Bulls n Bears Daily Market Commentary : 07 October 2021

Thu Oct 7 13:36:05 CAT 2021

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Bulls n Bears Daily Market Commentary : 07 October 2021

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ZSE commentary

The ZSE rallied in today’s session in a continued robust safe haven bid on deepening concerns about the country’s currency situation and subsequent inflation pressures. Among the 41 stock that were active in today’s session, there were 21 decliners against 18 gainers with 2 unchanged. Activity levels were lower at 361 trades with a share volume of 5.4 million shares. OK Zimbabwe was the most active stock at 37 trades followed by Delta and Star Africa at 35 and 30 trades respectively. Zimplow anchored volume aggregate trading 1 358 000 shares and Innscor anchored value aggregate with a value of ZW$48.99 million.

The All-Share Index firmed past the 9 000-mark adding 1.30% to 9 298.45 points. The Top 10 Index added 1.53%. The Top 15 Index gained 1.65%. The Medium Cap Index traded higher to 20 513.57 points appreciating by 0.99% whilst the Small Cap Index gained 0.54% to close at 259 935.30 points. Leading the risers pack of the day was Unifreight and National Foods which added 16.63% and 10.42% respectively. Simbisa added 6.65% to 7 377.87c. OK Zimbabwe added 5.70% and African Distillers was up by 5.56%. Mitigating the gains were losses in Fidelity and Bindura which shaded 11.01% and 9.73% respectively. Medtech Holdings shaded 8.16% to 23.34c and ZIMRE lost 4.51%. The Old Mutual Top Ten ETF closed at 398.70c down by 0.51% after 47 757 units were traded worth ZW$190 408 in 45 trades..-wealthaccess

Global Currencies & Equity Markets

South Africa

South African rand firms; focus on U.S. payroll data

(Reuters) - The South African rand firmed early on Thursday after slipping the previous day on concerns that surging energy prices will stoke inflation while increased interest rates drove investors towards safe-haven assets.

At 0647 GMT the rand ZAR=D3 was trading at 14.9250 against the dollar, 0.3% firmer than its previous close.

The currency had slipped to 15.1975 on Wednesday, its weakest this month.

The U.S. payrolls report is expected to provide clues on the Federal Reserve's timeline for tapering economic stimulus.

In the so-called "taper tantrum" of 2013, a Fed announcement that it would begin cutting back on bond purchases led to a sharp sell-off in emerging market currencies.

Government bonds also firmed, with the yield on 2030 maturity ZAR2030= down 4.5 basis points at 9.455%.

Nigeria

Naira loses further at official market

Naira fell marginally against the U.S. dollar at the official market on Wednesday, as foreign exchange supply increased significantly from what was recorded in the previous session on Tuesday.

Data from FMDQ securities exchange window, also known as the Investor and Exporters (I&E) window where forex is officially traded showed naira closed at N414.73 per $1.

The local unit performance on Wednesday represents a N0.43 or 0.10 per cent devaluation from N414.30 it exchanged on Tuesday.

This became significant as foreign exchange supply rose by 85.30 per cent with $226.32 recorded as against the $122.15 million recorded at the close of business in the previous session on Tuesday.

Naira touched an intraday high of N404.00 and oscillated to a low of N415.20 before closing at N414.73 per $1 on Wednesday.

At the black market in Abuja dealers exchanged the currency at N565.00 and N568.00 per $1 on Wednesday. This represents a N5.00(N2.00) or 0.90(0.4) per cent devaluation from N570.00 it exchanged on Tuesday.

In Uyo, dealers said the currency exchanged at N578.00 and N580.00 to a dollar due to increased demand they experienced.

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Global Market

Dollar strength holds back Asian FX; rupee bears re-emerge: Reuters poll

(Reuters) - Investors raised short bets on most Asian emerging currencies, a fortnightly Reuters poll found, as a slew of factors including U.S. rate-hike expectations, rising inflation and signs of slowing global economic growth boosted the dollar.

Long positions on the Singapore dollar, Taiwan’s dollar and the Indian rupee were reversed, while bearish views on the South Korean won hit a two-year peak, the poll of 12 respondents showed.

The Indonesian rupiah was the only currency with a bullish trend, although long bets were almost halved.

The safe-haven greenback has risen to a one-year high since the Federal Reserve’s hawkish tilt two weeks ago led markets to price in a rate hike sometime in 2022, with sharp gains in benchmark Treasury yields adding to its appeal.

The dollar is expected to dominate the currency markets for another year as inflation concerns come to the fore, with surging energy prices amid a supply crunch threatening global economic growth.

Asia’s economic prospects have already been marred by China’s slowdown, supply chain bottlenecks and lingering effects of devastating COVID-19 waves in trade-reliant countries like Singapore, Thailand and the Philippines.

However, bets on the yuan barely changed as the currency remained resilient despite a debt crisis at property giant China Evergrande, which HSBC partly attributed to the onshore market’s hope for a policy fine-tuning by the Chinese central bank.

Crude prices testing $80 per barrel prompted investors to turn bearish on the rupee for the first time since mid-August, as India is the world’s third-biggest oil consumer. The rupee has been the most heavily sold currency in Asia since the Fed meeting.

Analysts at Barclays said a recent slowdown in foreign fund flows into Indian equities seemed to be compensated by a pick-up in bonds as the economy’s growth trajectory was intact and would keep the rupee from breaching the 75.0 per dollar mark.

Taiwan and South Korea’s currencies have depreciated in tandem with a sell-off in local bourses dominated by tech stocks, which are sensitive to inflation. They have faced outflows of $2.13 billion and $762 million, respectively, so far this month.

Meanwhile, investors preferred the rupiah more among Asian currencies as higher commodity prices and a large trade surplus were seen putting a floor under the risky currency, Barclays analysts said.

The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars.

The figures include positions held through non-deliverable forwards (NDFs).

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper Leads Declines in Metals as Growth Concerns Intensify

(Bloomberg) -- Copper led most industrial metals lower as concerns of higher inflation and global growth outweighed a better-than-expected jobs report.

A gauge of the U.S. dollar registered its biggest gain in a week as investors turned to the haven currency amid those concerns, hurting metals’ appeal for foreign investors. Germany’s factory orders slumped 7.7% in August, in the third-biggest drop in 30 years, official data showed. U.S. companies added more jobs than forecast in September, the most since June, suggesting that ongoing hiring challenges are beginning to ease as more Americans return to the workforce.

“For industrial metals traders, downside risks are intensifying,” TD Securities strategists led by Bart Melek said in a note. “The global power crisis is expanding further into downstream sectors, raising downside risks to the world’s manufacturing engine.”

Copper dropped 1.4% to settle at $9,045.50 a metric ton on the London Metal Exchange at 5:51 p.m. local time. Nickel slipped 0.3% and aluminum fell 0.8%, while tin edged higher. Chinese markets are closed through Thursday for the National Day holiday break.

In ferrous markets, iron ore futures in Singapore were up 0.4% to $117.50 a ton amid thin trading. Prices of the steel-making raw material have almost halved since peaking in May and are expected to decline further on limited steel volumes and rising supply.

Gold price today fall for second time in 3 days, down ₹9,500 from record highs

Gold rates in India fell for the second time in three days as a stronger dollar put pressure on global prices. On MCX, gold futures fell 0.13% to ₹46,845 per 10 gram while silver was off 0.06% to ₹61,040 per kg. In global markets, gold prices edged lower as investors were cautious ahead of a US payrolls data due tomorrow. Spot gold fell 0.2% to $1,758.93 per ounce. The dollar held firm close to one-year high as investors amid inflation concerns and expectations that the Fed would have to act sooner to normalise policy.

A stronger dollar makes gold less appealing for those holding other currencies.

For today, $1770 remains resistance while $1756 may act as a support and break of this level can lead it to $1742, he added.

Analysts say that though inflationary concerns provide support to gold, tapering of stimulus measures by central banks and consequent increase in bond yields increase the opportunity cost of holding gold. 

The yield on 10-year US Treasuries remained above 1.5%.

Economists expect US nonfarm payrolls data to show an improvement in the labour market, which could prompt the Fed to begin start tapering before year-end.

Among other precious metals, spot silver fell 0.2% to $22.55 per ounce while platinum dropped 0.5% to $979.46.

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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