exchange climbed 1.9% to $7,910 a tonne by 0716 GMT, while the most-traded February copper contract on the Shanghai Futures Exchange ended up 0.3% to 58,160 yuan ($9,001.01) a tonne.

LME nickel jumped as much as 5% to $17,450 a tonne, a two-week high, while zinc advanced 1.1% to $2,781.50 a tonne. ShFE nickel climbed 3.1% to 128,210 yuan a tonne while ShFE lead was up 2% to 15,045 yuan a tonne.

The U.S. dollar kickstarted the new year by slipping broadly, while bitcoin hovered near a record high.

Other commodities, ranging from iron ore to oil and grains, also gained as optimism from vaccine rollouts and global fiscal support underpinned their prices.

FUNDAMENTALS

* China’s Caixin/Markit Manufacturing Purchasing Managers’ Index was at 53.0 in December, indicating factory activities growth but down from November’s 54.9.

* China’s central bank issued a regulation last week to cap property loans by banks to guard against any over-lending to the property sector.

* Chinese electric vehicle battery firm GEM Co Ltd aims to double its stake to 72% in a nickel at Indonesia’s Morowali Industrial Park.

* For the top stories in metals and other news, click or ($1 = 6.4615 yuan)

.

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 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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