Bulls n Bears Daily Market Commentary : 20 September 2021

Mon Sep 20 17:17:56 CAT 2021

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Bulls n Bears Daily Market Commentary : 20 September 2021

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ZSE commentary

The ZSE opened the week in the positive after all the indices in our review closed with gains headlined by mid-tier stocks. Activity levels were low at 255 trades and market bias was negative as 16 stocks registered losses against 15 gainers while 3 of the active stocks remained unchanged. Bindura was the most active stock at 27 trades followed by Medtech and Star Africa at 24 and 21 trades respectively. Medtech anchored volume aggregate trading 15 950 100 shares and Seed Co. anchored value aggregate with a value of ZW$6 million.

The benchmark All Share Index added 1.28% to 7 007.28 points breaching the 7 000 mark. The Top 10 Index was up by 1.80%. The Top 15 Index gained 2.12%. The Medium Cap Index traded higher to 17 356.14 points appreciating by 0.53% whilst the Small Cap Index also added 0.56% to close at 221 570.53 points. Leading the risers pack of the day was National Foods which was up by 20.00%. BAT added 16.41% to 129994.97c. Fidelity added 12.50% and Mashonaland Holdings was up by 3.307%. Econet added 2.80%. Leading in the shakers’ pack were NMB Holdings and ZIMRE Holdings which shaded 20.00% and 10.69% respectively. Star Africa Corporation and Medtech Holdings  were down 3.36% and 2.69% respectively. Dairibord Holdings shaded 2.64%. The Old Mutual Top Ten ETF closed at 237.51c after trading 25 800 units with a value of ZW$61 278 in 9 trades exchanged hands closing with a YTD gain of %.-wealthaccess

Global Currencies & Equity Markets

South Africa

Rand slips to four-week low as commodities keep unravelling

The rand slid to its lowest against the dollar in about four weeks on Monday morning as commodity prices plunged further, raising questions about the durability of the commodity windfall that has partially shielded SA against the Covid-19 onslaught.

The currency slipped 0.35% to trade at R14.83/$, marking a reversal from R14.12/$ touched on Tuesday last week, though still better than a five-month low of R15.40/$ in mid-August.

The plunge in commodity prices deepened amid concerns that the global economic recovery may have peaked, and due to a strong dollar before the US Federal Reserve’s policy meeting on Wednesday that could prepare ground for a reduction in its monthly bond-buying programme.

Platinum fell 2.18% to $920.58oz, its lowest level since November and palladium plunged 3% to trade at its weakest level since early-July at about $1,256/oz. The iron price was hovering around $100 per tonne, after peaking at $238.64 in May.

Commodity prices surged in the second half of 2020, driven partly by Covid-19-induced supply concerns and a rebound in global economic activity. SA has benefited via higher tax receipts and mineral royalties as higher metal prices boosted mining companies’ profits.

Lower metal prices will play out the negatively in the JSE-listed mining shares, which are already in correction territory after peaking in the first half of the year.

Elsewhere,  Hong Kong’s Hang Seng was down 3.3%, reflecting a general-risk off environment.

Nigeria

Naira depreciates further, as foreign reserves gain $600m in one week

Nigeria’s local currency, Naira, faced severe pressures last week, forcing it to a record depreciation against the US Dollar  in both the parallel market and Investors and Exporters (I&E) window.

This came at the backdrop of  the $600 million accretion to the nation’s foreign reserves during the week.In the parallel market the exchange rate rose to N570 per dollar on Friday from N540 per dollar the previous week, losing N30, the highest in recent years.

In the I&E window, the Naira depreciated by 88 kobo as the indicative exchange rate dropped to N412.88 per dollar on Friday from N412 per dollar the previous week.

However, the volume of dollars traded   (turnover) in the window rose by 35 per cent to $975.63 million last week from $724.11 million traded the previous week.

Meanwhile, data on the Central Bank of Nigeria (CBN) website showed that the nation’s foreign reserves gained $600 million  as the gross amount   rose to $35.4 billion on Friday from $34.8 billion the previous week.

The liquid amount also grew by $600 million to $35.1billion on Friday from $34.5 billion the previous week.

These were coming as the members of the Central Bank of Nigeria, CBN, Monetary Policy Committee, MPC, applauded the apex bank on management of exchange rate thereby urging the apex bank to take further  steps to restrict the activities of unauthorised and illegal dealers in the foreign  exchange market.

The communiqué of the MPC meeting held last week in Abuja stated: “On the management of the exchange rate, the Committee applauded the Bank for improving foreign exchange supply in the economy to meet legitimate  business and consumer demand.- Vanguard News Nigeria

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Global Markets

Safety flows extend dollar rally ahead of Fed

(Reuters) - The dollar rallied to a month-high in Asia on Monday as looming catastrophe at indebted developer China Evergrande added extra nerves to a cautious mood, with investors bracing for the Federal Reserve to take another step towards tapering this week.

In trade thinned by holidays in Japan, China and South Korea, the euro fell 0.1% to $1.1710, its lowest since late August.

The Australian dollar fell 0.5% to a three-week low of $0.7227 while sterling and the kiwi also hit multi-week troughs on the rising greenback. The dollar index rose 0.1% to 93.356, its highest since Aug. 23.

The yen held its own, edging up 0.1% to 109.88 per dollar, while equity markets dropped with concern that an Evergrande collapse could trigger a broader crisis.

Evergrande (3333.HK), with $300 billion in debts, has a bond interest payment of $83.5 million due on Thursday and said on Sunday it begun repaying some investors with real estate, sparking selling in other developers and its lenders.

The fear is that without a bailout, a messy collapse or liquidation ripples through China's property sector at a time when growth is already looking fragile. read more

Onshore Chinese markets were shut for the mid-Autumn break but the offshore yuan fell through its 200-day moving average to a three-week low of 6.4848 per dollar.

At 0330 GMT, sterling was down 0.1% at $1.3709 and the kiwi down 0.14% at $0.7024. The dollar also made broad gains against emerging markets' currencies and cryptocurrencies fell.

FED FOCUS

Ahead this week, no fewer than a dozen central banks hold meetings, but traders' top focus is on the Fed where expectations for a tapering signal are keeping the dollar bid.

The Fed concludes a two-day meeting on Wednesday and consensus is that it will stick with broad plans for tapering this year but will hold off providing details or a timeline for a at least a month.

Creeping U.S. yields, however, which at the 10-year tenor rose for a fourth straight week last week , point to risks of a hawkish surprise or a shift in projections to show hikes as soon a 2022, both of which could support the dollar.

Among the other major central banks, the Bank of England is expected to leave policy settings unchanged, but traders see potential for gains in the pound if the bank adopts a hawkish tone or more members call for asset purchase tapering.

There is no expectation of policy shifts at the resolutely dovish Bank of Japan on Wednesday, but a day later Norway's Norges Bank is expected to become the first G10 central bank to lift rates.

The Norwegian crown slipped with oil and the rising dollar on Monday to a three-week low of 8.7499 per dollar.

The oil-sensitive Canadian dollar was also on the back foot ahead of an election on Monday where polling points to an advantage for incumbent Prime Minister Justin Trudeau but a likelihood he remains leader of a minority government. read more

It hit a one-month low of C$1.2801 per dollar.

The Thomson Reuters Trust Principles.

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Commodities Markets

Gold price today fall to lowest in near 6 months, silver rates plunge

Gold and silver prices edged lower today, continuing their recent correction amid weak global cues. On MCX, gold rates were down 0.13% to ₹45,928 per 10 gram while silver rates dropped 1% to ₹59,427 per kg. In the previous session, gold had dropped 0.16% while silver had tumbled 1.76%.  In global markets, gold rates edged lower as a stronger US dollar dampened the appeal of safe-haven asset. Investors were also cautious ahead of US Federal Reserve meeting later this week. Spot gold dipped 0.1% to $1,752.66 per ounce.

The dollar index hovered near one-month high, denting gold's appeal for holders of other currencies.

Analysts expect the Fed to announce a timeline for reducing its monthly bond purchases as its two-day meeting starts tomorrow.  The US central bank is also likely to release fresh economic projections and a new read on officials' interest rate expectations. Gold is often viewed as a hedge against the inflation and currency debasement likely from widespread stimulus. Tapering of stimulus could diminish gold's appeal.

Also, higher interest rates raise the opportunity cost of holding non-interest bearing gold.

Among other precious metals, silver fell 0.3% to $22.33 per ounce while platinum dropped  0.1% to $940.39.

In a note, Kotak Securities said gold may remain volatile reflecting the trend in US dollar and equity markets as market players assess Fed’s monetary policy and China’s economic health. On the downside, gold could get supported by persisting virus risks, rising inflation concerns, uneven global economic recovery, geopolitical tensions and China’s regulatory crackdown measures, say analysts. Kotak expects gold rates to stabilize near $1750/ounce level. 

Copper slides to 1-month low as Evergrande crisis spurs selling

(Reuters) - Copper prices fell on Monday to one-month lows as the prospect of a debt default at China property developer Evergrande Group fuelled a sell-off across financial markets and investors headed for the safe haven dollar.

Benchmark copper CMCU3 on the London Metal Exchange was down 2.5% at $9,079 a tonne at 1115 GMT. Prices of the metal used widely in the power and construction industries earlier touched $9,052.50 a tonne, the lowest since Aug. 20.

RISK-OFF: Evergrande has been scrambling to raise funds to pay lenders, suppliers and investors, with regulators warning that its $305 billion of liabilities could spark broader risks to China's financial system if not stabilised.

DOLLAR: A higher U.S. currency makes dollar-denominated commodities more expensive for holders of other currencies, which would subdue demand. FRX/

TECHNICALS: Strong support for copper around $9,060, where the 200-day moving average sits has been tested, but traders expect it to hold for now. The first upside barrier comes in at around $9,380, the 21-day moving average.

NICKEL: Prices of the stainless steel metal slipped as traders shrugged off the idea of Indonesia imposing export taxes on products with less than 70% nickel content to drive expansion of the country's domestic processing industry.

Nickel CMNI3 was down 2.1% to $18,945 a tonne.

STOCKS: Nickel prices are expected to be supported by falling stocks of the metal in LME registered warehouses MNISTX-TOTAL, which at 169,992 tonnes have dropped 35% since the middle of April.

OTHER METALS: Aluminium CMAL3 was down 0.5% at $2,869.5 a tonne, zinc CMZN3 fell 1.6% to $3,038 a tonne, lead CMPB3 ceded 0.7% to $2,166 and tin CMSN3 lost 0.8% to $33,850.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Star Africa

AGM

virtual

September 23 -11am

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

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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