Bulls n Bears Daily Market Commentary : 04 May 2021

Tue May 4 16:17:14 CAT 2021

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Bulls n Bears Daily Market Commentary : 04 May 2021

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

ZSE commentary

The ZSE closed today's session with gains across the board except for the
Small Cap Index which pared a marginal 0.35% dragged down by Nampak which
shaded 11.11%. Turnover was down 52.25% to ZW$67.58 million from a trade of
over 5.78 million shares which exchanged hands in 465 trades. Econet was the
most active stock at 31 trades followed by OK Zimbabwe and Medtech. The
market breadth was positive after 24 stocks appreciated against 9 that
appreciated in a total of 41 stocks which traded. Medtech Holdings was the
most liquid counter as it anchored volume aggregates trading over 2.22
million shares and Econet anchored the value aggregate with a value of
ZW$30.68 million. The benchmark All Share Index was up 0.87% and the Top 10
Index was up by 1.26%. The Top 15 Index added 1.21%. The Medium Cap Index
traded higher to 11 292.13 appreciating by 0.32%, whilst the Small Cap Index
shaded a marginal 0.35% to close at 42 811.29.

Leading the risers pack of the day was the financial services group ZB which
added 11.11%. Hospitality group African Sun added 6.09% to 233.47c. Ariston
was 5.06% up to 200c. Econet added 5.00% to 2100.02c. Wildale appreciated by
4.28%. Leading in the shakers pack was Nampak which pared 11.11% to

a yield to date of % followed by Turnall shading 4.10%. Medtech Holdings and
Mashonaland Holdings pared 3.64% and 3.41% respectively. Please find a
summary of the market activity as shown below; The Old Mutual Top Ten ETF
closed at 176.78c down 0.12% after 26 710 units with a value of ZW$47 217 in
14 trades exchanged hands.- wealthaccess

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South Africa's rand slips as dollar regains footing

South Africa's rand weakened early on Tuesday, as the dollar rebounded from
a fall in the previous session triggered by weaker-than-expected U.S.
economic data.

At 0630 GMT, the rand traded at 14.4525 against the dollar, 0.35% weaker
than its previous close.

The dollar drifted higher, pausing a monthlong decline as investors consider
whether a roaring U.S. economic recovery may force interest rates higher,
looking to upcoming economic data and policy speeches for clues. read more

The rand has mainly taken its cue from risk sentiment in global markets, in
the absence of local catalysts.

Investor attention will soon turn to a scheduled review of South Africa's
sovereign credit by Moody's on Friday. The rating agency already assigns a
"junk" status to the country but with a negative outlook there is the
potential for a further downgrade.

Government bonds firmed with 2030 paper yielding 9.135%, down 5.5 basis
points.

Our Standards: The Thomson Reuters Trust Principles.

Nigeria

Nigerian Naira Remains Fair Stable, But Downside Risk Abounds

Naira has remained stable over the past few weeks supported by the gains
from higher crude prices (+3.40%MtD to US$68.32 bbl. as of the end of
April). The impact of the higher crude prices can also be seen in the
external reserves (+0.34%MtD to USD34.94bn), representing five months import
cover. Crude oil prices are poised to remain at current levels, on the back
of general compliance among OPEC+ members and recovery in global crude oil
demand. According to OPEC, global oil consumption is projected to rebound by
6.0mbbl/day in 2021. 

Nevertheless, Liquidity levels remain low across the FX strata, due to lower
intervention sales by the CBN and weak foreign inflows. On the latter, based
on the recent capital importation data released by CBN for January, the
total foreign inflow into the country was up 30.9% m/m to US$0.38bn. 

In our view, the narrative will likely remain the same for foreign
investors, as FX restrictions and measures on FX repatriation continue to
undermine confidence and prevent the free flow of capital. For clarity, the
average foreign inflow into the I&E window so far in 2021 was estimated at
USD60.0m, which remains significantly below the pre-covid levels of
USD1.7bn. As such, we expect FPIs aversion to persist, increasing the
possibility of further adjustment in the FX rates in the medium-term. 

Furthermore, the CBN announced that sugar and wheat will be included in the
list of items not eligible for FX in the official market. If implemented,
this is likely to save FX worth USD1.9bn. However, the policy will likely
push more FX demand to the parallel market, thereby widening the already
elevated parallel market premium (17.3%), given that local production of
both items is less than 5% of domestic demand. 

Finally, the Nigerian Senate approved a US$2.7bn external loan request,
comprising of a US$1.5bn World Bank loan and US$1.2bn from the Export-Import
Bank of Brazil. This will support the CBN's arsenal to defend the NGN at
current levels and help avoid a large currency devaluation. Our currency
valuation suggests a 5-7% devaluation by year-end.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar falls after Friday's surge as U.S. data disappoints

The dollar slipped against a basket of currencies on Monday, ceding some of
the ground gained in the previous session, as U.S. Treasury yields retreated
and lackluster data weighed on the American currency

U.S. manufacturing activity grew at a slower pace in April, likely
constrained by shortages of inputs amid pent-up demand unleashed by rising
vaccinations and massive fiscal stimulus. The data sent U.S. Treasury yields
lower. read more

The dollar index , which measures the greenback against a basket of six
currencies, was down 0.3% at 90.969.

The U.S. dollar's sharp rally on Friday may not be the start of a broader
rebound, Shaun Osborne, chief currency strategist at Scotiabank, said in a
note.

Bearish sentiment toward the dollar is on the rise after a brief pullback.
U.S. dollar net short positioning rose this week to the highest level since
late March, according to calculations by Reuters and Commodity Futures
Trading Commission data released on Friday.

The U.S. economy is doing better but is "not out of the woods yet," U.S.
Federal Reserve Chair Jerome Powell said on Monday in remarks that flagged
an upcoming central bank study documenting the disproportionate blow
suffered by the less educated and working parents during the coronavirus
downturn. read more

The dollar fell against the euro on Monday after a survey showed euro zone
factory activity growth surged to a record high in April, boosted by
burgeoning demand and driving a rise in hiring, although supply constraints
led to an unprecedented rise in unfulfilled orders. read more

Comments by Luis de Guindos, the European Central Bank's vice president,
also helped the euro. The ECB can start to phase out emergency stimulus
measures when the pace of coronavirus vaccinations reaches a critical level
and the economy picks up speed, he told an Italian newspaper.

Trading in foreign exchange markets was thinned by holidays in Japan, China
and Britain, which kept a lid on volatility.

The Australian and New Zealand dollars , were firmer on Monday, though not
enough to completely recoup Friday's losses.

Foreign exchange traders will be looking to labor market data out later this
week to read the health of the U.S. economic recovery and to gauge how the
Fed may respond to improving data. Central bank policy meetings are also
scheduled this week in Australia, Britain and Norway.

In crypto markets, ethereum broke past $3,000 to post a fresh record high of
$3,203.18. -The Thomson Reuters Trust Principles.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold, silver, crude, base metals

Bullion prices traded steady with spot gold at COMEX trading near $1,789 per
ounce and spot silver near $26.75 per ounce, writes Tapan Patel.

Most commodities in the non-agro segment traded higher supported by a weaker
dollar. Bullion prices rallied on disappointing US economic data and on
inflation concerns. Base metals saw choppy trade while crude oil prices
recovered in the evening session on hopes about demand recovery.

Here is a look at how different commodities are behaving in today's market:

Outlook: Bullion

Bullion prices traded steady with spot gold at COMEX trading near $1,789 per
ounce and spot silver near $26.75 per ounce. The prices made a rebound on
Monday taking cues from weak manufacturing PMI data from the US. The
precious metals also took support from inflation concerns and a fall in bond
yields despite assurance from Treasury Secretary Jennet Yellen. Bullion
prices are expected to trade sideways to up for the day.

Trading Strategy

MCX gold (June) faces resistance at Rs 47,600 per 10 grams and finds support
at Rs 46,900 per 10 grams. For MCX silver (May), support lies at Rs. 68,500
per kilogram and resistance at Rs 71,500 per kilogram.

Outlook: Crude Oil

Crude oil prices traded marginal down with benchmark NYMEX WTI crude oil
prices were trading near $64.38 per barrel in the morning trade. Crude oil
prices recovered in Monday evening session as higher demand prospects from
Europe and US offset pandemic worries of India. The European Union is set to
ease restrictions for the upcoming peak summer travel season, while states
around the New York region in the U.S. are likely to lift most of the
COVID-19 capacity restrictions on businesses. We expect crude oil prices to
trade sideways to up for the day.

Palladium extends record run on supply shortfall

(Reuters) - Palladium soared to an all-time high on Tuesday, extending a
record run driven by concerns of a shortage of the metal used in
emissions-controlling devices for automobiles.

Palladium was up 1.2% to $3,007.66 per ounce at 1136 GMT, after jumping to a
record of $3,017.18.

Prices of the autocatalyst have jumped about 21% since mid-March when top
producer Nornickel announced disruptions at two mines, exacerbating market
concerns about a shortage.

Chronic undersupply shot prices from around $500 an ounce in 2016 up to
$2,875.50 just before the coronavirus outbreak began.

A shift to electric vehicles may eventually erode demand, but tightening
environmental rules have forced carmakers to use more and more palladium in
gasoline engines.

Gold, meanwhile, retreated on a stronger dollar.

Spot gold was down 0.6% to $1,782.45 per ounce, after hitting its highest
since Feb. 25 at $1,797.75 on Monday.

Carlo Alberto De Casa, chief analyst at ActivTrades, said technical factors
were pressuring gold, while "the U.S. dollar's recovery is making it more
complicated".

The dollar index rose 0.4% as investors weighed chances that U.S. interest
rates will be forced higher by a roaring U.S. economic recovery, reducing
bullion's allure for other currency holders.

Higher interest rates increase the opportunity cost of holding non-yielding
bullion.

Investors await U.S. services data on Wednesday and April payrolls on
Friday.

Silver was down 0.2% at $26.83, after hitting its highest since March 1 on
Monday, while platinum rose 1% at $1,241.95.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

FCB

AGM 

virtual

06/05/21 : 3pm

NMB

AGM

virtual

1205/21 :  3:30pm

Africa Day

25/05/21

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
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for guideline purposes only and sourced from third parties.

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