Bulls n Bears Daily Market Commentary : 27 January 2021

Thu Jan 28 08:08:13 CAT 2021

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Bulls n Bears Daily Market Commentary : 27 January 2021

ZSE commentary

The All Share Index closed today's session at 3 580.06 points  lower as it
turned into negative territory. The Top 10 Index and the Top 15 Index
registered 6.46% and 6.93% losses respectively. The Medium Cap Index shaded
0.63% to close at 7861.59 points. The Small Cap Index added 1.72% by close
of trading. The ZSE market

capitalization was at ZWL$428.6 billion. Gains for the day were registered
in First Mutual Properties  and Unifreight  which strengthened by 20.00% to
close at 660c and 19.94% to close at 38.5c respectively. TSL  added 19.92%
to close at 4605c with a year to date gain of above 200%. The financial
holding company FBC settled at 1800c. Retail clothing company Truworths
closed at 65c after gaining by a margin of 18.31%. Gains were also offset by
Hippo  which closed the day at 9330.69c following a decrease of 139.98%,
Seed Co edged down by 19.91%, Delta shaded 19.59% to 3309.87c and Ariston
was 15.76% down to 135.84c.

The Old Mutual Top Ten ETF slipped 10.08% to 140.48c after 212 810 units
exchanged hands. The ETF has now gained 40.48% since its listing in early
January. Total turnover was at ZW$323 696 112.05 in 439 trades. The market
breath was negative after 20 stocks closed lower and 18 traded in the
positive. Total trades were 439 with 1 counter remaining unchanged and 12
with zero volume.wealthaccess

Global Currencies & Equity Markets

South Africa

Rand trades steady overnight

The South African unit garnered support from strong risk-on sentiment,
rising in tandem with a range of emerging market currencies as the dollar
retreated according to NKC Research.

The global economic calendar this week will be dominated by today's FOMC
policy meeting announcement, with markets looking toward Chairman Powell's
press conference for forward guidance.

While NKC Research expects Powell to present a more optimistic outlook, it
will likely be tempered with caution regarding elevated short-term risks (as
the worsening pandemic and the slow initial rollout of the vaccines is
restraining activity) with an emphasis on very dovish forward guidance.

Extending the forecast horizon, inflation is expected to accelerate to a
sustainable 2 percent pace and the labour market to be at full employment by
2023, thereby satisfying the conditions for rate lift-off by that time. A
gradual tapering of QE asset purchases should precede this, starting in
2022.

At the close of local trade, the rand quoted 1.14 percent stronger at
R15.08/$, after trading in range of R15.05/$ - R15.37/$. The rand traded
steady overnight. Expected range today R14.90/$ - R15.30/$.

South African bourse

The JSE All Share (-0.99 percent) ended deep in negative territory on
Tuesday as large technology (-4.94 percent) and industrial (-2.21 percent)
stocks pulled the bourse lower. In the overall emerging market sphere, the
MSCI Emerging Market Index (-0.83 percent) traded weaker.

Brent crude oil

The Brent oil price rose close to a 11-month peak yesterday as European
stock markets climbed higher and following reports of a blast in Saudi
Arabia. At the close of local trade, benchmark Brent crude futures quoted
0.86 percent firmer at $56.01pb. Crude prices remained on the front foot
during Asian trade this morning.

BUSINESS REPORT

Nigeria

Naira falls 0.63% on black market

Naira depreciated against the U.S. dollar on the parallel market on Tuesday,
according to data gleaned from abokiFX.com, a website that collates parallel
market rates in Lagos.

The local unit exchanged for the greenback currency at N480, N3.0 or 0.63
per cent weaker than N477, the rate it traded at the previous session.

However, Naira strengthened against the U.S dollar at the Investors &
Exporters (I&E) window of the foreign exchange market on Tuesday, according
to data from the FMDQ Security Exchange where forex is officially traded .

It closed at N394.00 at the Tuesday trading session, which appreciated by
N0.5 or 0.13 per cent from N394.50, the rate at which it closed at the
previous session.

The appreciation took place as turnover rose by 170.9 per cent, with $108.34
million recorded as against the $39.99 million posted on Monday.

The domestic currency during the trading session experienced an intraday
high of N390 and a low of N396.00 before closing at N394.00.

By implication, this further widens the spread between the unofficial market
and the I&E window exchange rates to N86, which translates to a gap of 21.83
per cent.

The continuous increase in the spread between the rates at which naira is
traded at both markets has been attributed to the significant decline in
dollar inflow from crude sales, Nigeria's main source of revenue, due to a
crash in oil prices in April last year, and the coronavirus pandemic.

 <mailto:info at bulls.co.zw> 

Global Markets

Record Dollar Bond Sales by Japan Prefectures Gather Steam

Dollar bonds are becoming an increasingly hot way for Japan's prefectures
and cities to diversify their funding at attractive costs.

In the latest example, Saga Prefecture in southern Japan sold its first note
in the U.S. currency on Tuesday, following last week's issuance of such debt
by neighboring Fukuoka Prefecture. The bond offerings came after a record
$570 million of such securities from Japanese local governments were sold to
local investors in the last three months of 2020.

The popularity is all the more striking considering that the first domestic
sale of prefectural dollar notes came only in 2018 by Shizuoka Prefecture,
near Tokyo.

The increase in debt issuance by Japanese municipalities comes as the
pandemic puts pressure on local governments all over the world to pay for
economic support steps even as tax revenues falter. In the U.S., some Wall
Street banks are forecasting a massive surge in debt issuance by local
governments this year to take advantage of low interest rates.

Japanese municipalities also face pressure to secure funding as the internal
affairs ministry expects their tax revenue to fall by 6.5% to 38.3 trillion
yen ($369 billion) in the fiscal year starting April 1. That would be the
first decline since the global financial crisis.

Most of the dollar bonds by Japanese local governments have targeted
domestic investors so far, to avoid extra costs needed to sell securities
abroad, such as for paperwork or for arranging conferences with foreign
institutions.

Dollar borrowing costs have dropped in general amid unprecedented monetary
stimulus to fight Covid-19, with yield premiums on U.S. currency debt in
Asia touching the lowest this month since the pandemic worsened in March.

For Japanese municipalities, it helps to attract investors that their dollar
securities offer slightly higher yield premiums than similar notes by
issuers such as government-backed organizations.

Fukuoka's 10-year bonds priced at 38 basis points over the mid-swap rate
last week and Saga's five-year notes had a spread of 35 basis points. Those
compare with a 25 basis-point spread on 10-year dollar notes offered
overseas by Japan Bank for International Cooperation this month, and a 22
basis-point premium on 2031 U.S. currency debt sold by Development Bank of
Japan.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Set for Worst Start to Year in a Decade as Dollar Ascends

Gold fell after the Federal Reserve left its benchmark interest rate
unchanged and stuck with the current pace of bond-buying, aiding the dollar
and putting bullion on course for the worst start to a year in a decade.

The Fed repeated it would maintain bond-buying at $120 billion per month
until "substantial further progress" toward employment and inflation goals
has been made. After the Federal Open Market Committee's first meeting of
2021, Chair Jerome Powell said it would take "some time" to achieve the
threshold for altering purchases, making clear the central bank's not close
to tapering them.

Bullion has lost more than 3% this month, its worst January performance
since 2011, as traders weighed the strengthening greenback, prospects for
more stimulus, and trajectory of the pandemic. Powell said that the
widespread availability of vaccines was grounds for optimism, noting that
"several developments point to an improved outlook for later this year."

Spot gold fell 0.4% to $1,837.29 an ounce at 11:12 a.m. in Singapore, after
ending 0.4% lower on Wednesday. Silver and platinum dropped, while palladium
was steady. The Bloomberg Dollar Spot Index rose 0.1% after surging 0.6% a
day earlier.

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
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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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