Bulls n Bears Daily Market Commentary : 15 October 2021

Sat Oct 16 09:16:59 CAT 2021

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Bulls n Bears Daily Market Commentary : 15 October 2021

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE market rally continues to close the week with strong gains mainly
from blue chip counters. Investor sentiment, as measured by market breath
was positive as 27 stocks registered gains against 9 losers while three of
the active stocks remained unchanged. Activity levels improved to 454 trades
with a share volume of 8.25 million shares. Econet was the most active stock
at 34 trades followed by OK Zimbabwe and Star Africa at 32 and 31 trades
respectively. Simbisa anchored both volume and value aggregate trading 2 675
400 shares with a value of ZW$278.78 million contributing 44.6% to total
turnover.

The All-Share Index gained 4.04% to 10 596.85 points. The Top 10 Index added
5.24%. The Top 15 Index gained 4.45%. The Medium Cap Index added 1.61% to 21
875.41 points whilst the Small Cap Index also added 1.63% to 321 507.84
points. Leading the risers pack of the day was Proplastics adding 19.69% to
close at 3350c. Innscor added 18.17% and Lafarge added 18.12% to 11300c. Rio
Zimbabwe added 16.10% and Simbisa Brands was up by 15.86%. Mitigating the
gains were losses in OK Zimbabwe and Wildale which shaded 9.85% and 7.19%
respectively. Medtech lost 7.11% to 21.2439c. General Beltings and CBZ
Holdings pared 6.14% and 4.01% respectively. The Old Mutual Top Ten ETF
closed at 399.41c down by 0.53% after 42 773 units were traded worth ZW$170
839. On the VFEX, Padenga added 0.20% to US 24.50 cents after 1 050 shares
exchanged hands worth US$257.25.-wealthaccess

Global Currencies & Equity Markets

South Africa

South Africa's rand set for weekly gain, stocks flat

(Reuters) - South Africa's rand firmed on Friday, and was on track for a
weekly gain thanks to a softer dollar and higher commodity prices, while
stocks inched up only slightly.

At 1500 GMT, the rand ZAR=D3 traded at 14.6200 against the dollar, 1.05%
firmer than its previous close.

The currency has firmed 3% since Monday.

This week the rand has been boosted by market bets the South African central
bank will raise its main lending rate at its next monetary policy meeting in
November, as well as a retreat in the dollar, an increase in the gold price
XAU= and demand for local bonds.

The rand this week shrugged off mixed domestic economic data, including
August manufacturing ZAMAN=ECI and mining ZAMNG=ECI numbers, which
reinforced the view that the economic recovery from the COVID-19 pandemic
has been uneven across sectors.

The dollar headed for its first weekly decline versus major peers since the
start of last month as global risk appetite rebounded.

In fixed income, the yield on the benchmark government bond due in 2030
ZAR2030=was down 5.5 basis points to 9.41%.

Stocks were flat, with the Johannesburg Stock Exchange's Top-40 Index .JTOPI
closing 0.17% higher at 60,494 points and the broader All-Share Index .JALSH
up 0.27% to 67,029 points.

Drugmaker Aspen Pharmacare ASPJ.J and pharmacist Clicks CLSJ.J topped the
blue-chip index, rising 3.6% and 3.4% respectively.

On Friday, South African health minister Joe Phaahla announced the country
would start vaccinating children between the ages of 12 and 17 against
COVID-19, and that it was considering giving high-risk healthcare workers a
booster shot of the Johnson & Johnson vaccine JNJ.N.

Aspen is contracted to manufacture J&J's vaccine locally while Clicks
administers shots in its pharmacies.

The views and opinions expressed herein are the views and opinions of the
author and do not necessarily reflect those of Nasdaq, Inc.

Nigeria

One month after Aboki FX shutdown, naira fails to rise

Almost a month after the Central Bank of Nigeria forced foreign exchange
update platform, Aboki FX, to suspend its operations, the naira has failed
to rise on the parallel market although it has stabilised, Saturday PUNCH
has observed.

Worse still, the naira dropped by 2.6 per cent to N422 per dollar, hitting
an all-time low on the official market on Thursday.

The CBN Governor, Godwin Emefiele, had on September 20, 2021 accused Aboki
FX of exchange rate manipulation, describing the platform as illegal and
criminal.

Emefiele had said, “I have given instructions to our experts to go after his
website and let it be clear that we will go after him, because we can’t
allow this to continue.”

The platform had denied the allegations but suspended its updates, saying,
“We sincerely hope this suspension will lead to the naira appreciation from
next week.”

Nearly a month later, however, the exchange rate has continued to fluctuate
between N570/$1 and N575/$1.

Our correspondent was informed that in Abuja on Thursday, the exchange rate
stood at N572/$1 and N780/£1

The greenback crossed the N500 mark in July 2021 and continued to rise,
hitting N570 in September.

Speaking with Saturday PUNCH on Thursday, a former Director-General of the
Lagos Chamber of Commerce and Industry, Mr Muda Yusuf, said the development
was evidence that Aboki FX was not the problem but more fundamental issues.

Yusuf, who is the Chief Executive Officer, Centre for the Promotion of
Private Enterprise, said, “The CBN needs to give the market a chance.  Its
current approach would continue to deepen distortions in the economy,
perpetuate round tripping, fuel speculation, suppress Forex supply and boost
underground economy.  The problem is not with Aboki FX. It is essentially a
policy matter.”

Yusuf attributed current happenings in the foreign exchange market to
consequence of the CBN policy choice of a fixed exchange rate regime and
administrative allocation of Forex.

“It is a policy regime that has created a huge enterprise around foreign
exchange – round tripping, speculation, over-invoicing, capital flight etc.
The action of the apex bank amounts to tackling the symptoms rather than
dealing with the causative factors, which is not a sustainable solution.

“It is regrettable that the CBN does not believe in the market mechanism.
Yet market systems are time-tested as instruments of efficient resource
allocation in leading economies around the world.  Of course, market
failures are recognised in economics, and these are exceptions that can be
identified and dealt with,” the former LCCI boss said.

The economist argued that suppressing the market is like swimming against
the tide which is a difficult battle to win.

Yusuf added that moving retail Forex transactions from bureau de change
operators to the banks is like kicking the can down the road.

“The same issues would manifest even with the banks,” he said.

  Copyright PUNCH.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar's five-week winning streak ends as risk sentiment rebounds

(Reuters) - The dollar edged lower against a basket of major currencies on
Friday, on track to end its five-week winning streak, as global risk
appetite rebounded, helping reduce demand for the safe-haven currency.

Global stock markets have rallied this week as fears about a stagflationary
economy have been eased by forecast-beating corporate earnings in the United
States. read more

Unexpectedly strong U.S. retail sales data for September also boosted
sentiment. Retail sales rose 0.7% last month, versus expectations of a 0.2%
decline, helped in part by higher prices. read more

The dollar index initially firmed after the retail sales data, but then
trended lower and was last down 0.106% at 93.941. The greenback was down
0.19% for the week, after having appreciated for the previous five weeks,
and hitting a one-year high of 94.563 on Tuesday.

The big run-up in dollar strength, based on expectations that the U.S.
Federal Reserve may begin hiking rates sooner than had been anticipated, may
have been overblown, and the dollar is now consolidating, said Marc
Chandler, chief market strategist at Bannockburn Global Forex.

The greenback had rallied against its major peers since early September on
expectations the U.S. central bank would tighten monetary policy more
quickly than previously expected amid an improving economy and surging
energy prices.

Minutes of the Fed's September meeting confirmed this week that a tapering
of stimulus is all but certain to start this year, although policymakers are
sharply divided over inflation and what they should do about it. read more

Money markets are currently pricing in about 50/50 odds of a 25 basis point
rate hike by July.

Sterling rose 0.57% to $1.3765, hitting its highest since Sept. 17, while
the euro edged down 0.03% to $1.1595 after touching $1.1624 on Thursday for
the first time since Sept. 4.

The risk-sensitive Aussie dollar added 0.02% to $0.7417, having climbed to
$0.7439 earlier in the session. New Zealand's dollar jumped 0.54% to
$0.7068, extending Thursday's 1% surge.

The Japanese yen was the biggest loser, dropping to as low as 114.46 yen per
dollar , its weakest since October 2018. The yen is a safe-haven currency
and has been knocked by the rebound in risk sentiment including in Asia. The
dollar was last up 0.53% against the yen at 114.28 yen.

In cryptocurrency markets, the price of bitcoin topped $60,000 for the first
time in six months and was not far from its record high on bets U.S.
regulators will approve a bitcoin futures exchange traded fund.  

The Thomson Reuters Trust Principles.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Energy crisis pushes copper towards best week since 2016

LONDON – Copper on Friday was heading for its biggest weekly gain since 2016
as surging power prices threaten to curb supply at a time when exchange
stockpiles are at rock bottom.

A rapid rise in the cost of energy and shortages of power in China have
already forced zinc and aluminium smelters to cut output, pushing prices of
both metals to their highest in more than a decade.

Benchmark copper on the London Metal Exchange (LME) was up 2.1% at $10
191.50/t at 11:32 GMT, up 9% this week and nearing a record high of $10
747.50 reached in May.

High power costs are also inflationary and this is boosting demand from
investors for copper and other physical commodities as a hedge, said Saxo
Bank analyst Ole Hansen.

ENERGY: The energy crisis in China, the biggest metals producer and
consumer, deepened as cold weather swept into much of the country.

IMPACT: High power prices and potential shortages will impact supply more
than demand for metals in the coming months, analysts at ANZ said.

COPPER STOCKS: On-warrant copper inventories in LME-registered warehouses
have tumbled to 14 150 t, the lowest in at least 20 years, and stocks in the
Shanghai Futures Exchange (ShFE) at 41 668 t are the lowest since 2009.

COPPER SPREAD: Low stockpiles have pushed the premium for cash copper over
the three month contract to $246/t, the highest since 2005.

SURPLUS: The international zinc and copper study groups said this month they
expected both metals to be oversupplied next year, but analysts say the
power crisis could change that.

ZINC: LME zinc was up 5.8% at $3 733.50 a tonne after reaching $3 761, it's
highest since 2007. It was up a whopping 19% this week after Belgium-based
Nyrstar said it would cut production by up to 50% at its three European zinc
smelters.

ALUMINIUM: Aluminium was up 2.1% at $3 183/t after touching $3,215, the
highest since 2008. It was up more than 7% this week.

OTHER METALS: Nickel was up 2.8% at $19 825/t, lead rose 1.8% to $2 340.50
and tin added 1% to $37 290. 

Oil prices rise to three-year high on back of supply deficit forecasts

(Reuters) - Oil prices settled at a three-year high above $85 a barrel on
Friday, boosted by forecasts of a supply deficit in the next few months as
the easing of coronavirus-related travel restrictions spurs demand.

Brent crude futures settled up 86 cents, or 1%, at$84.86 a barrel.
Front-month prices, which touched their highest level since October 2018 at
$85.10, hit a weekly rise of 3%, its sixth straight weekly gain.

U.S. West Texas Intermediate (WTI) crude futures rose 97 cents, or 1.2%, to
$82.28 a barrel. The was up 3.5% on the week in an eighth consecutive weekly
rise.

Demand has picked up with the recovery from the COVID-19 pandemic, with a
further boost from power generators who have been turning away from
expensive gas and coal to fuel oil and diesel.

The White House said it will lift COVID-19 travel restrictions for fully
vaccinated foreign nationals effective Nov. 8, which should boost jet fuel
demand. read more

Meanwhile, a sharp drop in oil stockpiles in the United States and the
member countries of the Organisation of Economic Co-operation and
Development is expected to keep global supply tight.

U.S. energy firms this week added oil and natural gas rigs for a sixth week
in a row as soaring crude oil prices prompted drillers to return to the
wellpad.

The U.S. oil and gas rig count, an early indicator of future output, rose 10
to 543 in the week to Oct. 15, its highest since April 2020, energy services
firm Baker Hughes Co (BKR.N) said in its closely followed report on Friday.
read more

The International Energy Agency on Thursday said the energy crunch is
expected to boost oil demand by 500,000 barrels per day (bpd).

That would result in a supply gap of around 700,000 bpd through the end of
this year, until the Organization of the Petroleum Countries and allies,
together called OPEC+, add more supply, as planned in January.  

The Thomson Reuters Trust Principles.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

National Unity Day

December 22

Christmas Day

December 25

Boxing Day

December 26

Public Holiday in lieu of Boxing Day falling on a Sunday

December 27

Counters trading under cautionary

ART

Seed co Int.

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
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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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