Bulls n Bears Daily Market Commentary : 15 March 2021

Mon Mar 15 14:56:55 CAT 2021

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Bulls n Bears Daily Market Commentary : 15 March 2021

 <https://www.nedbank.co.zw/> 

ZSE commentary

The ZSE opened the week in the negative territory with turnover further
subdued closing at ZWL$12 642n896.55, corresponding to 2 273 075 shares
exchanging hands. Medtech Holdings remained the most liquid counter as it
anchored volume traded and Delta anchored value aggregate. However, this
movement wasn't enough to pull the All Share Index and the ZSE 10 back into
the positive as they closed with a depreciation of 1.84% and 2.76%
respectively. The Top 15 Index and the Medium Cap Index also traded weaker
to close with 2.50% and 0.41% respectively, whilst the Small Cap Index
gained a marginal of 0.54%. The ZSE current market capitalization is
ZWL$520.03 billion.

The market breadth was negative after 23 stocks depreciated while 11
registered gains in total out of the 38 ZSE counters which traded. Leading
the gainers of the day was National Tyre Services  with a 19.84% share
appreciation followed by Fidelity with 8.12% to 581.07c. African Distillers
appreciated by 6.71%. The banking counters FCA gained by 3.59% to 187.03c.
Leading in the shakers pack was the tile and roof manufacturer Turnall which
pared 11.56% followed by the telecoms giant Econet  shading 8.23%. Wildale
and BAT also pared 8.07% and 8.05% respectively. Please find a summary of
the market activity as shown below; The Old Mutual Top Ten ETF closed at
195.04c down 2.48% after 28 811 units with a value of ZW$56 192 in 20 trades
exchanged hands.-wealthaccess

 <https://www.firstmutual.co.zw/> 

Global Currencies & Equity Markets

Nigeria

Naira's free fall: Insurance industry capital base crashes to $1b 

Naira's depreciation has taken a toll on the capital base of the insurance
industry. The capital has dropped to $1 billion from $2.2 billion.

This was contained in the Agusto & Co. 2021 Nigerian Insurance Industry
Report: "Forging ahead despite headwinds", released at the weekend.

The report by the pan-African credit rating agency, said that as at December
31, last year, the industry had an estimated capital base of $1 billion,
significantly lower than $2.2 billion recorded as at 31 December 2007.

The naira was at the weekend exchanging at N485/$1  at the parallel market
and N415/$1 at the Investors' & Exporters' (I&E) Forex window but remained
stable at N379/$1 on the Central Bank of Nigeria (CBN's) official rate, a
check at the apex bank's website showed.

The local currency has lost over 30 per cent of its value in the last one
year, despite regular dollar interventions by the CBN to stabilise the local
currency.

Read Also: On the CBN's 'Naira 4 Dollar Scheme'

According to the report, insurance industry is also burdened with other
challenges, including the urgent need to raise new capital.

Although, some insurers have strengthened their capital base through
earnings retention, the ability of most industry operators to solely
underwrite large ticket transactions has dwindled, based on the lower value
of the capital in dollar terms.

The report said the on-going insurance recapitalisation is expected to
change the structure of the industry.

Industry regulator - the National Insurance Commission (NAICOM) - has
therefore, raised the minimum capital to N8 billion (from N2 billion), N10
billion (from N3 billion), N18 billion (from N5 billion) and N20 billion
(from N10 billion) for life insurers, non-life insurers, composite insurers
and reinsurance firms respectively.

The report said: "In addition to the benefits accruing from a larger capital
base from a risk underwriting perspective, improved investment management
practices will be upheld by a larger investment portfolio driven by a need
to generate adequate returns. The recapitalisation has elicited mergers and
acquisition transactions in the Industry."

According to Agusto & Co., the recapitalisation has suffered some setbacks,
particularly as the COVID-19 pandemic ravaged global economy, including
Nigeria's.

Agusto & Co. hoped the industry's recapitalisation could be a watershed
despite the setbacks.

It said: "Consequently, NAICOM postponed the deadline for the
recapitalisation exercise, which was later stratified into two phases;
December 2020 and September 2021. In addition, litigation by some Industry
operators and aggrieved shareholders resulted in the postponement of the
December 2020 deadline for the first phase of the recapitalisation
exercise."

Also contained in the report is a review of the coronavirus pandemic on the
insurance industry and the strategies adopted by insurers to minimise the
associated disruptions while optimising the opportunities provided by the
pandemic.

The firm anticipates an uptick in these transactions as the recapitalization
deadline draws near.

South Africa

Rand struggles as power cuts are extended

JOHANNESBURG - The rand retreated as the greenback advanced during the
European session, supported by Treasury yields according to NKC Research.

With external factors remaining the key drivers of rand movements, it is
expected that the FOMC will reaffirm its extremely dovish stance, despite
large upward revisions to its GDP growth and inflation forecasts for this
year.

Chairman Powell will re-emphasize that the labour market is far from fully
recovered, the rise in inflation is not likely to be "large or persistent,"
and overall inflation expectations remain well-anchored around 2 percent.

On local soil, Eskom announced that a loss in generation capacity meant that
it would extend loadshedding to Wednesday in order to replenish emergency
generation reserves.

At the close of local trade, the rand quoted 0.41 percent weaker at
R14.95/$, after trading in range of R14.82/$ - R15.04/$. The rand traded in
a narrow band during this morning's Asian trading session. The expected
range of the rand against the dollar today is R14.80/$ - R15.20/$.

Brent crude oil

The Brent oil price traded in a tight range at the end of last week,
supported by Opec-led supply cuts and optimism about a strong global
economic recovery in H2. At the close of local trade, benchmark Brent crude
futures quoted 0.01 percent lower at $69.39pb. Crude prices traded firmer
during Asian trade this morning.

BUSINESS REPORT ONLINE

 <https://www.facebook.com/Hyundaizimbabwe/> 

Global Markets

Dollar sets pace ahead of key central bank meetings

LONDON (Reuters) - The dollar gained for a second consecutive session on
Monday as traders cut their bearish dollar bets to four-month lows on rising
U.S. Treasury yields ahead of key central bank meetings.

Gains in the greenback were more pronounced against low-yielding currencies
such as the euro and the British pound while high-yielding currencies like
the Australian dollar fared relatively better.

The U.S., Japanese and British central banks, along with those in some key
emerging markets, are all set to meet this week, with benchmark 10-year
Treasury yields trading at 1.6320% on Monday, close to Friday's top of
1.6420%, a level last seen in February.

Rising U.S. yields have lifted the greenback 2% so far this year thanks to
widening interest rate differentials relative to other major bond markets.
The dollar declined more than 4% in the last quarter of 2020.

The dollar index, which tracks the U.S. currency against six major peers,
held at around 91.84 in early London trading. It hit a late November 2020
high of 92.51 last week.

The U.S. currency has been supported by a paring of bets for its decline,
with speculators cutting net short positions to the lowest since
mid-November in the week ended March 9.

Rising bond yields will continue to focus minds this week before a Federal
Reserve meeting at which some analysts expect policymakers to strike an
optimistic tone on the U.S. economy.

While there are some expectations that the Fed might try to calm bond
markets -- yields have risen some 60 bps since the last Fed meeting -- the
consensus view is Fed Chief Jerome Powell will not make changes to policy
settings.

U.S. producer prices increased strongly in February, leading to the largest
annual gain in nearly 2-1/2 years, with the economy set for a massive shot
in the arm from President Joe Biden's $1.9 trillion stimulus package.[

The greenback rose 0.01% against the yen to 109.05, drifting to its highest
since June 2020.

The euro weakened 0.2% to $1.1925 after rising last week for the first time
in three weeks as latest data showed hedge funds slashed their net euro
positions.

Defeat in two regional votes on Sunday for Germany's ruling Christian
Democrats (CDU) ahead of federal elections in September also weighed on
sentiment.

The Australian dollar -- viewed widely as a liquid proxy for risk appetite
-- fell 0.2% to $0.7745, extending Friday's 0.4% loss.

Bitcoin weakened more than 5% after surging to a record high of $61,781.83
over the weekend. [L1N2LD0LY]

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold edges up on inflation bets as Fed meeting looms

Gold edged higher on Monday on prospects of higher inflation following the
approval of a $1.9 trillion U.S. stimulus bill, although elevated U.S.
Treasury yields capped bullion's gains ahead of a Federal Reserve meeting.

Spot gold was up 0.2% at $1,729.12 per ounce by 1014 GMT. U.S. gold futures
rose 0.4% to $1,727.70.

President Joe Biden signed the $1.9 trillion stimulus bill into law last
week.

Some investors view gold as a hedge against higher inflation that could
follow stimulus measures, but higher Treasury yields dull some of the appeal
of the non-yielding commodity.

Benchmark U.S. Treasury yields were at their highest in more than a year,
while the dollar rose for a second straight session.

Investors are now awaiting a two-day U.S. Federal Reserve meeting this week
for policymakers' remarks on a recent spike in bond yields, fears about
rising inflation and the economic outlook.

The Bank of England and Bank of Japan also have meetings on Thursday and
Friday this week.

In other metals, silver gained 0.6% to $26.07 an ounce. Palladium edged 0.1%
higher to $2,374.17 and platinum rose 0.7% to $1,213.22.

Oil on the boil: Can crude prices sustain at higher levels?

Brent and WTI prices have been rocketing in recent weeks and this has
attracted a lot of attention from investors globally. Price rise of more
than 75 per cent since November 2020 has been on account of major economies
reopening and vaccinating their populations after the pandemic shut down
factories and grounded planes in March 2020.

This has been a boon for exporters of oil and this flood of cash is a relief
for energy behemoths like Saudi Arabia and Russia, two of the top producers
in the global energy market. Although the rising oil prices are boon for
exporters, the importing countries are feeling the heat with growth still
lagging when compared to the pre-pandemic era and high oil prices are
pinching the end consumers in the form of higher inflation.

Demand optimism boils oil

The recent meeting of OPEC producers held on 4 March 2021 opted to increase
the production by a meagre 1,50,000 bpd in April instead of market
expectations of 1.5 million barrels per day. This clearly signals that the
group wants the oil prices to be on the higher side. On the contrary, the
demand side boost and optimism is a reason for the strength and the
continued momentum in oil prices. Investors have been pumping funds into
commodities such as oil on expectations of a demand recovery in the second
half of the year as the global economy grows, while a wider rollout of
vaccines against the Covid-19 pandemic allows more people to travel this
summer.

According to data from the US Energy Information Administration released on
10 March, the US East Coast crude inventories fell by 478,000 barrels to
about 8.4 million barrels, the lowest on record. The East Coast gasoline
inventories also fell by about 7.5 million barrels to 63.7 million barrels,
the biggest decline since September 2016.

Moreover, the overall US gasoline stocks fell by 11.9 million barrels in the
week to 231.6 million barrels, compared with expectations for a 3.5
million-barrel drop. The drop in product inventories clearly signals the
rising demand from US consumers.

Note of caution: Are oil prices sustainable?

Although the producers and exporters are a happy lot, the importers are not
and hence the recovery in the post-Covid era accompanied by high oil prices
is a hindrance for the consumers of oil importing economies. Although the
vaccination programmes have started globally, the fresh wave of virus and
the increasing infections are leading to restrictions in travel,
international and domestic.

High oil prices are always detrimental for aviation companies as they form a
bigger chunk of the operating costs and the impact becomes more pronounced
in a post pandemic world when the demand has not picked up adequately.

Higher oil prices have a Passover effect on all the sectors of the economy
as all the connected industries right from automobiles to plastics to
transportation to agriculture are all dependent on oil. Higher input costs
further adds to higher inflationary scenarios in an era of low growth
wherein economies are trying to recover from after effects of the pandemic.

We are of the view that oil prices should remain stable in the range of
$55-65 per barrel wherein it will be a balancing act for both the producers
as well as consumers of oil. Taking into consideration the recent gains in
oil, and the state of the global economy, higher oil prices will hinder the
growth and momentum across. Oil prices cannot sustain at higher prices and
we expect correction in (brent and WTI) towards $65/bbl and $60 per barrel
respectively. While MCX oil prices have also had the support of the
depreciating rupee, prices might move lower towards the Rs 4200/bbl mark in
a months' time frame.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Old Mutual

analysts briefing

24/03/21 | 2:30pm

Willdale

AGM

Boardroom, Willdale Administration Block, Teneriffe, 19.5km peg Lomagundi
Road, Mt Hampden

25/03/21 | 11am

TSL

AGM

Virtual | https://eagm.creg.co.zw/eagmzim/ Login.aspx | in the Auditorium,
Ground Floor, 28 Simon Mazorodze Road, Southerton

25/03/21 | 12pm

CFI

AGM

Farm & City Boardroom, 1st Floor Farm & City Complex, 1 Wynne Street

31/03/21 | 11am

Good Friday

02/04/21

Easter Sunday

04/04/21

Easter Monday

05/04/21

Independence Day

18/04/21

Public Holiday in lieu of Independence Day falling on a Sunday

19/04/21

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.

(c) 2021 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
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