Bulls n Bears Daily Market Commentary : 16 September 2024

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Bulls n Bears Daily Market Commentary : 16 September 2024

 

 	



 

 	


ZSE commentary 

 

ZSE record gains in week opening session ...

The ZSE market recorded gains in week opening session as the primary All
Share Index gained 1.98% to 262.04pts while, the Blue-Chip Index added 2.02%
to close at 290.15pts. The Agriculture Index went up 0.31% to 205.75pts as
the Mid Cap Index rose 2.69% to settle at 181.85pts. Insurer First Mutual
Holdings headlined the top performers of the day on a 13.60% jump to
$3.2000, followed by  construction  group  Masimba that surged 13.02% to
close at $2.6000. ZB Financial Holdings firmed up 12.86% to $7.1900  while,
banking  group  FBC charged 12.19% to $9.7250. Proplastics completed the top
five performers of the day on a 5.29% uplift to end the day pegged at
$2.0000 . Contrastingly, NMB led the laggards of the day on a 8.00% retreat
to $2.3000 while, fintech group Ecocash slipped 3.28% to close at $0.4940.
Nampak eased 1.63% to settle at $1.2000 while, cigarette manufacturer BAT
trimmed 0.02% to $65.2995 . The market closed on a positive breadth of nine
after thirteen counters recorded gains against four that faltered.

 

Activity aggregates declined in the session as volume traded dropped 10.76%
to l.98m shares while, value outturn shed 23.56% to $7 .0Sm. The top volume
drivers of the day were OKZim (46.32%), SeedCo (11.55%) and Willdale
(10.48%) . Delta, Seedco, OKZIM and Econet contributed 49.83%, 17.61%,
11.36% and 10.54% respectively. A total of 318,950 units exchanged hands in
the ETF category. Datvest ETF stepped up 1.36% to end the day pegged at
$0.0299 while, the MIZ ETF added 2.19% to $0.0158. The Tigere REIT shot up
10.29% to end the day pegged at $1.1029 after 56,342 units exchanged
hands.-efesecrities

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global South African rand gains, interest rates in focus this week

(Reuters) - The South African rand gained in early trade on Monday, as
markets geared up for a week packed with interest rate announcements and a
local inflation print.

 

At 0720 GMT, the rand traded at 17.66 against the dollar, about 0.6% firmer
than its previous close.

 

"There are many moving parts to consider this morning that will have an
important role to play in determining SA's economic future over the next few
months," said ETM Analytics in a research note.

 

On Wednesday, local investors will look to South Africa's August consumer
inflation figures. Consumer inflation fell to 4.6% year-on-year in July,
only just above the level the South African central bank aims for, 4.5%.

 

Another reading near the target would further cement expectations for a rate
cut from the South African Reserve Bank (SARB) on Thursday. Economist polled
by Reuters predict a 25 basis point cut.

 

"Most of this week's attention will fall on the SARB's interest rate
decision. However, the domestic MPC (Monetary Policy Committee) is just one
of three important central banks deciding on monetary policy," ETM Analytics
added.

 

The U.S. Federal Reserve will announce its policy decision on Wednesday.
Markets are betting the central bank of the world's biggest economy will cut
rates but are divided on the size of the cut.

 

 

The Bank of England is expected to keep its main lending rate unchanged when
it announces its decision on Thursday.

 

South Africa's benchmark 2030 government bond also gained in early deals, as
the yield slipped 6.5 basis points to 8.85%.

 

 

 

Ghana

 

 

Ghana's Cedi eyes a comeback ahead of key U.S. Federal decision on September
18

The Ghanaian cedi's more than 27% year-to-date depreciation against the
dollar appears to be easing, as the upcoming U.S. Federal Reserve rate cut
on September 18 could weaken the dollar, offering the cedi a chance to
rebound.

 

In August 2024, Ghana inaugurated its first gold refinery, the Royal Ghana
Gold Refinery, which is set to refine 400 kilograms of gold daily using raw
materials from artisanal and small-scale miners nationwide, boosting the
country's earnings.

 

Following the refinery's launch and news about a 2.39% drop in inflation,
the cedi strengthened in August, reversing a decline that saw it briefly
touch 16 GHS in the first week of the month.

 

 

However, with speculation that the US Federal Reserve might cut rates by up
to 50 basis points on September 18, 2024, a potential weakening of the
dollar could further strengthen the cedi, building on the resilience it
demonstrated in August.

 

What to Know

Ghana's cedi is already showing signs of recovery, supported by favorable
developments in August, including a 2.39% reduction in inflation and the
inauguration of the Royal Ghana Gold Refinery.

The refinery is a public-private partnership between Rosy Royal Minerals of
India and Ghana's central bank, with Ghana holding an 80% stake.

With a capacity to process 400 kg of gold per day, it is expected to boost
Ghana's earnings, especially considering a disappointing cocoa season in
2024, driving positive investor sentiment and lifting the currency.

A US Federal Reserve rate cut, designed to make borrowing cheaper for
businesses and consumers in America, often leads investors to seek higher
yields elsewhere, potentially weakening the dollar.

If the dollar softens after the rate cut, currencies like the cedi, which
are paired with the dollar, could strengthen, offsetting losses from earlier
dollar strength.

USD/GHS Trend 

Like Nigeria's naira, the cedi has been gradually depreciating against the
dollar for several years, with significant declines starting in 2016.

The depreciation accelerated in February 2022, and by November of that year,
the cedi had fallen by 132%, reaching a low of 14.40 GHS.

In December 2022, the currency appreciated to the 9.98 GHS range but has
continued to weaken since then, briefly hitting 16 GHS in the first week of
August 2024.

However, the favourable economic news in August, including the drop in
inflation and the refinery's inauguration, helped halt the cedi's
seven-month depreciation streak in 2024.

If the US Federal Reserve announces a rate cut on Wednesday, and the dollar
weakens as a result, the cedi could capitalize on this, further
strengthening and offsetting its earlier declines.

 

 

 <mailto:info at bulls.co.zw> 

 

Global Markets

 

Dollar pinned down by 50 bp Fed cut wagers

(Reuters) - The dollar traded near its lowest levels of the year on Tuesday,
on the eve of the expected start to a U.S. easing cycle that markets are
betting may begin with an outsized rate cut.

 

The euro hovered around $1.1123 in the Asia session, not far from the year's
high of $1.1201.

The yen made a jaunt to the stronger side of 140 during holiday thinned
trade on Monday, and had eased back to 140.77 as dealers returned to their
desks in Tokyo.

 

 

It has fallen the most this year so has the most room to rally on a dovish
turn from the U.S. central bank. A sustained break of 140.00 would open the
way to a low from last January at 127.215.

Fed funds futures have rallied to push the chance of a 50 basis point rate
cut to 67%, against 30% a week ago. The odds have narrowed sharply after
media reports revived the prospect of a more aggressive easing.

 

"Regardless of which of -25bps or -50bps the (Fed) goes with on Wednesday,
we do think that the Fed's messaging will be 'dovish,'" said Macquarie
strategists in a note to clients.

"The USD could weaken against the majors on a very dovish tone, even with a
-25bp cut ... the largest losses, if any, are still likely to be experienced
against the JPY," they said.

"That's because the contrast between central bank outlooks will remain
starkest between the Fed and the BOJ, for the time being."

The Bank of Japan is expected to keep policy steady on Friday but signal
that further interest rate hikes are coming, perhaps turning the next
meeting in October into a live one.

 

Sterling - the best performing G10 currency this year with a 3.9% rise on
the dollar - has also led the charge against the dollar thanks to signs of
resilience in Britain's economy and stickiness in inflation.

It broke above $1.32 on Monday and bought $1.3203 in the Asia session. The
Bank of England is generally expected to leave rates on hold at 5% when it
meets on Thursday, though markets have priced in a 36% chance of another
cut.

The Australian and New Zealand dollars also rallied through Monday and
bought $0.6746 and $0.6189, respectively, on Tuesday, as traders focused
more on the Fed rather than weekend signs of deepening trouble in China's
sluggish economy.

Chinese markets are closed for the Mid-Autumn Festival break until
Wednesday, though the yuan was firm at 7.0947 in offshore trade as it
settles into a new range.

 

The U.S. dollar index held at 100.7, not far from its 2024 low made last
month at 100.51.

U.S. retail sales data and Canadian CPI figures are due later in the
session, though all eyes are on the Fed's two-day meeting which concludes on
Wednesday.

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold SWOT: Positioning on silver has been more bullish by Bank of America

 

 

Strengths

 

The best performing precious metal for the week was palladium, up 19.2%.
According to Bank of America, assets under management in physically backed
ETFs have bottomed out, suggesting a more broad-based increase in exposure
to the yellow metal from Western investors, which have been somewhat absent
from the market earlier this year.

 

Probe Gold overall resources in the Val d'Or East have nearly doubled (+92%)
from 5.2 Moz to 10.0 Moz, reports Canaccord. This is impressive growth which
the company achieved through successful expansion and conversion drilling;
acquisitions made since its last resource update in 2023.

Andean Silver announced an +80% increase in the Cerro Bayo resources to 91M
ounces (previous: 50M ounces), which is above Canaccord's expectations of
70-80Moz. 

 

Weaknesses

 

The worst performing precious metal for the week was gold, down 3.36%. Ascot
owns the Premier Gold Project in northwestern British Columbia. Management
announced it was suspending operations as the mill cannot be filled and
funding is required to complete an estimated three to six months of
development.

According to Bank of America, Kinross Gold released the results of a
Preliminary Economic Assessment on its Great Bear gold mining project
located in northwestern Ontario, Canada. From a production point of view,
the results are below the bank's forecasts and what it believes to be
consensus expectations, both in terms of total production and average annual
production.

Royalty stocks underperformed the traditional gold miners, reports Scotia,
albeit the large-cap royalty companies outperformed the broad U.S. equity
market indices over the past three months. Scotia's top picks in this space
are Wheaton Precious Metals and Triple Flag.

Opportunities

 

The current gold/silver ratio at 89 is above the long-term trendline,
reports Bank of America, which indicates the gold/silver price ratio should
currently be around 83. With gold now at $2,497 per ounce, this long-term
trendline implies that the price of silver is undervalued versus gold and
should be around $30 per ounce, suggesting 7% from the current level.

teaser image

 

 

According to UBS, AngloGold made a firm offer to buy Centamin for $2.5
billion in a predominantly script transaction that included $145 million in
cash. The offer represented a premium of 37% to Monday's closing price of
120 pence for Centamin. This implies a $2,700 per ounce gold price
environment over the medium term. 

Positioning on silver has been more bullish by Bank of America due to its
link to green technologies. The bank sees upside for both precious metals in
the next 18 months but believes silver should outperform gold because it is
more sensitive to manufacturing activity.

Threats

 

According to UBS, for Bellevue Gold, the A$146m equity raise will pay down
A$120 million debt and lift liquidity from A$76 million to A$102 million. By
restructuring the debt profile, Bellevue will be able to self-fund its
growth targets. However, the requirement for further significant capex was a
key surprise in the update.

Bloomberg covered ETFs have reduced their silver holdings by 19,769 troy
ounces in the latest trading session, adding to concerns that increased
selling could put downward pressure on silver prices. This reduction in
demand poses a threat to silver investors, as continued sales could lead to
further price declines in the market. 

According to Bank of America, Pan American Silver announced its annual
reserve and resource estimate update. Adjusting for asset sales, total
contained silver and gold reserves declined 4% and 11% year-over-year to 468
million ounces and 6.9 million ounces, respectively.

 

 

 


 

INVESTORS DIARY 2024

 


Company

Event

Venue

Date & Time

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

Counters trading under cautionary

 

 

 

 	

 

 

 

 

 	

CBZH

GetBucks

EcoCash

 

 	

Padenga

Econet

RTG

 

 	

Fidelity

TSL

FMHL

 

 	

ZBFH

 

 

 

 	

Invest Wisely!

Bulls n Bears 

 

 

 Invest Cellphone:            +263 71 944 1674 | +27 79 993 5557 

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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
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opinions expressed and recommendations made are subject to change without
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any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 

 	

 

 

 	


 (c) 2024 Web: www.bullszimbabwe.com Email: bulls at bullszimbabwe.com Tel: +27
79 993 5557 | +263 71 944 1674

 

 	

 

 

 	
							

 

 

 

 

 

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