Bulls n Bears Daily Market Commentary : 20 May 2021

Thu May 20 15:21:41 CAT 2021

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Bulls n Bears Daily Market Commentary : 20 May 2021

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ZSE commentary

The stock market remained in the negative in today’s session after the benchmark index lost a further 1.59%. Turnover for the day was ZW$57.6 million (62.12% lower) from a trade of over 3.3 million shares. Medtech was the most active stock at 40 trades followed by Star Africa and Econet in a total of a record high 356 trades. The market breadth was negative after 25 stocks depreciated against 14 that appreciated in a total of 42 stocks which traded. Econet was the most liquid counter as it anchored both volume and value traded at 1 261 300 shares and ZW$32.24 million respectively. At close, the benchmark All Share Index was down by 1.62% and the Top 10 Index was also down by 1.98%. The Top 15 Index shaded 2.02%. The Medium Cap Index traded lower to 13 366.45 points depreciating by 1.22%. The Small Cap Index added 1.62% to 56 086.71 points.

Leading the risers pack of the day was Lafarge adding 20.00% followed by up by 19.83%. Masimba Holdings and First Mutual Holdings which added 7.53% and 3.50% respectively. Padenga added 2.71% to 3215c. Leading in the shakers pack was Meikles which pared 13.33% followed by BAT shading 11.11%. Axia Corporation and Unifreight pared 8.37% and 7.69% respectively. Please find a summary of the market activity as shown below; The Old Mutual Top Ten ETF closed at 199.56c up 3.66% after 81 954 units with a value of ZW$163 549 in 11 trades exchanged hands closing with a market capitalization of ZW$262.2 million and a YTD of 99.56%..-wealthaccess

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Global Currencies & Equity Markets

Nigeria

Naira gains at official market

The Naira gained marginally against the U.S. Dollar at the I&E window of the foreign exchange market on Wednesday, as foreign exchange supply soared substantially.

Data posted on the FMDQ Security Exchange window where forex is officially traded showed that the currency closed at N410.75 at the NAFEX window. This represents a N0.88 or 0.21 per cent appreciation from N411.63 the rate it traded in the previous session on Tuesday.

This happened as forex turnover skyrocketed by 122.76 per cent with $131.16 million recorded as against the $58.88 million posted in the previous session on Tuesday.

Naira touched an intraday high of N360.00 and a low of N426.90 on Wednesday before closing at N410.75 after it has oscillated around the rate of N411.00 and above benchmark in the last four consecutive sessions simultaneously.

The last time the local currency hit N410.00 and above rate was on May 10 when it exchanged hands with the greenback currency at N410.67 at the over-the-counter (OTC) market.

No changes at parallel market

However, Nigeria’s naira remained unchanged against the U.S. dollar at the unofficial market on Wednesday, data posted on abokiFX.com, a website that collates parallel market rates in Lagos showed.

Data posted showed that the local currency again closed at N484.00 at the black market, the same rate it has been trading since May 14 last week.

Based on this, the spread between the parallel market and the official market exchange rates is pegged at N73.25, this translates to a margin of 15.13 per cent.

South Africa

Rand trades slightly weaker

JOHANNESBURG - The rand showed muted reaction as inflation beat expectations, while the South African Reserve Bank is seen as tolerating a negative real interest rate differential, according to NKC Research.

The inflation surge, at 4.4 percent y-o-y, was expected but, nonetheless, beat the consensus forecast by 0.1 ppts. While the latest inflation print adds to pressure for monetary authorities to join a slew of emerging markets with a tightening cycle, we continue to expect that the repo rate will be kept at 3.5 percent.

The latest consumer price index inflation print released indicates that, as expected, inflationary pressures intensified in April.

Specifically, inflation rose to 4.4 percent y-o-y in April, from 3.2 percent y-o-y in March. The main contributors to the annual inflation rate remained the sub-indices pertaining to food and non-alcoholic beverages, housing and utilities, transport, and miscellaneous goods and services.

The costs of food and housing & utilities increased by 6.7 percent y-o-y and 2.3 percent y-o-y, respectively.

At the close of local trade, the rand quoted 0.28 percent weaker at R14.04/$. BUSINESS REPORT ONLINE

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Global Markets

Dollar drifts lower as Fed minutes-fuelled bounce fades

LONDON (Reuters) - The U.S. dollar slipped on Thursday but remained well above three-month lows hit overnight after minutes from the Federal Reserve’s last policy meeting showed there was more talk of it tapering its bond purchases than investors had expected.

In the Fed minutes, several policymakers said a discussion about reducing the pace of asset purchases would be appropriate “at some point” if the U.S. economic recovery continues to gain momentum.

That surprised markets, with some investors unwinding some of their short dollar positions and pushing the dollar higher as they believed the Fed would remain on hold for the foreseeable future despite strong data.

However, the dollar’s gains fizzled partially in London, trading with the greenback declining against most of its peers. Against a basket of its rivals, the dollar was down 0.25% at 90.00 but remained above a late-February low of 89.686 hit on Wednesday.

The dollar’s overnight bounce coincided with a spike in U.S. Treasury yields and weaker stocks. Fed fund futures pricing for rate changes in late-2022 and early 2023 remain steady from earlier this week.

The dollar has been declining over the past few weeks as key Fed officials have repeatedly said they were not ready to discuss reducing stimulus, judging that spikes in inflation would be transient.

The biggest beneficiary of the weak dollar trend was the Aussie dollar which also received a boost from robust April jobs data. It was up 0.4% at $0.7749.

The euro hopped 0.2% higher at $1.22 after having slipped 0.4% in the previous session and off a three-month high of $1.2245.

Cryptocurrencies were volatile after suffering one of their biggest losses on Wednesday in the wake of China’s decision to ban financial and payment institutions from providing digital currency services.

Bitcoin last traded up 10% at $40,526, having fallen as low as $30,066 on Wednesday, which represented a whopping 54% fall from its record high hit just over a month ago.

Smaller rival Ether gained 13% at $2,765. On Wednesday, it fell 22.8%, its biggest daily fall since March 2020.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper up on dollar, strike possibility in Chile

(Reuters) - Copper prices rose on Thursday as a softer dollar and worries about a strike in Chile spurred purchases, but plans by top consumer China to manage the supply, demand and prices of commodities capped gains.

Benchmark copper on the London Metal Exchange traded up 1% at $10,104 a tonne in official rings. However, prices of the metal used widely in power and construction are down 6% since hitting a record $10,747.50 a tonne earlier in May.

STRIKE: The union representing workers at Chile’s Escondida copper mine, the world’s largest, said on Wednesday it was preparing for a lengthy strike if owner BHP did not reach a “fair and equitable” deal in looming contract talks.

DOLLAR: A lower U.S. currency makes dollar-denominated metals cheaper for holders of other currencies, which could boost demand.

CHILE: Also supporting copper is political uncertainty in top producer Chile and Peru.

An overhaul of Chile’s market-orientated constitution is underway and the country is debating whether to increase royalties on miners.

Peru, the No. 2 producer, is heading for a polarized June presidential election with a little-known socialist leading in the polls who wants to redistribute mining wealth.

CHINA: The world’s top metal consumer said on Wednesday it will strengthen its management of the supply and demand of commodities to curb “unreasonable” increases in prices and prevent them being passed on to consumers.

OTHER METALS: Aluminium was up 0.2% at $2,419, zinc rose 0.7% to $2,961, lead added 1.2% to $2,200, tin climbed 0.8% to $29,855 and nickel gained 0.2% to $17,352.

Gold prices today fall after hitting 3-month high, silver rates down for 3rd day

Gold fell today in Indian markets while silver extended decline to the third straight day, tracking lackluster global cues. On MCX, gold futures were down 0.32% to ₹48,520 while silver was off 0.4% to ₹72,073 per kg. In the previous session, gold had hit a over 3-month high of ₹48,700 per 10 gram. On MCX, gold has support at ₹48000-47900 levels which when breached with heavy volume could lead to a downfall till 47700 levels, say analysts at CapitalVia Investment Advisor. For silver, support is at ₹71050-70900 levels.

In international markets, gold rates were flat at at $1,869.50 per ounce. On Wednesday, gold had hit a near four-month high of $1,889.75. Stronger dollar and higher bond yields weighed on gold. Benchmark US Treasury yields held above 1.664% after the release of the minutes from the Federal Reserve's last monetary policy meeting.

A number of Fed policymakers at the central bank's April 27-28 meeting thought if the US economy continued rapid progress, it would be appropriate to reconsider asset purchases in upcoming meetings. Higher interest rates increase the opportunity cost of holding non-yielding bullion. However, in a press conference following last month’s meeting, Chair Jerome Powell had said that it was premature to start talking about tapering.

Meanwhile, inflows into gold-backed exchange traded showed some profit-taking at higher levels. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.5% to 1,031.27 tonnes on Wednesday from 1,035.93 tonnes on Tuesday.

Among other precious metals, silver eased 0.3% to $27.66, while platinum edged 0.2% higher to $1,193.32.

Gold’s rally however came to a halt as US dollar index and bond yields halted ahead of the

Apart from higher bond yields, gold's rally has been halted as ETF investors moved to sidelines after recent inflows, says Kotak Securities. "Also weighing on gold price is improving virus situation in US and Europe which has led to easing of virus related restrictions. Also weighing on price are concerns about Indian demand amid rising virus cases," the brokerage added.

Rising inflation expectations and a resurgence of coronavirus cases in some countries has revived interest in gold as a hedge and haven asset, with a rebound seen in holdings in bullion-backed exchange-traded funds. While U.S. policy makers have signaled they intend to maintain an accommodative stance for a prolonged period, any hints of a timeline for paring back exceptional stimulus could weigh on the precious metal.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

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 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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