Bulls n Bears Daily Market Commentary : 01 September 2021

Thu Sep 2 07:03:11 CAT 2021

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Bulls n Bears Daily Market Commentary : 01 September 2021

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE opened the month of September in the negative albeit an improvement
in liquidity. This was as a result of a profit taking spree by some
investors from mid-August up to now. At close, market bias-maintained
negativity as 22 stocks registered losses against 12 advancers while 5 of
the active stocks remained unchanged. Shares of 39 out of 49 companies were
traded. Activity levels retreated to 361 trades. Delta was the most active
stock at 38 trades closely followed by Innscor at 37 trades and FBC Holdings
at 36 trades. OK Zimbabwe anchored volume aggregate trading 1 265 100 shares
and Delta anchored value aggregate with a value of ZW$41.7 million.

The benchmark All Share Index lost 0.96% to 6 588.74 points. The Top 10
Index was down 1.49%. The Top 15 Index shaded 1.34%. The Medium Cap Index
traded lower to 16 987.67 points depreciating by 0.26% whilst the Small Cap
Index added 0.65% to close at 225 581.76 points pushed by a trade from ZECO
Holdings. Leading the shakers pack of the day was Zimpapers  which was down
by 9.17%. Axia Corporation shaded 6.28% and Econet lost 6.23%. BAT was down
by 4.90% to 95 000c. Leading in the risers' pack were ZECO Holdings which
registered its second trade for this year and First Mutual Properties which
added 100.00% and 10.00% respectively. Zimplow was up by 5.75% to 1593.33c.
First Mutual Holdings and Simbisa Brands added 2.86% and 2.02% respectively.
The Old Mutual Top Ten ETF closed at 253c up by 1.20% after 9 300 units with
a value of ZW$23 529 in 13 trades exchanged hands.- wealthaccess

Global Currencies & Equity Markets

South Africa

The Rand regains past losses

The Rand bounced back significantly last week, moving in line with broader
emerging market strength.

The release of the Federal Open Market Committee (FOMC) minutes and a more
hawkish outlook had investors in a "flight to safety" toward safer assets.
Recent counter-clockwise currency flows helped to offset these drastic moves
and the rand regained some previous losses and ended last week in the green
against most major developed currencies.

The dovish market mood was further influenced by the annual Jackson Hole
Symposium last Friday, where central bankers from around the world gathered
to coordinate plans for the year. The main takeaway from this year's event
was that, while the US will likely begin the tapering of bond purchases
sooner-than-expected, markets should not assume that this will coincide with
an identical approach to raising interest rates. Fed Chair, Jerome Powell,
appears to be kicking this can down the road, signalling that investors
should not hold their breath waiting on higher interest rates.

Despite the correction in the global forex market, the rand suffered local
headwinds in the form of poor unemployment data. The unemployment rate moved
another 1.8% higher during the second quarter of 2021, coming in at 34.4%.
Furthermore, the youth unemployment rate hit a staggering new record high of
64.4%.

This week, South Africa will be releasing its balance of trade figures for
July. The trade surplus is expected to narrow towards R53 billion, after a
reading of R57.66 billion in June. Next week, we turn to the release of
South Africa's GDP growth rate, for the second quarter of 2021.

On the global data front, we have US nonfarm payrolls data out on Friday.
Strong jobs data would help support the narrative of a robust economic
recovery, thus providing additional legs for the greenback, while poor
employment figures are likely to leave markets dovish. 

Zambia

Zambia Holds Key Rate as Currency Rally Helps Rein in Inflation

Zambia's central bank kept its benchmark interest rate unchanged, with
inflation seen decelerating faster than earlier expected. 

The monetary policy committee held the rate at 8.5%, Governor Christopher
Mvunga told reporters Wednesday in Lusaka, the capital. This was the MPC's
first rate decision under a new government following elections last month.

The decision to hold was supported by a slowdown in inflation from a near
19-year high in August that's expected to be sustained on the back of a
stronger kwacha. Zambia imports everything from fuel to food, so currency
volatility has a major bearing on price growth.

A sharp drop in yields at a government bond auction that saw record demand
also seems to be signaling that investors expect inflation will cool in the
coming months. 

Hichilema Rally 

A kwacha bond sale on Aug. 27 saw the central bank raising 2.5 billion
kwacha ($156 million), having received bids for a record 12.5 billion
kwacha. Yields fell across the curve, with those on the five-year notes
dropping almost 8 percentage points to 25%.  

Since Hakainde Hichilema was declared the winner of the presidential
election on Aug. 16, the kwacha has surged by almost 20% against the dollar,
more than any other currency tracked by Bloomberg. The rally has largely
been driven by expectations that Hichilema will rein in public debt and the
budget deficit, while restoring the nation's credibility after it became
Africa's first pandemic-era sovereign defaulter last year.

Zambian President Says Debt 'Hole' May Exceed $12.7 Billion

The nation's newly appointed Finance Minister Situmbeko Musokotwane has laid
out aggressive plans to secure a much sought-after economic program with the
International Monetary Fund by November. A deal could further strengthen the
kwacha which in turn could help curb inflation that has been above the 8%
upper limit of the central bank's target band for more than two years.  

Higher foreign-exchange reserves due to soaring copper prices, its main
export, and a $1.3 billion allocation from the IMF's special drawing rights
have also boosted the currency. Foreign-currency reserves stood at $2.9
billion as at end August, compared with $1.4 billion at June 30.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar softens after ADP; euro hits one-month high

The dollar fell against a basket of major currencies on Wednesday after a
report on the U.S. labor market missed expectations by a wide margin, while
the euro climbed to a one-month high on inflation worries.

The greenback fell after the ADP National Employment Report showed private
payrolls rose by 374,000 in August, up from 326,000 in July but well short
of the 613,000 forecast. A report on weekly initial jobless claims arrives
on Thursday and on Friday the government releases the payrolls report for
August, which could provide clues about the Federal Reserve's policy path.

The dollar has been under pressure since Friday, when Fed Chair Jerome
Powell said at the Jackson Hole conference that while tapering could begin
this year, the central bank was in no hurry to raise interest rates.

Concerns about rising COVID-19 cases denting the economic rebound could also
serve to keep the central bank from scaling back stimulus.

Other data showed U.S. manufacturing activity increased more than
anticipated in August, but a measure of employment in factories fell to a
nine-month low, likely due to a shortage of workers.

The dollar index fell 0.203% and hit a new one-month low of 92.376.

The euro rose against the greenback to a one-month high as inflation worries
persisted following data on Tuesday which showed euro zone inflation
increased to 3% year-on-year in August, the highest in a decade and above
the European Central Bank's 2% target, as well as the 2.7% Reuters forecast.

The euro was up 0.3% to $1.1843, after rising to as much as 1.1857, its
highest level since Aug. 5.

German Bundesbank President Jens Weidmann said euro zone inflation risks
overshooting ECB projections and the central bank should prepare for the end
of its 1.85 trillion euro Pandemic Emergency Purchase Program (PEPP).

The ECB is scheduled to hold a policy meeting on Sept. 9.

The Japanese yen strengthened 0.04% versus the greenback at 109.97 per
dollar, while sterling was last trading at $1.3773, up 0.14% on the day.

In cryptocurrencies, bitcoin last rose 2.9% to $48,521.68 while ether last
rose 8.18% to $3,713.24. Ether rose as high as $3,791.28 on the day, its
highest level since May 16.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Price Forecast: Blue skies ahead above $1,834

XAU/USD was trading around $1,814 at the closing bell having travelled
between a low of $1,808.73 and $1,820.07 the high. 

While that range is narrow, the price is in fact moving steadily higher,
underpinned by a weaker tone surrounding prospects of an imminent taper of
the Federal Reserves quantitive easing programme.

There are expectations for a disappointing jobs number this week while
pushes back the case for a taper no sooner than December.

In this regard, investors are buying risk which is leaving the greenback out
to dry. 

The US dollar, as measured against a basket of currencies in the DXY index
ended around 0.13% lower and near to 92.500. The index had fallen to as low
as 92.378 on the day, just points above the structural support of 92.344. 

Should this level break, it could be blue skies ahead for the gold bugs
above $1,834. 

End of update

Gold prices moved sideways on Wednesday, supported above $1800. After the
ADP report, XAU/USD peaked at $1820 and then pulled back, falling to $1808.
The yellow metal is now around $1815, looking at the $1820 area.

The current positive tone is being supported by a weaker US dollar across
the board. The DXY trades under 92.40, at the lowest level since August 6,
down 0.27% for the day. US yields are modestly lower while stocks in Wall
Street are posting modest gains.

US economic data came in mixed on Wednesday ahead of Friday's NFP. The ADP
employment report showed an increase of 374K in private jobs during August
below the 613K of market consensus. The ISM manufacturing index rose
unexpectedly to 59.9 in August; with the employment index at 49, down from
52.9. The dollar was affected by the job's number and then recovered, only
for a brief momentum, following the ISM report.

Levels to watch

On the upside, the immediate resistance is seen at $1820; above attention
would turn to the July and August tops around $1833. A consolidation above
$1835 could clear the way toward $1850. A slide back under $1800 would
alleviate the upside pressure; the next support stands at $1790 followed by
$1782.

Copper falls 2%, aluminium down 1% in broad LME decline

Almost all London Metal Exchange base-metals prices fell under pressure at
the end of the day on Wednesday September 1, to start the new month on the
back foot following a small pickup in prices in the last week of August.

The base-metals complex came under pressure on Wednesday morning after the
release of the Chinese Caixin manufacturing purchasing managers' index
(PMI). This dropped to 49.2 in August from 50.3 in July, moving into
contraction territory from expansion, which is associated with months when
the index is higher than 50.

"While there will be a school of thought that. this deterioration should
result in government stimulus, in the here-and-now, metal prices are under
pressure, with signs of onshore traders shorting the likes of lead and zinc,
while even aluminium is seeing some signs of longs taking...

Copper price down as China factory activity slows

Copper prices fell more than 2% on Wednesday after data showed that factory
activity slowed in August across swathes of Europe and Asia. In China,
manufacturing contracted for the first time in nearly 1-1/2 years.

Copper for delivery in December fell 2.3% from Tuesday's settlement price,
touching $4.275 per pound ($9,405 per tonne) on the Comex market in New
York.

The state reserves administration in China also released 150,000 tonnes of
copper, aluminum and zinc into the market, on the third round of metal
auctions that helped to cool the rally in copper prices.

Prices are still up 20% this year after rising 26% in 2020, with analysts
optimistic that demand for the metal used in power grids will increase as
the world races toward electrification.

Related read: Copper royalty bill clears another hurdle in Chile

Fundamentals have improved in recent weeks, said Citi analyst Oliver Nugent,
pointing to falling exchange stockpiles, higher Chinese import premiums,
lower speculative positioning and expectations for more economic stimulus.
-Reuters

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Dairibord

Starafrica

Medtech

Turnall

Seed co

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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