Bulls n Bears Daily Market Commentary : 25 January 2021

Mon Jan 25 14:07:33 CAT 2021

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Bulls n Bears Daily Market Commentary : 25 January 2021

ZSE commentary

The All Share Index registered its biggest single day gain this year in today’s session closing at 3 521.68 points higher. The Top 10 Index and the Top 15 Index registered 10.92% and 10.89% gains respectively. The Medium Cap Index added 11.52% to close at 7292.78 points. The Small Cap Index also added 3.94% by close of trading. The ZSE market capitalization was at ZWL$419.5 billion.

Gains for the day were registered in Hippo and Unifreight which strengthened by 20% to close at 12000c and 20% to close at 32.10c respectively. General Beltings  added 20% to close at 21.60c and the property and assurance firm First Mutual Properties and First Mutual Life settled at 480c and 1259.99c respectively after gaining by a margin of 20%. Dawn eased 10.86% to 49.03c ahead of the release of its delisting road map next week. Gains were also offset by RTG which closed the day at 170c following a decrease of 9.26%, Medtech edged down by 6.27%, Star Africa shaded 2.13% to 29.36c and ZBFH which was 0.05% down to 3997.96c. OMTT Top 10 ETF traded ZW$119 027.35 translating to 81 963 units closing with a market cap of ZW$116.2 million. Total turnover was at ZW$131 515 520.50 in 450 trades. The market breath was positive after 33 stocks closed higher and 6 traded in the negative. Total trades were 450 with 2 counters remaining unchanged and 10 with zero volume.-wealthaccess

Global Currencies & Equity Markets

Kenya shilling to gain, Zambia kwacha to ease

NAIROBI: Kenya’s shilling is expected to gain against the dollar in the next week to Thursday, while Tanzanian, Ugandan and Nigerian currencies are seen holding steady, traders said.

KENYA — The Kenyan shilling is expected to rally, buoyed by higher dollar inflows from offshore investors into the local debt market and improved risk sentiment for so-called frontier assets.

At 0700 GMT, commercial banks posted the shilling stronger at 109.75/95 versus 110/110.20 last Thursday. Traders said a Treasury bond auction had been met by high demand from foreign investors.

TANZANIA — Tanzania’s shilling is expected to hold steady as dollar inflows from the mining sector balance demand from the energy and manufacturing sectors.

Commercial banks quoted the shilling at 2,314/2,324 against the dollar, the same as last Thursday’s close.

UGANDA — The Ugandan shilling is seen trading in a stable range in the coming days as easing political risks following last week’s elections support positive market sentiment.

Commercial banks quoted the shilling at 3,680/3,690, compared with last Wednesday’s close of 3,705/3,715.

Markets were closed on Thursday last week for a holiday in Uganda.

ZAMBIA — The kwacha is expected to remain under pressure against the dollar as demand for the hard currency continues to outweigh supply.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 21.3300 per dollar from a close of 21.2750 a week ago.

NIGERIA — The naira is seen flat in the coming week as traders watch for policy details at the central bank’s first rate-setting meeting of the year. The naira opened at 394.16 on the over-the-counter spot market on Thursday, compared with 475 naira on the black market. The naira is quoted at 381 to the dollar on the official market, a level set in July and backed by the central bank. <mailto:info at bulls.co.zw> 

Global Markets

Dollar index resumes its decline as global markets turn hopeful again

A rebound in global market sentiment put new momentum behind the dollar decline on Monday, while riskier currencies strengthened, as optimism about U.S. President Joe Biden’s stimulus plans took precedence over the impact of COVID-19.

Market sentiment had turned more cautious at the end of last week as European economic data showed that lockdown restrictions to limit the spread of the virus hurt business activity, dragging stocks lower.

The mood picked up on Monday, however, lessening demand for the safe-haven U.S. dollar. The dollar index fell overnight and was down 0.2% at 90.094.

Analysts expect a broad dollar decline during 2021. The net speculative short position on the dollar grew to its largest in ten years in the week to Jan. 19, according to weekly futures data from CFTC released on Friday.

The U.S. Federal Reserve meets on Wednesday and Fed Chair Jerome Powell is expected to signal that he has no plans to wind back the Fed’s massive stimulus any time soon - news which could push the dollar down further.

In a phone call on Sunday with Republican and Democrat lawmakers, officials in President Biden’s administration tried to head off Republican concerns that the $1.9 trillion stimulus proposal -- hopes for which have lifted market sentiment since the U.S. elections last year -- was too expensive.

RELIEF MEASURE

Lawmakers from both parties said they had agreed that getting the COVID-19 vaccine to Americans should be a priority, but some Republicans objected to such a hefty package only a month after Congress passed a $900 billion relief measure.

The euro was flat against the dollar, at $1.2174. At the European Central Bank meeting last week, President Christine Lagarde said the bank was closely watching the euro. The euro surged 9% last year versus the dollar and reached new two and a half year highs earlier in January.

But despite this verbal intervention, traders remain bullish on the euro, expecting the bar for a rate cut to be high.

Ulrich Leuchtmann, head of FX and commodity research at Commerzbank, wrote in a note to clients that in the short term the threshold for a rate cut is high and in the long term more than one or two cuts would be impossible.

Elsewhere, the Australian dollar, which is seen as a liquid proxy for risk, was up 0.2% at 0.773 versus the U.S. dollar at 0822 GMT.

Australia approved the Pfizer-BioNTech COVID-19 vaccine for use but warned AstraZeneca’s international production problems mean the country would need to distribute a locally manufactured shot earlier than planned.

The New Zealand dollar was up 0.4%, while the commodity-driven Norwegian crown was up 0.3% versus both dollar and euro .

The safe-haven Japanese yen was flat on the day at 103.735 versus the U.S. dollar.

The Swiss franc lost out slightly versus the euro, with the pair changing hands at 1.0786 at 0829 GMT.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices today fall for third day in a row, silver rates edge higher

Gold prices in India continued to be weak for the third day in a row. On MCX, gold futures dipped 0.02% to ₹49,131 per 10 gram despite positive global cues. In the previous session, gold had slipped 0.5% while silver had dropped 0.9%. Silver futures on MCX today however rose 0.4% to ₹66,885 per kg. Hopes of big US fiscal measures continue to support gold prices on the downside, says Geojit Financial. MCX gold futures price of ₹49,800 need to be challenged for a major buying move, it added.

In global markets, gold prices edged higher on optimism that US lawmakers will soon pass the massive economic stimulus to revive the world's largest economy. Spot gold rose 0.3% to $1,858.57 per ounce after dropping 0.9% in the previous session. Gold is considered a hedge against inflation and currency debasement, likely from widespread stimulus.

Meanwhile, holdings of the world's largest gold-backed exchange-traded fund or gold ETF, SPDR Gold Trust, eased 0.07% to 1,173.25 tonnes on Friday. Among other precious metals, silver today gained 0.9% to $25.61 an ounce while platinum rose 0.6% to $1,105.06.

On gold traders watch this week will be the announcement of US Federal Reserve's monetary policy committee's decision and briefing by Chair Jerome Powell, both scheduled for Wednesday. Also, US fourth-quarter GDP, initial and jobless claims data will be released on Thursday.

Asian equity markets were mostly higher today while S&P 500 futures pointed higher. Investors are hoping Fed Chair Jerome Powell may reassure that US central bank's $120 billion of monthly bond purchases won’t be tapered any time soon.

Meanwhile, physical gold demand in Asia picked up last week as the approaching Chinese New Year encouraged buyers in China and Singapore. In India, dealers charged a premium of up to $1 an ounce, up from the previous week's premium of $0.5, over official domestic prices. Gold rates in India include 12.5% import duty and 3% GST levy. Gold rates in India are now down about ₹7,000 from their August highs and dealers hope that the correction in prices and economic recovery will lift demand in India.

Finance minister Nirmala Sitharaman will present the annual budget on February 1.

.

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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