Bulls n Bears Daily Market Commentary : 12 August 2021

Thu Aug 12 15:54:33 CAT 2021

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Bulls n Bears Daily Market Commentary : 12 August 2021

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE maintained gains in this second day of trading in the holiday
shortened week. Total turnover was up by 77% to ZW$138.45 million. Activity
levels were below the previous week average of 500 trades in a session at
470 trades. Medtech was the most active stock at 42 trades followed by
Econet at 39 trades while Star Africa and OK Zimbabwe were at 37 trades
each. Medtech was the most liquid counter as it anchored volume aggregate
trading 2 430 000 shares and First Mutual Holdings anchored value aggregate
with a value of ZW$29.99 million contributing 21.7% to total turnover.

At close, the benchmark All Share Index added 0.16% with 14 advancers and 21
losers while 6 counters remained unchanged. The Top 10 Index was up by 0.72%
with major gains in Econet and Innscor. The Top 15 Index added a paltry
0.04%. The Medium Cap Index traded lower to 18 182.05 points depreciating by
0.70% whilst the Small Cap Index also added 1.66% to close at 234 706.38
points. Leading the risers pack of the day was NMB up by 13.36% followed by
Fidelity and Econet  which added 10.00% and 8.90% respectively. Zimplow was
up 8.47% to 1688.26c. Leading in the shakers’ pack were First Mutual
Holdings and Zimpapers which shaded 16.00% and 5.24% respectively. Medtech
Holdings lost 3.82% to 28.85c. ZIMRE Holdings and Delta pared 3.73% and
3.40% respectively. The Old Mutual Top Ten ETF closed at 250.02c down by
0.22% after 19 392 units with a value of ZW$48 483.90 in 21 trades exchanged
hands. On the VFEX, Seed Co International traded 15 518 shares at US 25.20
cents worth US$3 910.54.-wealthaccess

Global Currencies & Equity Markets

Zambia

Current Kwacha appreciation unsustainable – Musokotwane

FORMER Finance Minister Dr Situmbeko Musokotwane says excessive borrowing by
the PF has led to the collapse in the value of the Kwacha over the past 10
years. And Dr Musokotwane says government’s attempt to assure Zambians that
the current strengthening of the Kwacha is genuine and sustainable should be
rejected. 

South Africa

Rand breaks five-day losing streak

The rand rose in tandem with most emerging market currencies, cheering the
slowdown in US inflation as fears surrounding a taper announcement eased,
according to NKC Research.

The local currency broke out of a five-day losing streak as the
softer-than-expected US CPI print bolstered the risk-sensitive rand. Looking
at the main conclusions of the July CPI report, is showed a moderation in
the monthly gain in consumer inflation.

At the close of local trade, the rand strengthened by 0.84 percent ending at
R14.69/$, after trading in range of R14.62/$ - R14.90/$. The rand traded
firmer overnight. The expected range of the rand against the dollar today is
R14.50/$ - R14.80/$.

South African bourse

The market reacted to news of the US Senate passing a trillion-dollar
infrastructure bill, while moderation in US July inflation boosted investor
sentiment. Despite these positive developments, concerns remain over the
Delta variant impact on the global economic recovery. In local news, the JSE
All Share (+0.02 percent) ended higher yesterday and Steinhoff shares rose
(+23.2 percent) following the company’s announcement that it has increased
its global settlement offer by an additional R3.2bn to around R25bn. In the
overall emerging market sphere, the MSCI Emerging Market Index (-0.21
percent) traded lower.

BUSINESS REPORT ONLINE

Shilling slides to four month low

The Kenyan shilling is now trading past the Ksh.109 mark to the dollar, its
lowest in over four months since March 31 this year.

The Central Bank of Kenya (CBK) quoted the shilling at Ksh.109.01 against
the green buck at Tuesday’s close with the local unit opening Wednesday at
Ksh.109.05.

The steady weakening of the local currency is attributable in part to an
increase in the demand for dollars alongside a funds surplus in the
financial system over recent weeks.

At the same time, the Forex exchange rate has been affected by tight global
financial conditions attributed to uncertainty with regard to the COVID-19
pandemic.

Nevertheless, the Kenyan shilling continues to record less volatility
compared to most regional currencies supported in part by increased
remittances and adequate foreign exchange reserves.

The South African Rand, the Botswana Pula and the Uganda shilling have for
instance seen greater volatility in gains made across 12 months to June
while the Rwandese Franc, the Nigerian Naira and the Malawian Kwacha have
marked greater weakening.

The CBK has been stepping in to minimize any volatility in the unit to
include heavy shilling mop ups this past week to squeeze out excess
liquidity in the financial markets/inter-bank system.

The reserve bank has however taken a step back in the open market operations
(OMOs) this weeks as August’s primary bond sale drains out some of the
overbearing liquidity.

The shilling has remained stable across 2021 following a sub-optimal run in
December last year.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar off four-month high as inflation jitters ease

The dollar index, which measures the greenback against a basket of six
rivals, was little changed at 92.942, after edging 0.2% lower on Wednesday
following the report of easing consumer price growth.

The dollar stood just below a four-month peak against major peers on
Thursday as currency traders digested data from the previous day showing
U.S. inflation may be coming off the boil.

The dollar index, which measures the greenback against a basket of six
rivals, was little changed at 92.942, after edging 0.2% lower on Wednesday
following the report of easing consumer price growth.

The greenback has broadly strengthened since mid-June - hitting its highest
since April 1 at 93.195 prior to Wednesday’s data - when the U.S. Federal
Reserve flagged that it was gearing up for earlier-than-expected rate hikes
and amid evidence that the release of pent-up demand in a rebounding economy
was fueling price rises.

Price increases slowed in July, although inflation overall remains
historically high. Inflation also eased in some areas where Fed policymakers
had indicated price pressures would likely prove temporary, such as used
cars.

Other analysts cautioned the dollar’s dip could be short-lived.

The dollar index “should continue to find support in the 91.5-92.0 area” and
“could see new highs beyond 93.50,” when taper talk gathers momentum later
this quarter, they wrote.

The euro was broadly flat versus the dollar at $1.17350 , after recovering
from a four-month low of $1.1706 on Wednesday.

The dollar was also unchanged against the yen at 110.440 yen , after pulling
back from a five-week high of 110.80 overnight.

Sterling dipped 0.1% to $1.38530 despite official data showing Britain’s
economy grew faster than expected in June and by 4.8% in the second quarter
overall.

EUR/USD rallies from March support

Euro bulls will be hoping that EUR/USD can repeat its March feat and bounce
from $1.17 in a substantial fashion.

The price is holding that support level for now, although gains are limited.
Nonetheless, it gives longs something to trade against, while shorts will
wait to see if a reversal develops that takes the price back below $1.17.
Further, gains target $1.88 and then $1.194.

GBP/USD bounces from $1.38

Dollar weakness in the wake of US consumer price index (CPI) figures
yesterday has allowed GBP/USD to bounce from $1.38, providing hope that the
downward move of August has run its course. $1.40 could now be in the sights
of longs, which would help to restore a more bullish view.

Sellers will have to wait and see if the price reverses below $1.38, a
development that might put $1.36 back into the frame as a downside target.

USD/JPY falters at July highs

Unsurprisingly, USD/JPY has weakened following inflation data yesterday,
leaving the ¥110.60 area intact as resistance, as was the case in July.

Bulls will want to see a revival that clears this zone, in order to open the
way to more upside, while sellers will be hoping for a reversal below
¥110.00, that confirms a more negative short-term view and targets ¥109.00.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices dropped this week and analysts predict they will keep falling 

On Sunday evening, gold prices dropped to a four month low of $1,677.9 per
ounce.

Analysts pegged the fall to a stronger-than-expected U.S. jobs report as
well as a rush to buy the dollar in response.

Dominic Schnider, chief investment officer at UBS Global Wealth Management,
predicts that real yields will “go less negative” and that means more
downside for gold.

Gold prices recovered slightly from a sharp fall earlier this week, but
analysts are still pessimistic on the outlook for the precious metal going
forward.

On Sunday evening, gold prices dropped to a four month low of $1,677.9 per
ounce. The metal was hovering around $1,740 per ounce Thursday morning trade
in Asia, still off its highs earlier this year of around $1,900.

Analysts pegged the fall to a stronger-than-expected U.S. jobs report as
well as a rush to buy the dollar in response.

Gold prices and the greenback have an inverse relationship. As the dollar
gets stronger against other currencies, gold prices will fall as it becomes
more expensive in other currencies, driving down demand. 

Fundstrat says bitcoin is headed to $100,000 by year-end as a trading rule
kicks in

The world’s second-biggest cryptocurrency is rallying more than bitcoin

Major analysts are talking about Coinbase’s second-quarter earnings. Here’s
what they said

On Friday, the Bureau of Labor Statistics said nonfarm payrolls increased by
943,000 in July, above the 845,000 new jobs forecast by Dow Jones.

While gold has since recovered some losses, Dhar said it was “difficult to
remain bullish on the precious metal,” given the hawkish outlook for U.S.
monetary policy.

The Federal Reserve is expected to dial back monetary easing and slow its
stimulus efforts as the economy recovers from the pandemic. The U.S. central
bank has held rates near zero, but officials have signaled that hikes could
happen soon, especially with inflation running hot. 

But Dominic Schnider, chief investment officer at UBS Global Wealth
Management, predicts that real yields will “go less negative” and that means
more downside for gold. He told CNBC’s “Street Signs Asia” on Wednesday he
expects outflows from the gold exchange-traded funds and futures markets. 

When real yields go up, gold prices go down, and vice versa. In such a
scenario, the opportunity cost of holding gold, a non-yielding asset, is
higher as investors are foregoing interest that would be otherwise earned in
yielding assets.

He predicts that gold prices will fall to $1,700 per ounce by the first
quarter of 2022. Schnider forecast that gold could see drops to $1,600 per
ounce or lower.-CNBC

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Dairibord

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
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for guideline purposes only and sourced from third parties.

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