Bulls n Bears Daily Market Commentary : 27 September 2021

Tue Sep 28 05:55:41 CAT 2021

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Bulls n Bears Daily Market Commentary : 27 September 2021

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ZSE commentary

The ZSE continued on its winning streak closing today’s session with significant gains in all indices in our review. Small and medium cap stocks headlined the market rally for the day. Activity levels climbed to 589 trades and market bias still firm in the positive as 31 stocks rose while 5 lagged and 9 of the active stocks remained unchanged. Star Africa was the most active stock at 71 trades followed by Medtech and OK Zimbabwe at 65 and 55 trades respectively. Medtech Holdings anchored volume aggregate trading 7 041 100 shares and Econet anchored value aggregate with a value of ZW$64 million.

The benchmark All Share Index was up by 4.01% to a fresh all time high of 8 182.63 points. The Top 10 Index added 3.88%. The Top 15 Index gained 4.20%. The Medium Cap Index traded higher to 19 426.49 points appreciating by 4.13% whilst the Small Cap Index also added 6.40% to close at 244 354.47 points. Leading the risers pack of the day was Econet which added 19.22% to a new record high of 5012.77c. Zimplow added 18.16% to 1878.80c. Mashonaland Holdings added 17.38% and Axia  was up by 17.01%. BAT added 14.95%. Bears for the day were NMB Holdings and Rio Zimbabwe which shaded 12.13% and 10.82%. Delta lost 2.16% together with First Mutual Properties which shaded 1.45%. The Old Mutual Top Ten ETF closed at 287.57c up by 5.47% after trading 3 600 units with a value of ZW$10 353 in 9 trades. Elsewhere on the VFEX, Padenga  traded 980 shares worth US$294 to close unchanged at US 30 cents.wealthaccess

Global Currencies & Equity Markets

South Africa

South African rand ends stronger, receding Evergrande fears help

(Reuters) - The South African rand ended stronger after a volatile day of trading on Monday, helped by receding fears of widespread market contagion from indebted Chinese developer Evergrande (3333.HK).

At 1640 GMT, the rand traded at 14.9125 against the dollar, around 0.3% firmer than its previous close.

Evergrande owes $305 billion and has run short of cash, and concerns its problems could ripple through China's financial system and beyond have overshadowed trade on global markets in recent weeks. read more

But some of those fears are ebbing after China's central bank vowed to protect consumers exposed to the housing market on Monday and injected more cash into the banking system. read more

The domestic focus this week is on economic data releases including August credit numbers (ZACRED=ECI), producer price inflation (ZAPPIY=ECI) and trade figures (ZATBAL=ECI), all due on Thursday.

Africa's most industrialised nation performed strongly in the first half of the year, with sectors like mining expanding strongly on the back of bumper commodities prices, but it suffered a sharp knock in July when some of the worst rioting in the post-apartheid era broke out.

Last week, the central bank said an economic bounce back was mostly done as it held its main lending rate.

Johannesburg-listed stocks were mixed on Monday.

Financial shares, considered a barometer of local economic prospects, posted losses with a banking index (.JBANK) down 0.73%. But a resources index (.JRESI) rose 0.86%.

The Johannesburg Stock Exchange's All-share index (.JALSH) closed up 0.23% at 64,197 points, while the Top-40 index (.JTOPI) ended up 0.25% at 57,784 points.

The Thomson Reuters Trust Principles.

Nigeria

Nigeria naira at record black market low despite successful Eurobond sale

(Reuters) - The Nigerian naira hit a record low of 573 against the dollar on the black market on Monday, shrugging off news of the country's Eurobond sale, meant to boost its currency reserves, traders said, weighed by a recent clampdown on retail forex operators.

The West African country sold $4 billion via Eurobonds last week after investors submitted bids of $12.2 billion. It is considering an additional issue.

But traders on the informal black market have shrugged off the news, citing the central bank's ban on dollar sales to exchange bureaus in an attempt to channel demand from the unofficial market, where the naira is trading at much lower levels.

Forizs added that pressure on the black market could abate if the central bank lifts currency restrictions on imports.

Nigeria has been battling dollar shortages brought on by low oil prices, which worsened with disruptions linked to COVID-19. The central bank has devalued the currency three times since March last year, but the naira has continued to weaken.

The currency has been hitting new lows on the black market since the central bank action. It has traded within a range on the official market, supported by the central bank.

Patience Oniha, head of the Debt Management Office, told Reuters that Nigeria's credit story coupled with strong engagement helped it sell the dollar-denominated bond and that it was considering more sales.

Our Standards: The Thomson Reuters Trust Principles.

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Global Markets

Yen weakens to 111 per dollar as U.S. Treasury yields soar

The yen traded near an almost three-month low to the dollar and reached a two-week trough versus the euro on Tuesday, as rising bond yields in the U.S. and Europe lured Japanese investors.

The yen was little changed at 110.985 per dollar, not far from Monday’s low of 111.07, a level not seen since July 5.

It was also largely flat at 129.785 to the single currency after earlier touching 129.92 for the first time since Sept. 14.

While benchmark 10-year Japanese government bond yields remain pinned near zero by the Bank of Japan’s yield curve control policy, equivalent U.S. Treasury yields have soared to a three-month high, touching 1.516% overnight.

German 10-year bund yields, while below those on JGBs, have catapulted to the highest since the start of July at minus 0.191% from as low as minus 0.340% just a week ago.

U.S. yields have been pulled higher by a hawkish shift at the Federal Reserve, which announced last week it may start tapering stimulus as soon as November and flagged interest rate increases may follow sooner than expected.

That was reinforced by hawkish tones from the Bank of England and Norges Bank, which last week became the first developed-nation central bank to raise interest rates, pulling other global bond yields higher.

But despite an initial pop in the dollar index — which measures the currency against six major rivals - to as high as 93.526 for the first time in more than a month, it has since moved mostly sideways, and was last not far off from Monday at 93.421.

Against the euro, the dollar was little changed at $1.16935, hovering near the more than one-month high of $1.16835 reached on Thursday.

Still, many analysts expect the dollar to rise over time.

TD expects the Fed to end its quantitative easing program by June 2022.

Elsewhere, the risk-sensitive Australian dollar slipped 0.14% to $0.7276, but held on to most of Monday’s 0.4% rally as concerns about contagion from China Evergrande Group’s debt woes receded and iron ore prices continued to rebound.

New Zealand’s dollar weakened 0.17% to $0.70005, after ending Monday mostly flat.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price today fall to near lowest in 6 month but silver rates higher

Gold edged lower in Indian markets, tracking subdued global cues. On MCX, gold futures were down marginally to ₹45,984 per 10 gram while silver futures were up 1% to ₹60,517 per kg. In the previous session, gold had edged 0.13% lower to near 6-month lows while silver had slumped 1.4%. Gold has been volatile this year after hitting record high of ₹56,200 last year. 

In global markets, gold prices eased, pressured by an uptick in U.S. bond yields and a robust dollar. Spot gold was down 0.1% at $1,747.99 per ounce. Denting gold's appeal by raising its opportunity cost, benchmark 10-year U.S. Treasury yields rose to their highest level in nearly three months. The dollar also strengthened, adding further pressure.

Gold is often considered a hedge against higher inflation, but higher interest rates increase the opportunity cost of holding gold, which pays no interest.

Reports over the weekend said that Chinese authorities had ordered local housing chiefs to put Evergrande's cash in ringfenced accounts to make sure it is used to pay to complete construction projects.

Gold could see choppy movement in near term but direct break of $1725 would trigger major liquation pressure in coming sessions, says Geojit. 

Inflows into gold ETFs remained subdued. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes on Thursday.

Gold traders will be closing watching Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen's testimony at a Senate Banking Committee hearing on Tuesday. On the same day, European Central Bank President Christine Lagarde will be speaking at an event.

Copper rises as Shanghai exchange stockpiles hit 12-yr low

(Reuters) - Copper prices rose on Monday as stockpiles in Chinese exchange warehouses dropped to their lowest levels in more than 12 years, with a shortage of scrap metal boosting demand for refined copper.

Three-month copper on the London Metal Exchange CMCU3 rose 0.5% to $9,380.50 a tonne by 0420 GMT, while the most-traded October copper contract on the Shanghai Futures Exchange SCFcv1 advanced 0.9% to 69,630 yuan ($10,768.29) a tonne.

ShFE copper inventories CU-STX-SGH on Friday fell for the seventh straight week to 44,629 tonnes, their lowest since June 2009.

Tighter restrictions in China and supply disruptions limited supplies of scrap copper, forcing some users to switch to copper cathode for consumption.

Yangshan copper premium SMM-CUYP-CN rose to $114 a tonne, suggesting improving demand to import the metal into China, and LME cash copper's premium over the three-month contract CMCU0-3 was at $11.25 a tonne, indicating tight nearby supply.

Chinese commodity producers and manufacturers have also been hit by widening power curbs, put in place to keep emissions in check.

ING analysts said the power crunch would support prices as it would lead to reduced supply, but also have a negative effect as it impacts semi-fabricating and downstream consumers.

($1 = 6.4662 yuan)

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 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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