Bulls n Bears Daily Market Commentary : 20 January 2021

Wed Jan 20 20:15:08 CAT 2021

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Bulls n Bears Daily Market Commentary : 20 January 2021

ZSE commentary

Dawn block trade highlights mid-week session… A block trade of circa 2.24bln shares worth $1.08bln in Dawn highlighted the mid-week session. The trade propelled both the volume and value aggregates higher as it claimed 99.39% of the former and 91.82% of the latter. Resultantly, total volumes traded in the session ballooned 11,102% to $2.25bln while, the turnover enhanced 1,045% to $1.17bln. Foreign participation remained depressed as purchases accounted for a mere 0.12% of the value outturn while, disposals added 3.18% of the same. The market stretched gains in mid-week session to see the mainstream All Share Index adding a further 2.90% to 2769.22pts while, the Industrials put on 2.87% to 9251. 79pts. The Minings were 4.67% higher at 3766.49pts with the Top Ten ticking up 1.81% to 1745pts. 

TSL and Getbucks were the session’s best performers after charging a similar 20% to see them closing at respective prices of $19.2000 and $0.1800. Simbisa followed on a 14.91% rise and closed at $12.1000 on firming demand while, retailer OKZIM added 10.09% to reach a high of $10.0000. Proplastics completed the top five winners of the day on a 9.95% increase to end at $11.0500. Topping the losers of the day was property concern Mash which slumped 11.12% to $0.8041 while, AFDIS lost 9.09% to $20.0000. Heavy cap CBZ found its way in the loser’s zone as it dropped 7.13% to $90.0000, where demand could be established. Ariston was 3.12% down at $1.2110 while, Dairibord eased 2.59% to $15.0006. efesecurities

Global Currencies & Equity Markets

South Africa

Rand strengthens as dollar slips

JOHANNESBURG - The South African rand rode the tailwinds of recovering risk sentiment while the dollar toppled from a one-month high according to NKC Research.

While we retain a bullish outlook on the rand, shaped by a policy-led softening dollar narrative, the short-term risks to high-beta are now more elevated than we estimated in December.

In turn, we expect the rand’s carry appeal allure to dim somewhat with the MPC seen as trimming the repo rate by 25 bps this week.

At the close of local trade, the rand quoted 1.21 percent stronger at R14.98/$, after trading in range of R14.92/$ - R15.20/$. The rand traded steady overnight. Expected range today R14.80/$ - R15.20/$.

South African bourse

The JSE All Share (-0.17 percent) ended lower yesterday, dragged by losses in large gold (-3.88 percent) stocks. In the overall emerging market sphere, the MSCI Emerging Market Index (+1.01 percent) traded in the black buoyed by optimism over the incoming Biden administration.

Brent crude oil

The Brent oil price rose during yesterday’s trading session fuelled by stimulus optimism, boosting fuel demand prospects, which countered concerns about renewed economic lockdowns. At the close of local trade, benchmark Brent crude futures quoted 1.07 percent higher at $55.48pb. Crude prices traded firmer during Asian trade this morning.

BUSINESS REPORT ONLINE

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Global Markets

Yellen Shows Dollar Shift, China Toughness, Change on Climate

The U.S. under Joe Biden is adjusting its dollar policy, giving no sign of an immediate shift on China strategy and putting a new focus on climate change. Those are some of the takeaways from Tuesday’s Senate confirmation hearing for the president-elect’s Treasury secretary pick, Janet Yellen.

The three-hour Senate Finance Committee hearing also provided a potential timeline for Yellen’s confirmation. Democratic Senator Ron Wyden, the panel’s incoming chairman, unveiled a scheduling agreement that he said could see a vote on Yellen on the Senate floor on Thursday. That would put her in line to be among Biden’s first nominees to take office.

Yellen, a former Federal Reserve chair, countered criticism from Republicans on the committee alarmed at the size of Biden’s $1.9 trillion Covid-19 relief proposal, saying the U.S. will be better off in the long run if the government contains the Covid-19 pandemic, assists Americans suffering because of it and invests in efforts to build infrastructure and mitigate climate change.

Following are some highlights from the hearing:

Deficit Financing

Yellen said a key metric to watch is the cost of debt interest payments relative to the size of gross domestic product. It’s now below where it was in 2008 during the financial crisis, she said. That reinforces the argument for using deficit financing to help the pandemic-battered economy, she said.

Questioned by South Dakota Senator John Thune, the chamber’s No. 2 Republican, she did say, “I agree with you that it’s essential that we put the federal budget on a path that’s sustainable.” She nodded elsewhere in the hearing to Biden’s plans to boost some taxes in time.

Yellen also said she’d take a look at proposals to launch a 50-year Treasury bond. The current longest-dated security is a 30-year maturity.

Dollar Policy

Yellen disavowed using exchange-rate policy to obtain a competitive advantage, a marked difference from President Donald Trump and outgoing Treasury Secretary Steven Mnuchin, who repeatedly expressed preference for a weaker dollar. At the same time, she didn’t say she backs a “strong” dollar -- the policy that the U.S. had starting in the mid-1990s.

Yellen also said she would work “to oppose any and all attempts by foreign countries to artificially manipulate currency values to gain advantage in trade.”

China Stance

Yellen presented what sounded from her like a new tone on China, after the more academic language she used in the past -- in a sign of some continuity from the Trump administration.

Democratic Priorities

Biden’s Treasury pick highlighted priorities on which Democrats have long sought action, including measures to address climate change and raising the minimum wage.

She pushed back against Republican protests over Biden’s plan to raise the federal minimum wage to $15 an hour from $7.25 -- a move that would result in a dramatic increase in about 20 states that don’t enforce a higher minimum pay.

And she appealed for inclusion of direct aid to state and local governments in the next Covid-19 relief package, something Democrats unsuccessfully fought for in last month’s aid legislation.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices today inch higher but down ₹7,000 from record highs, silver rises

Gold and silver prices edged higher in Indian markets, tracking higher global rates. On MCX, February gold futures rose 0.27% to ₹49,115 per 10 gram while silver gained 0.3% to ₹66,234 per kg. In the previous session, gold and silver had risen 0.2% and 0.9% respectively. In global markets, gold rates moved higher following a weaker US dollar amid expectations of a massive US stimulus.

Janet Yellen, US President-elect Joe Biden's Treasury Secretary nominee, on Tuesday at her confirmation hearing urged lawmakers to "act big" on coronavirus relief spending. This buttressed gold's appeal as an inflation hedge and pressured the dollar. At the same time, Yellen, the former US Fed chairperson, did not say she backs a “strong" dollar.

Spot gold rates today gained 0.5% to $1,848.30 per ounce while the dollar index fell 0.14% to 90.345. The US treasury yields also fell. Lower Treasury yields reduce the opportunity cost of holding non-yielding bullion.

Joe Biden is set to be sworn into office today and investors will be focused on his $1.9 trillion stimulus package plan to boost the economy.

Gold is considered a hedge against inflation and currency debasement that can result from widespread stimulus. After strong gains last year, gold has declined this year as Treasury yields gained along with the US currency. In August last year, gold had hit a record high of ₹56,200 per 10 gram in global markets.

Among other precious metals, silver climbed 0.9% to $25.42 an ounce while platinum rose 1.2% to $1,096.23 and palladium gained 0.4% to $2,361.79.

The World Gold Council in its outlook for this year said that the investment demand for gold will remain supported this year as investors navigate potential portfolio risks "including ballooning budget deficits, inflationary pressures, and market corrections amid already high equity valuations."

Gold consumption should benefit from the nascent economic recovery, especially in emerging markets, it added.

.

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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