Bulls n Bears Daily Market Commentary : 14 September 2021

Tue Sep 14 14:24:34 CAT 2021

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Bulls n Bears Daily Market Commentary : 14 September 2021

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ZSE commentary

The Top 10 index and the small cap index marginally performed better compared to other benchmark indices. The top 10 index was marginally up 0.01% to close the day at 3757.48 points while the small cap index registered was softer 0.03% to close at 221422.74 points. There was bloodbath within the All Share Index, top 15 index and medium cap as they depreciated 0.15%, -0.04% and 0.41% respectively. The ZSE market capitalization stood at ZWL$813 billion being shy from its year’s highest record of ZWL$841 billion.

Gains for the day were registered in RIO Zimbabwe and NMB which strengthened by 17.86% to close at 3300c and 6.67% to close at 1599.98c respectively. CBZ added 4.19% to close at 8043.48c and Innscor settled at 10369.63c after marginally gaining by 0.75%. Gains were offset by losses recorded in Proplastics which closed the day at 2554.44c following a decrease of 5.35% and Masimba shaded 5.03% to 3608.70c. Other losses were also recorded in Medtech which edged down by 4% to 22.57c, while First Capital Bank shaded 3.28% to 301.33c and RTG was 2.19% down to 510c. On the ETF market, the Old Mutual TOP 10 fund saw 13 trades valued at ZWL$15,242 from 6 500 units traded. This led to marginal gain of 1.82% to 234.49c. Turnover was ZW$84,091,900.60 in 432 trades. Medtech was the most active with 36 trades. The market breath was negative after 12 stocks appreciated while 21 depreciated. Total trades were 432 with 5 counters remaining unchanged and 11 with zero.- wealthaccess

Global Currencies & Equity Markets

South Africa

Rand dips ahead of US inflation data

The rand dipped slightly on Tuesday morning, but its underlying strength remained intact on a short-term basis after strengthening 2.4% against the dollar since the beginning of September to trade at its highest level since June 25.

SA’s currency dipped 0.20% to R14.1628/$ ahead of US consumer inflation data that could determine its next level.

Market participants have been split for months on the trajectory of US inflation, which is hovering at its highest level since 2008. While some argue its recent spike is temporary because it was fuelled by the reopening of the US after pandemic-induced interruptions, others insist that higher inflation could be durable.

US consumer price index (CPI) is likely to have eased to an annual rate of 5.3% in August, according to Bloomberg median estimate, down from 5.4% in July. Core inflation, which excludes volatile energy and food, likely softened to 4.2% year on year from 4.3%.

Investors will monitor the CPI data, as it carries implications in the expected decision by the US Federal Reserve to taper multibillion-dollar bond buying programme.

The rand has been sensitive to the prospect of possible reduction in bond buying programme as it weakened to R15.40 during August, which was the highest level in five months before bouncing back to current levels.

The JSE is likely be choppy given the mixed session in Asia, where jitters over the regulatory overhang on Chinese stocks continue. Commodity prices were mixed, with Brent crude rising 0.43% to $73.97 a barrel.

Nigeria

Naira’s free-fall continues, hits record low

Naira fell significantly against the U.S. dollar at both the unofficial and official markets on Monday, taking what has become the trend in the last week to a new low.

According to abokiFX.com, a website that collates black market rates in Lagos, the local unit closed at N550.00 per $1 at the black market window on Monday. This implies a N5.00 or 0.92 per cent devaluation from the N545.00 it exchanged on Friday last week.

Naira, which opened at N545.00 at the parallel market segment, hit N549.00 at noon, before closing at N550.00 on Monday.

The currency has maintained a steady decline on the black market segment for six consecutive sessions on a stretch.

Similarly, the naira saw a pronounced decline against the dollar at the official market on Monday as foreign exchange supply rose significantly.

According to data recorded on the FMDQ securities exchange window where forex is officially traded, naira closed at N412.75 per $1 at the official window on Monday, the lowest decline the currency touched on the official window.

This translates to a N0.75 or 0.20 per depreciation from the N412.00 it exchanged hands with the greenback currency in the previous session on Friday last week.

The forex turnover skyrocketed by 83.10 per cent with $161.82 million recorded at the market session against the $88.39 million posted in the previous session on Friday last week.

Naira experienced an intraday high of N404.00 and a low of N414.00 at the trading session before closing at N412.75 on l Monday.

The spread between both market rates is pegged at N137.25 as of the close of business on Monday, which leaves a margin of 25.00 per cent.

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Global Markets

Dollar holds below two and a half-week high as inflation data eyed

The U.S. dollar settled below a two and a half-week high hit in the previous session, as investors braced for inflation data that might offer clues on the timing of policy tightening by the Federal Reserve at a meeting next week.

Before the Fed’s review on Sept. 21-22, investors are looking closely at U.S. consumer price data due at 1230 GMT. Economists expect core consumer price inflation (CPI), an index which strips out volatile energy and food prices, to have risen 0.3% in August from July.

While inflation readings have surged in recent weeks, global growth expectations have dampened, boosting the safe-haven appeal of the greenback. A monthly investor survey by Bank of America found growth expectations at their lowest since May 2020.

Analysts believe a strong inflation reading will further dampen the mood and put pressure on the Federal Reserve to withdraw policy stimulus.

Long dollar bets have climbed rapidly in recent weeks, last week hitting the highest levels since March 2020, as rising inflation prints coupled with slowing growth worries boosted the safe-haven appeal of the greenback.

Against a basket of its rivals, the dollar index steadied at 92.59, having retreated from 92.887, which it hit on Monday. The euro changed hands at $1.1815, having bounced back from Monday’s low of $1.17705, its lowest since Aug. 27.

Currency markets were in a quiet mood in early Tuesday trading, with a gauge of broader market volatility holding near its lowest levels for 2021.

The only source of excitement in the currency markets came from the Australian dollar. The currency fell to a two-week low after the head of the country’s central bank dismissed market pricing of rate hikes in 2022 and 2023.

The Aussie extended losses to more than 0.5%, falling to $0.7336 as Reserve Bank of Australia (RBA) Governor Philip Lowe painted a very dovish policy outlook with no rate rises on the horizon until 2024.

Though the world’s stock markets rebounded on Monday after a fall last week, some analysts also warn of growing headwinds to risk sentiment.

In cryptocurrencies, bitcoin dropped to as low as $43,400, its lowest in almost a week, and last stood at $45,395. Ether changed hands at $3,307.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price today falls for third time in 4 days, down ₹9,500 from record highs

Gold continued to trade in a narrow range today amid subdued global cues. On MCX, gold futures were down 0.1% to ₹46,860 per 10 gram in their third decline in four days while silver futures edged 0.23% lower to ₹63,155 per kg. In India, gold rates are hovering near one-month low as uncertainty over Fed tapering timeline and a stronger dollar weigh on the precious metal. In August last year, gold had hit a record high of ₹56,200 per 10 gram. 

In international markets, gold edged lower today as the dollar index was steady near a two-week high while investors also remained cautious ahead of crucial US inflation data due later today. 

Among other precious metals, silver fell 0.3% to $23.65 per ounce, platinum dipped 0.2% to $958.73. 

Meanwhile, the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.2% to 1,000.21 tonnes on Monday from 998.17 tonnes on Friday.

US consumer price data is due at 1230 GMT and if readings come in higher-than-expected, the Fed could start tapering bond purchases could shift to November from December, say analysts. Higher treasury yields translate into higher opportunity cost for holding non-interest bearing bullion. 

The inflation data comes ahead of the key policy meeting by the Federal Reserve on September 21-22, where gold traders will keep a close eye on central bank's announcement on when it will start winding up its pandemic-era bond-buying programme. (With Agency Inputs)

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

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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