Bulls n Bears Daily Market Commentary : 05 January 2021

Tue Jan 5 16:48:10 CAT 2021

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Bulls n Bears Daily Market Commentary : 05 January 2021

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ZSE commentary

The All Share Index shaded 46.35 points to close at 2 583.03 points (-1.76%). The Top 10 Index and the Top 15 Index registered -3.22% and -3.07% losses respectively. However, the Medium Cap Index and the Small Cap index added 1.20% and 0.54%  respectively by close of trading. The ZSE market capitalization was at ZWL$308.2 billion. Gains were spurred by TSL and ZBFH which strengthened by 20.00% to close at 2070c and 2880c respectively. Nampak added 19.93% to close at 273.75c and Unifreight settled at 22.3c after gaining by a margin of 19.89%.

Gains were offset by Rio Zim which closed the day at 1200c following a decrease of 19.74%, Wildale edged down by 15.63%, Delta shed 9.63% to 2056.11c, Dawn Properties  which is set for delisting was 8.58% down to 54c while Art settled at 450c after easing 5.72%. OMTT.zw ETF traded a total of 12 380 867 units for a value of ZWL$12 380 867 easing 0.2195% to close at 100c. Total turnover was at ZW$12 966 174.17 in 181 trades. Cassava was the most active on 20 trades and it led both the volume and turnover contribution at 780 900 shares and ZW$4 844 628 respectively. Among the counters that participated in trading, 23 counters declined against 8 that appreciated. Total trades were 181 with 5 counters remaining unchanged and 15 with zero volume.-wealthaccess

Global Currencies & Equity Markets

South Africa

South African Rand Unravels as Lockdown Speculation Swirls 

The South African Rand was unravelling on Tuesday and remained the worst performing major emerging market currency for the week amid speculation suggesting President Cyril Ramaphosa could announce a new national shutdown later this week. 

South Africa's Rand was lower against all major developed and emerging market rivals for the session as well as the recent week on Tuesday as local press reported that President Cyril Ramaphosa is expected to address the nation on Wednesday night. 

Speculation is that he could announce an intention to return South Africa to a more stringent form of 'lockdown' after new coronavirus infections and deaths both threatened to set new record highs this week, and as uncertainty remained over the scale of the challenge posed by a new, more infectious variant of the disease in South Africa.

The new strain of coronavirus detected in South Africa, currently referred to as 501.V2, is more infectious than other variants and may even be resistant to the vaccines which being rolled out in Europe, North America and now South Africa too. Government scientists are investigating what implications it will have for the effectiveness of existing vaccines, while also hedging their bets by attempting to bring forward the procurement of as many doses as possible.

Health Minister Dr Zweli Mkhize said on Sunday the government hopes to have some doses available as early as February where before South Africa wasn't expected to take delivery the vaccine until nearer to mid-year. An accelerated vaccine rollout is essential for minimising the time spent under lock and key by the already-fragile economy.

Already, and just last week, the country and economy was moved to "an adjusted Level 3," of a five-stage alert system under which indoor and outdoor gatherings have been banned, a night time curfew has been imposed and mask wearing is mandatory in public. Supposedly non-essential businesses are required to close from 20:00 while the "sale and transportation" of alcohol is banned, with South Africans facing fines and possible imprisonment for noncompliance.

The Rand was an outperformer in late 2020 as a Dollar sell-off and fledgling economic recovery drew international investors toward the country's comparatively high bond yields, but the resurgent virus and resulting containment measures have seen the currency go from hero to zero in recent weeks.

Given the extent of the Rand's recent gains, any announcement of a fresh lockdown later this week could see the South African currency sell-off further. Previously USD/ZAR had been attempting to break beneath an important level of technical support around 14.50 on the charts although recent weeks have seen the exchange rate turn higher.

Rudolph says Rand's uptrend is likely to remain intact so long as USD/ZAR continues to trade below 16.49, a level not seen since mid-October.

The nascent USD/ZAR rebound has also helped to lift the Pound-to-Rand rate back above the 20.0 level in recent days, despite a widespread underperformance by the Pound against other major currencies.

Sterling was lower against all major rivals Tuesday after the UK was placed back into 'lockdown' overnight in response to its own new, more infectious strain of coronavirus, which has ensured that the British currency got little respite after UK and EU leaders agreed terms of the future relationship last month. 

Speculation ahead of what is now the UK's third national shutdown ensured global markets got off to a shaky start during the first trading session of 2021 on Monday as investors weighed the disruption that it might yet cause in other countries and economies. The shutdown is expected to weigh heavily on the UK's services-dominated economy in the first quarter, following a year in which many economists expect GDP to have contracted by more than -10%.

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 Thursday, December 31.

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.

 <mailto:info at bulls.co.zw> 

Globla Markets

Rupee slips 13 paise to 73.15 against the US dollar in early trade

The rupee depreciated by 13 paise to 73.15 against the US dollar in opening trade on Tuesday tracking the muted opening in domestic equities.

At the interbank forex market, the domestic unit was trading in a narrow range. It opened at 73.02 against the US dollar and fell to 73.15 against the greenback, registering a fall of 13 paise over its previous close.

On Monday, the rupee appreciated by 9 paise to close at a four-month high of 73.02 against the US dollar.

Most Asian currencies were flat against the greenback this Tuesday morning, it added.

The UK has issued stay-at-home orders for citizens as it goes into a lockdown which is expected to last until mid-February. The Sterling fell about 150 pips overnight from close to 1.37, said Abhishek Goenka, Founder and CEO, IFA Global.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 89.76.

Traders said market participants remained cautious ahead of the outcome over the runoff elections in Georgia that will determine control of the US Senate.

In addition, traders will be eyeing the minutes of the December Federal Reserve meeting, the US ISM manufacturing and non-manufacturing data and the US monthly jobs report.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 174.91 points lower at 48,001.89, and the broader NSE Nifty was down 61.30 points at 14,071.60.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,843.22 crore on a net basis on Monday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, fell 0.18 per cent to USD 51.00 per barrel.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices today fall, a day after surging ₹1,200; silver rates rise

In the previous session, gold had surged ₹1,200 per 10 gram while silver had jumped ₹2,000 per kg

Gold and silver prices were mixed today in Indian markets, a day after both the precious metals had surged following a global rally. On MCX, gold futures were down 0.03% to ₹51,410 per 10 gram after a ₹1,200 surge in the previous session. Silver futures were up 0.48% to ₹70,373 per kg. In the previous session, silver had surged about ₹2,000 per kg.

In global markets, gold prices eased today after after 2.5% jump in the previous session. The US dollar strengthened today from a two-year low ahead of Senate runoff elections in Georgia. The dual runoff elections in Georgia will decide which party controls the US Senate. A win by Democrats would make it easier for President-elect Joe Biden to push policies.

Spot gold was down 0.2% to $1,938.11 per ounce. Among other precious metals, silver was little changed at $27.22 an ounce while platinum lost 0.6%.

The UK has announced a new national lockdown to contain a surge in COVID-19 cases, while New York registered its first case of the more contagious, 'UK' variant of stimulus.

Gold prices had surged on Monday after the dollar slipped to its lowest in over two years. Gold traders will be looking ahead to the minutes of US Federal Reserve's last policy meeting, due on Wednesday.

Gold is considered a hedge against inflation and currency debasement, likely to result from large stimulus measures and lower interest rates. In 2020, gold had registered gains of about 25% as central banks and governments announced large stimulus measures to protect the economy from the impact of coronavirus.

Prior to Monday's rally, gold prices had remained in narrow range over two weeks. "Gold prices have recovered from support levels amid growth concerns on worries over new strain of corona virus spreading. The weaker dollar also boosted buying in gold prices with stimulus announcements from US. The rising COIVD-19 cases across world and lockdown measures in UK and Europe may keep risk premium high in gold prices," HDFC Securities said in a note.

.

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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