Bulls n Bears Daily Market Commentary : 13 December 2021

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Bulls n Bears Daily Market Commentary : 13 December 2021

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

 

The ZSE shares opened the week in the red in a session with significant losses as investors continue to pullback moderately amid concerns of a surge in infections from the Omicron variant and an imminent stricter lockdown. Activity levels retreated and remained below recent averages at 236 trades. Star Africa was the most active stock at 30 trades followed by Delta and Simbisa at 25 and 24 trades respectively. Investor sentiment was negative  after the session yielded 17 fallers against 11 risers while five of the active stocks remained unchanged. Star Africa anchored volume aggregate trading 375 500 shares and Delta anchored value aggregate with a value of ZW$12.16 million.

 

The All-Share Index shaded 0.58% to close at 10 535.21 points. The Top 10 Index pared 0.78%. The Top 15 Index also lost 0.71%. The Medium Cap Index was up by a paltry 0.02% to 20 042.34 points whilst the Small Cap Index lost 1.82% to 376 629.34 points. Leading the shakers pack of the day was Turnall Holdings  shading 19.71%. Hippo was down by 3.49%. First Capital Bank shaded 2.38% and Delta shaded 1.72% to 14 743.59c. Mashonaland Holdings was down by 1.54%. Mitigating the losses were gains in Ariston Holdings and FBC Holdings which added 6.39% and 1.11% to 380c and 3 325c respectively. Proplastics was up by 1.06% to 2 980c. African Sun and NMB Holdings added 0.75% and 0.51% respectively. The Old Mutual Top Ten ETF closed at 493.28c up by 0.29% after 4 205 units worth ZW$20 742.60 exchanged hands in 15 trades.-wealthaccess

 



 

Global Currencies & Equity Markets

 

 

South Africa

 

South African rand weaker on Fed meeting expectations

(Reuters) - The South African rand fell on Monday, as investors bet the U.S. Federal Reserve will announce that it will wrap up its bond purchases sooner than expected at a meeting this week.

 

At 1644 GMT, the rand traded at 16.0075 against the dollar, around 0.2% weaker than its previous close, with concerns about a surge in domestic COVID-19 cases also weighing on the rand.

 

The dollar (.DXY) was 0.2% stronger against a basket of currencies.

 

The Fed's two-day gathering wraps up on Wednesday, with clues about the timing of interest rate increases next year also in focus. read more

 

A flurry of South African economic data releases including the November consumer price index (ZACPIY=ECI), producer inflation (ZAPPIY=ECI) and a leading business cycle indicator (ZALEAD=ECI) are also due on Wednesday.

 

In fixed income, the yield on the benchmark 2030 government bond was down 1 basis point to 9.48%.

 

Stocks fell slightly, with the Johannesburg Stock Exchange's Top-40 Index (.JTOPI) slipping 0.33% to 65,177 points and the broader All-Share Index (.JALSH) losing 0.36% to 71,430 points.

 

Retailer Shoprite (SHPJ.J) rose 1.71%. It said on Monday it had entered into a joint venture agreement with a delivery partner in a drive to grow its e-commerce business. read more

 

The Thomson Reuters Trust Principles.

 

 

Nigeria

 

Declining naira weighs down forex reserves

The naira depreciated across official and parallel markets at the weekend following sustained demand pressure for the dollar.

 

This led to the depletion of the foreign exchange (forex) reserves by $187.6 million.

 

There were also concerns over rising trade deficit and possible further official devaluation of the national currency.

The local currency depreciated by 0.1 per cent to N415.10/$ at the official Investor and Exporter (I & E) Window and it fell by 1.2 per cent to N574/$ at the parallel market.

 

It, however, closed flat at N430/$ at the Interbank Foreign Exchange market as the Central Bank of Nigeria (CBN) sustained its weekly injections of $210 million in support of the apex bank’s floating management of the national currency.

 

 

The apex bank allocated $100 million to Wholesale Secondary Market Intervention Sales (SMIS) and $55 million each to Small and Medium Scale Enterprises and invisibles.

 

With the naira management pressure, the nation’s forex reserves declined by $187.63 million to $40.93 billion, according to the latest update provided by Cordros Capital, a major investment banking group, at the weekend.

Most analysts appeared to be unanimous on the precarious position of naira and forex reserves, especially with last week’s national data showing increasing trade deficit.

 

The management of Cowry Asset, which said there was a relationship between naira devaluation and trade deficit, noted that widened trade deficit amid rising petroleum products and manufactured goods imports partly triggered the pressure on the naira against the dollar, which led to devaluation of the naira by the CBN in the third quarter of 2021.

 

Cordros Capital noted that while the CBN may have enough supply to sustain the forex market over the short term, given recent inflows from the issued Eurobond and the IMF’s SDR, the medium to long-term stability of the national currency remains uncertain.

 

According to analysts at Cordros Capital, foreign inflows are paramount for sustained forex liquidity over the medium term, in line with expectation that accretion to the reserves will be weak given that crude oil production levels remain quite low.

Cordros Capital pointed out that foreign portfolio investors (FPIs), which have historically supported supply levels in the I & E Window will be needed to sustain forex liquidity levels. About 53.8 per cent of forex inflows to the I & E Window in 2019 came from FPIs.

 

Analysts further said adjustments in the naira-dollar peg closer to naira’s fair value and flexibility in the exchange rate would be significant in attracting foreign inflows back to the market.

 

The latest economic report by the National Bureau of Statistics (NBS) showed that Nigeria’s trade deficit increased by 61.6 per cent to N3.02 trillion in third quarter 2021 from N1.87 trillion in second quarter 2021. This marked eighth consecutive quarter of negative trade balance.

 

The increased trade imbalance was due to 17.3 per cent increase in total imports from N6.95 trillion in second quarter 2021 to N8.15 trillion in third quarter 2021. However, total exports inched up by 1.0 per cent from N5.08 trillion in second quarter 2021 to N5.13 trillion.

 

A Senior Research Analyst at FXTM, Lukman Otunuga, outlined that there were several factors weighing on the naira, listing the prevalent 16.63 per cent inflation rate as one of such challenges.

 

In such a situation, the forces of demand and supply are not in equilibrium. It is usually the case that demand is higher than supply.

 

He listed other factors affecting the inflow of foreign exchange as oil prices per barrel, import dependence, and the land border closure.

 

Otunuga added that given how the fundamentals still point to tight market conditions, the path of least resistance for crude oil remains north. Despite the high crude oil prices, a sizeable portion of the country’s foreign exchange has depreciated due to the continued importation of refined petroleum products.

 

Otunuga said: “Apart from dependence on imported fuel, the Nigerian economy is dependent on imported goods and products. This is another avenue for the outflow of the limited forex into other economies.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

U.S. dollar advances as Fed seen concluding asset buys sooner than expected

(Reuters) - The dollar rose on Monday ahead of a slew of central bank meetings this week led by the Federal Reserve, with investors expecting the U.S. central bank to announce it will wrap up its bond purchases sooner than expected, as they look for clues on timing of interest rate increases next year.

 

Aside from the Fed, the European Central Bank, Bank of Japan, Bank of England, Swiss National Bank, and Norges Bank, among others, all have policy decisions in the next few days.

 

The euro fell, as it is seen as vulnerable to a U.S. rate hike given expectations that the Fed will tighten policy more quickly than the dovish ECB.

 

The dollar index , which measures the greenback against six major peers, was up 0.2% at 96.297. The euro was down 0.2% at $1.1291.

 

Against the yen, the dollar was up 0.1% at 113.49 yen .

 

Some analysts, however, believe the dollar's march higher in recent weeks has already factored in many of its possible sources of strength in the short term.

 

That said, if the Fed forecasts 2022 inflation rates above 3 percent, or if the 2023 projection jumps, "dollar bulls will stampede," noted Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

 

The pound dipped 0.4% to $1.3216 after Prime Minister Boris Johnson said on Sunday Britain faced an Omicron "tidal wave." On Monday he said at least one person has died in the UK due to the latest variant. read more

 

The Swiss franc was down versus the dollar, which was last up 0.1% at 0.9219 francs , while the euro was down 0.1% at 1.0409 francs .

 

Moves in the franc came as the Swiss National Bank's sight deposits rose last week by their highest amount in seven months, indicating policymakers are taking the first steps to battle a rise in the value of the franc against major rivals, particularly the euro. read more

 

The SNB, which has been battling the appreciation of the franc since the start of the pandemic, is due to make its latest interest rate decision on Thursday. read more

 

In cryptocurrencies, bitcoin fell to a two-week low of $45,750 and was last down 7.2% at $46,500, after hitting levels above $50,000 on Sunday. Ether , the token linked to the Ethereum blockchain, dropped 9.8% to $3,747. The Thomson Reuters Trust Principles.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



Gold price today rises for second day in a row, silver rates edge higher

Gold and silver prices today edged higher today amid steady global rates. On MCX, gold rates rose 0.23% to ₹48274 per 10 gram while silver rose 0.38% to ₹61382 per kg. 

 

Gold prices had jumped on Friday following data showing U.S. consumer prices rose further in November, leading to the largest annual gain since 1982.

 

Gold has been rangebound in recent sessions amid mixed factors. The US dollar index was steady while market players countered increasing risks to the global economy from rising inflation and spread of new variant against prospect of Fed’s monetary tightening.

 

In global markets, gold traded in a narrow range ahead of this week's Federal Reserve meeting. Spot gold was last up 0.1% at $1,783.91 per ounce. Analysts expect the Fed to likely announce a faster tapering of bond purchases but more pronounced concerns over inflation could roil financial markets.  Among other precious metals, spot silver dropped 0.1% to $22.14 per ounce while platinum fell 0.2% to $940.01.

 

The Fed's two-day policy meeting is scheduled on December 14-15.

 

Although gold is considered an inflation hedge, reduced stimulus and interest rate increases tend to push government bond yields up, raising the opportunity cost of bullion, which pays no interest.

 

Also capping gold's rise was a stronger US dollar and a rally in global equity markets. A stronger dollar makes bullion more expensive for those holding other currencies, dimming its appeal. (With Agency Inputs)

 

 

 


 

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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