Bulls n Bears Daily Market Commentary : 13 September 2021

[Bulls n Bears]

 <http://www.bullszimbabwe.com> Bullszimbabwe.com         <mailto:bulls at bulls.co.zw> Views & Comments        <http://www.bullszimbabwe.com> Bullish Thoughts        <http://www.twitter.com/BullsBears2010> Twitter         <https://www.facebook.com/BullsBearsZimbabwe> Facebook           <http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn          <mailto:info at bulls.co.zw?subject=Unsubscribe> Unsubscribe

 

 	

 

 

 	

Bulls n Bears Daily Market Commentary : 13 September 2021

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

The ZSE closed with mixed trading across the board amid weaknesses in medium cap stocks. This is a halt from a six-day winning streak last week. Shares of 38 out of 49 companies were traded. Activity levels were near flat 324 trades. At close, market bias was positive as 19 stocks registered gains against 14 losers while 5 of the active stocks remained unchanged. Delta was the most active stock at 37 trades followed by Simbisa and Medtech at 22 and 19 trades respectively. Medtech anchored volume aggregate trading 2 630 300 shares and Delta anchored value aggregate with a value of ZW$55 million.

 

The benchmark All Share Index lost a marginal 0.17% to 6 866.98 points. The Top 10 Index was up by 0.90%. The Top 15 Index was down by a paltry 0.09%. The Medium Cap Index traded lower to 17 305.90 points depreciating by 1.79% whilst the Small Cap Index added 0.55% to close at 221 366.86 points. Leading the risers pack of the day was Zimpapers which was up by 7.14%. Simbisa added 3.69% to 4365.93c. First Capital Bank added 3.65% and Ariston Holdings was up by 2.63%. Medtech Holdings  was up by 1.77%. Leading in the shakers’ pack were British American Tobacco and Edgars which shaded 20.00% and 8.88% respectively. NMB Holdings and Bindura was down by 6.25% and 5.12% respectively. Medtech shaded 5.33%. The Old Mutual Top Ten ETF closed at 230.30c down 0.32% after 2 240 451 units with a value of ZW$5 159 739.25 in 18 trades exchanged hands.- wealthaccess

 



 

Global Currencies & Equity Markets

 

 

 

South Africa

 

South Africa's rand falls, focus on U.S. inflation data

(Reuters) - South Africa's rand began the week on a weaker footing, as investors awaited readings on U.S. consumer prices that could be crucial to the Federal Reserve's decision on when to exit its super-supportive policy.

 

At 0630 GMT, the rand traded at 14.2400 against the dollar, 0.3% weaker than its previous close.

 

All eyes are now on U.S. consumer price index for August, due to be released on Tuesday, along with U.S. retail sales and production figures later in the week as they frame the world largest economy's progress in the lead-up to the Federal Reserve's Sept. 21-22 meeting.

 

Riskier currencies, such as the rand, thrive on U.S. interest rates remaining low because they benefit from the interest rate differential that increases their appeal for so-called carry trade, in which investors borrow in a low-yielding currency to invest in higher-yielding assets.

 

In fixed income, the yield on the benchmark 2030 government bond was up 1.5 basis points to 8.870%.

 

The Thomson Reuters Trust Principles.

 

 

Nigeria

 

Naira’s free fall to continue

The naira depreciated across the official and parallel markets with many pundits yesterday projecting further depreciation of the nation’s currency.

 

The naira depreciated to as low as N545 per dollar at the weekend but there were projections of further depreciation to some N550 per dollar within the immediate period and as low as N600 per dollar in the medium to long-term.

 

Despite sustained growth in Nigeria’s foreign exchange (forex) reserves, the naira has been on the downswing. At the official Investors and Exporters (I & E) Window, the naira depreciated by 0.1 per cent to N412.00 per dollar. At the parallel market, the naira dropped by 2.83 per cent to N545.00 per dollar while also depreciating by 2.48 per cent to N538.00 at the Bureau De Change segment.

 

The naira, however, closed flat at N380.69 per dollar at the Interbank Foreign Exchange market; supported by Central Bank of Nigeria’s (CBN)’s  weekly injections of $210 million.

 

Market pundits attributed the depreciation to “sustained demand pressure” as huge unmet demand and wide gap between rates stoke speculative trades; exacerbating the tough exchange situation.

 

On the outlook for naira, Chief Executive Officer, Financial Derivatives Company, Bismarck Rewane said while naira might trade within the range of N530 to N550 per dollar, in the meantime, it may rash to some N600 per dollar in the long-run as supply increases and the naira is allowed to adjust.

 

Nigeria’s forex reserves rose by $599 million to $34.78 billion at the last count on Thursday, sustaining a positive trend boosted by crude oil gains in recent period

 

Analysts said they expected speculators to continue to take advantage of the wide gap between the official and unofficial windows. Analysts also expected to see increasing shift towards dollar-denominated investments as investors seek to lock into safe havens.

 

Pundits, meanwhile, expected improved liquidity in the official market as increased oil inflows from rise in crude oil prices and foreign currency borrowings of $6.18 billion and IMF’s facility of $3.40 billion boost the forex reserves.

 

Nigeria’s leading investment finance and economic research firms had warned that the naira faces the risk of precipitous fall and depreciation in the months ahead unless the CBN take urgent and coordinated measures to address pressure points and engender an enduring clarity in forex management.

 

Finance and economy experts had agreed that the naira faces a tough future and the apex bank might be walking itself into a repeat of the 2016 scenario when similar uncoordinated decision led to more than 40 per cent depreciation in the national currency.

 

Market pundits at Afrinvest West Africa; Cordros Capital, GTI Capital and Cowry Asset Management, among others, said the naira could weaken further unless the apex bank undertake a comprehensive review and take a holistic approach to its forex management.

 

Afrinvest outlined five concerns that must be addressed by the CBN to avoid a repeat of the negative consequences that followed similar suspension for six months in 2016.

 

The apex bank had in January 2016 suspended dollar sales to BDCs over similar allegation of racketeering. This was followed by a similar directive to commercial banks to fully take up the responsibility of facilitating forex sales to Nigerians in need of forex for items not included in the list of 41 items banned by the CBN.

 

However, the decision failed as insufficient forex supply to banks from CBN and customers’ apathy to banks’ cumbersome kept demand pressure at the parallel market elevated. This was also compounded by a sharp decline in foreign capital flows as foreign investors shunned Nigeria due to currency risk.

 

With these, the foreign reserves and the official exchange rate fell by four percent and 43.7 percent to $26.5 billion and N283 per dollar over the six months period. These developments fuelled a steep rise in inflation to 16.6 percent at the end of June 2016 from 9.6 percent in January.

 

Pundits at Afrinvest said that to avoid a repeat of the 2016 episode, the CBN needs to provide better clarity on its exchange rate policy to gain the confidence of foreign portfolio investors.

 

Also, the apex bank should increase forex allocation to banks to enable them to cater to all genuine demands.

 

Thirdly, analysts advised the apex bank to scale back banks’ forex processing requirements to attract Nigerians into the official forex loop.

 

Read Also: Nigeria to increase oil palm production by 67 percent

 

They also called on the CBN intensify public awareness on the need to embrace the latest development, to prevent unfavourable reactions that could further promote speculative trading.

 

Analysts said the CBN needs to provide more funding to local producers of the 44 items restricted from accessing forex at the official rate, to mitigate the likely pass-through effect of higher costs to consumers.

 

Analysts at Cordros Capital noted that Nigeria already in a difficult position as continuous decline in foreign capital inflows underscored foreign investors’ apathy to the market due to weak macroeconomic position, relatively lower yields and lingering forex liquidity constraints.

 

According to analysts at GTI Capital the ban of BDC is not the required antidote to reverse the persistent fall of naira in the currency market.

 

Analysts called for restructuring of the BDC business to source forex from tourists who are suppliers of retail forex.

 

Cowry Asset Management noted that the decision to stop dollar sales to BDCs may, in the short term, lead to shortage of supply to the parallel market where unfilled genuine demand at the official window and speculative demand are sought from.

 

 

Of e-naira and emerging digital currency imperialism

Last week’s historic adoption of ‘bitcoin’ by El Salvador as a legal tender presents a new analytical trend on the entire concept of money.

 

The mistrust that clouded the courageous roll-out as well as the widespread dip of the cryptocurrency market points to the increasing role of external variables in determining the value of money.

 

The $30-in-bitcoin ‘bribe’ extended to every Salvadorian is also metaphoric of the emerging concept of money as a store of value, not only for the South American country but for other future adopters of the digital currency and businesses that are already accepting cryptocurrency payment. Few hours into the roll-out, the $30-incentives had shrunk to $25 as the coin dived from $52, 000 to $43, 000 in an hour amidst the hysteria and glitch around the functionality of the digital wallet.

 

In the run-up to the adoption, the El-Salvadorian government’s mop-up of the market to stock for its not-too-eager citizens among other factors had pumped the value of the flagship cryptocurrency to a three-month high. The historic adoption should, by logic, drive the consolidation of the uptrend of the past few weeks. Unfortunately, there is no science or logic in the crypto world. Hence the sudden dip – the steepest fall in recent history – could only shock a Salvadoran who was holding the electronic currency for the first time.

 

There have been different theories on the crash that followed the bumpy start to the ‘nationalisation’ of the extremely volatile cryptocurrencies. First, the sell-the-news theory, a model built on the pumping of financial asset value on the premise of a future event that could remarkably push up the price, only for those who warehouse the asset to dump it when the expected event eventually happens.

 

Another prominent explanation is connected to the increasing role of whales in the novel investment market. Whales are individuals or institutions which hold large amounts of a certain cryptocurrency. Like market makers in the conventional financial market, whales leverage their disproportionately huge asset sizes in trade to alter the direction of the market in a manipulative manner.

 

 

They are responsible for the pumping and dumping culture, which has become a norm in the cryptocurrency space. There is, thus, an argument that the whales dumped their hoardings to take profits when bitcoin hit $52,000 or called up their arsenal to trigger a crash in commemoration of El Salvador’s bitcoin adoption just to prove a point.

 

Here, whichever supposition may be true is not as important as the possibility of an individual or non-state actors to cause a major upset in the value of a supposed legal tender. It means that certain variables that were hitherto considered as residual may not matter anymore in modeling the value of money in economies like El-Salvador.

 

The decentralised character of cryptocurrency and the coefficient manipulative possibility are at the heart of the argument for the central bank digital currencies (CBDCs) and virtual formats of fiat currencies issued by central banks. Today, about 80 per cent of central banks, including that of Nigeria, are in the process of issuing CBDCs. Its necessity, notwithstanding, the CBDC invention raises some salient questions on currency imperialism.

 

Recently, the Bank for International Settlements (BIS) engaged the central banks of Malaysia, Singapore, South Africa and Australia to test the use of CBDCs for international settlements.

 

Dubbed Project Dunbar, the initiative will develop prototype shared platforms for cross-border transactions using multiple CBDCs, eliminating the need for intermediaries and reducing the time and cost of transactions. The project intends to develop technical prototypes on different distributed ledger technology platforms.

 

Of the projects whose technical prototypes will be demonstrated at the Singapore FinTech Festival holding in November, Chief Fintech Officer at Monetary Authority of Singapore, Sopnendu Mohanty, said: “Project Dunbar’s work on using multi-CBDC platforms to facilitate seamless multi-currency fund transfers is a significant contribution to the global vision to make payments cheaper and faster. The findings on how a common platform can be governed effectively and managed efficiently will shape the blueprint of the next generation payment systems.”

 

A similar BIS-led project, exploring CBDCs for cross-border payments, also involves central banks of China, Hong Kong, Thailand and the United Arab Emirates (UAE). Details of these concepts are still sketchy but they align with the thinking of the International Monetary Fund (IMF) in using stable coins to drive down the cost of remittances and cross-border financial transactions. The Managing Director of IMF, Kristalina Georgieva, at a forum on digital currency, said the adoption of stable coins is crucial to reducing remittances in developing countries and preventing the “digital divide”.

 

At the national level, countries are jostling for the smartest and most scalable electronic money that can compete beyond their physical borders. China had worked on digital yuan for years but the project only got into overdrive when Facebook revealed its plan for Diem, its electronic currency. China has found a limitless opportunity in its CBDC to reinforce its efforts to challenge the supremacy of the dollar. It also intends to pitch the digital yuan as a global currency. And fortunately, CBDCs, like other e-money forms, are only limited by their scale of utilities and not physical national borders.

 

Other powers, including Russia, have joined the race for CBDC, a dream not only driven by the need to duplicate existing fiats electronically but also as weapons of extra-national economic subjugation. Developing countries, including Nigeria, are also on the verge of issuing electronic money but may necessarily not in the context of economic subjugation.

 

Yet, the Director-General of the Securities and Exchange Commission (SEC), Lamido Yuguda, has argued that e-naira must be designed to operate beyond Nigeria to explore the opportunity in the cross-border transaction opportunity.

 

Yuguda who spoke at the Chartered Institute of Bankers of Nigeria (CIBN) Advocacy Dialogue Series Four, said “the design and functionality” of the proposed e-naira must take into cognizance of the aspirations of other countries.

 

About two weeks ago, the apex bank announced the engagement of a Barbados-based digital financial technology firm, Bitt Inc, as a technical partner for the e-naira project, which will be unveiled before the end of the year.

 

With operations spreading across the Caribbean, Bitt utilises blockchain and distributed ledger technology to facilitate peer-to-peer (P2P) transactions with mobile money across a suite of Bitt’s Software and mobile applications.

 

A statement by the Bank said the firm was chosen through a highly competitive bidding process. It said it was chosen on its technological competence, efficiency, platform security, interoperability and implementation experience.

 

But the issue is less about the competence of the technical partner than the limited time left to work on the project. Of course, the e-naira idea was first mooted in 2017 but it only got accelerated attention earlier in the year after the apex bank stopped financial institutions from transacting in cryptocurrency trading.

 

Programme Lead, Sustainable and Inclusive Digital Financial Services Initiative, Prof. Olayinka David-West, at the CIBN forum, spoke extensively on the technical tasks involved in achieving a secured, scalable and hitch-free CBDC.

 

Does the CBN have sufficient time to build the most needed infrastructure for an e-naira Nigerians would trust, unlike the El-Salvadoran bitcoin experiment that has triggered protests? Time will tell.

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

Dollar finds footing as traders await inflation data

(Reuters) - The dollar began a week full of big economic data on a firm footing, with investors wary of the Federal Reserve beginning its exit from super-supportive policy even as cases of the coronavirus surge.

 

The greenback closed out its best week in three weeks on Friday, gaining about 0.6% on the euro as it benefited both from safety flows and the policy outlook lifting yields on U.S. Treasuries.

 

It maintained gains early in the Asia session to hold the common currency at $1.1810. It was also steady at 109.91 Japanese yen , while its strength has for now stymied rallies in the Australian and New Zealand dollars.

 

In morning trade, the Aussie was marginally firmer at $0.7362, but it has struggled to stay above $0.74. The kiwi was marginally weaker at $0.7115 but has likewise battled to break out of a months-long range despite the Reserve Bank of New Zealand preparing for interest rate hikes.

 

U.S. consumer price data on Tuesday is expected to show core inflation easing slightly to 4.2%.

 

However, with Philadelphia Fed President Patrick Harker, in a Nikkei interview on Monday, joining a chorus of policymakers keen to begin scaling back asset purchases, bond traders seem to think a slowdown won't be enough to delay tapering much.

 

Ten-year Treasuries were sold for a third straight week last week - the longest streak since yields lurched higher in February and March - lifting the 10-year yield to 1.3462%.

 

Also ahead on the calendar are Chinese economic data, likely to highlight wobbly retail sales on Wednesday and further add to concerns about the world's second biggest economy.

 

The yuan was steady at 6.4424 per dollar in offshore trade. Elsewhere, sterling held at $1.3834 and cryptocurrencies bitcoin and ether were broadly steady, with bitcoin at about $46,000.

 

The Thomson Reuters Trust Principles.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold price today struggles near 1-month low, silver rates drop further

Gold and silver rates struggled in Indian markets today amid subdued global cues. Gold prices edged up 0.14% to ₹46,872 per 10 gram but still hovered near 1-month low. Silver continued the weak trend, falling 0.4% to ₹63,345 per kg. In the previous session, gold had dropped 0.4% while silver slumped 0.9%. 

 

In global markets, gold struggled today after a sharp decline in the previous week. Investors remained cautious ahead of a crucial US consumer price reading due later this week. Spot gold was flat at $1,787.40 per ounce, after falling 2.1% in the previous week. 

 

Also, a stronger US dollar weighed on gold. The dollar index edged higher to 92.632, after a 0.6% gain last week. 

 

Among other precious metals, silver was flat at $23.72 palladium traded up 0.3% at $2,145.03.

 

US consumer-price data will be announced on Tuesday that could be crucial to Federal Reserve's decision on when to taper its stimulus. Ahead of the US consumer inflation data, US producer prices released on Friday showed inflation pressure, leading to the biggest annual gain in nearly 11 years. The reading also pushed benchmark U.S. 10-year Treasury yield higher.

 

Higher yields mean higher opportunity cost for holding non-interest bearing gold. The US Fed later this month to decide on its monetary policy. 

 

 

Oil at one-week high as U.S. supply concerns dominate

(Reuters) - Oil rose more than 1% on Monday, supported by concerns over shut output in the United States because of damage from Hurricane Ida, with analysts expecting prices to remain rangebound in a stable market over the coming months.

 

Brent crude rose 90 cents, or 1.2%, to $73.82 a barrel by 1049 GMT and U.S. West Texas Intermediate (WTI) crude was up 99 cents, or 1.4%, at $70.71.

 

Brent has held between $70 and $74 a barrel over the past three weeks.

 

A U.S. Energy Information Administration (EIA) last week said it expected Brent prices to remain near current levels for the remainder of 2021, averaging $71 a barrel during the fourth quarter.

 

Prices still found some support from Hurricane Ida's impact on U.S. output. About three-quarters of the offshore oil production in the Gulf of Mexico, or about 1.4 million barrels per day, has remained halted since late August. read more

 

However, the number of rigs in operation in the United States grew in the latest week, energy service provider Baker Hughes said, indicating production could rise in coming weeks. read more

 

Supply risks remain from China's planned release of oil from strategic reserves while the hope of fresh talks on a wider nuclear deal between Iran and the West was raised after the U.N. atomic watchdog reached an agreement with Iran on Sunday about the overdue servicing of monitoring equipment to keep it running. read more

 

China on Monday said it will announce details of planned crude oil sales from strategic reserves in due course.

 

The Thomson Reuters Trust Principles.

 

 

 

 

 

 

 

 

 


 

INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

Hippo

AGM

virtual

September 17 -  (9am)

 

 	

Star Africa

AGM

virtual

September 23 -11am

 

 	

 

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

 

 

 

 	

 

 

 

 

 	

 

 

 

 	

 

 

 	

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.

 

 	

 

 

 	

(c) 2021 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:  <mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77 344 1674

 

 	

 

 

 	
							

 

 

 

 

 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20210913/38c6eaed/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 34378 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20210913/38c6eaed/attachment-0001.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.jpg
Type: image/jpeg
Size: 22328 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20210913/38c6eaed/attachment-0003.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 107064 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20210913/38c6eaed/attachment-0004.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20210913/38c6eaed/attachment-0005.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: oledata.mso
Type: application/octet-stream
Size: 65578 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20210913/38c6eaed/attachment-0001.obj>