Bulls n Bears Daily Market Commentary : 16 September 2021

Thu Sep 16 15:59:50 CAT 2021

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Bulls n Bears Daily Market Commentary : 16 September 2021

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE closed in a dull session with mixed trading across the board. Market Cap was near flat paring a paltry 0.07%. Activity levels were higher at 317 trades. At close, market bias was negative as 20 stocks registered losses against 11 gainers while 4 of the active stocks remained unchanged. Bindura was the most active stock at 36 trades followed by Medtech and Star Africa at 32 and 26 trades respectively. Bindura anchored volume aggregate trading 780 600 shares and Cassava anchored value aggregate trading 190 100 shares with a value of ZW$4.4 million.

The benchmark All Share Index added a marginal 0.02% to 6 895.66 points. The Top 10 Index was up by 0.38%. The Top 15 Index was up by 0.46%. The Medium Cap Index traded lower to 17 159.71 points depreciating by 0.51% whilst the Small Cap Index shaded 0.34% to close at 221 801.19 points. Leading the risers pack of the day was BAT which was up by 19.95%. ZIMRE Holdings added 7.18% to 376.68c. The construction giant Masimba Holdings added 2.74% and Delta was up by 2.43%. Meikles was up by 2.04% to 9490.10c. Leading in the shakers’ pack were First Mutual Holdings and the diary giant Dairibord Holdings which shaded 18.52% and 9.20% respectively. Star Africa Corporation and NMB Holdings were down 8.40% and 6.67% respectively. Medtech Holdings shaded 3.55%. The Old Mutual Top Ten ETF closed flat at 230c after trading 37 265 units with a value of ZW$85 709.50 in 11 trades exchanged hands.wealthaccess

Global Currencies & Equity Markets

South Africa

Rand clipped by weak retail sales data

The downbeat tone imparted by JP Morgan’s sell recommendation on Tuesday, was compounded by the weak retail sales data for July, according to NKC Research.

At the close of local trade, the rand quoted 0.7 percent weaker, at R14.43/$, after trading in range of R14.25/$ to R14.44/$.

Meanwhile, the NKC says the rand should retain support from external factors, including our view for moderate dollar weakness as we approach year end, predicated on a patient Fed, growth outperformance outside the US, yield curve re-steepening post Jackson Hole, and a modest greenback overvaluation.

One of the key drivers that has re-emerged of late is that of a patient Fed, with the monetary authority less overly concerned about inflation dynamics than in June, even if acknowledged in a cursory fashion.

The traded sideways overnight. The expected range of the rand against the dollar today is R14.30/$ to R14.60/$.

The sub-indices were a mixed bag as technology (-0.9 percent) and industrials (-0.6 percent) closed in the red, while resources (+1.2 percent) and telecommunication (+1.5 percent) ended the day higher.

The JSE All Share (+0.13 percent) edged firmer yesterday. In local news, Rand Merchant Investment (RMI) said that it expects earnings per share to increase between 10 to 12 percent. In the overall emerging market sphere, the MSCI Emerging Market Index (-0.6 percent) traded lower.

Brent crude oil

The large drawdown on US crude inventories together with an anticipated rise in demand as vaccine rollouts gain momentum, saw the Brent oil price break through the $75 mark yesterday. At the close of local trade, benchmark Brent crude futures quoted 2.4 percent higher, at $75.9pb. Crude prices traded sideways during Asian trade this morning.

BUSINESS REPORT ONLINE

Nigeria

Naira’s Free Fall Continues As Nigerians Rush To Hoard Dollars

Some people and corporate entities are saving their fortunes in dollars as a preferred store of value, Daily Trust investigations revealed.

Some of those who spoke to our correspondents said it was safer, convenient and profitable to hoard dollars because of the dwindling fortunes of the naira, especially in the parallel forex market.

Analysts believed that the rush for the dollar and other factors have further exacerbated the pressure on the naira as checks at the bureau de change (BDC) market in Wuse, Abuja and other places showed that the value of the Nigerian currency was fast plummeting.

The United States dollar was yesterday purchased by walk-in customers between N565 to N567 to $1. Similarly, checks in Kano, Kaduna and Lagos showed that the prices fluctuated between N564 and N570/1$.

The BDCs also confirmed huge demand for forex at the moment with some of the operators disclosing that most of the demands were from SMEs that were having difficulty accessing forex from banks.

One BDC operator, Malam Nura, said the demand was high especially from small business owners, saying that the naira might be losing its value partly because of the demand. He, however, could not confirm if individuals were closed betting their naira accounts to dollars to hedge against inflation and devaluation. Nura said that small businesses might have been buying enough to save so that they could continue to import in case the naira value falls further.

According to Ahmed Nasiru, an Abuja-based businessman, “I operate one of these savings accounts that you are not expected to withdraw from after some time. Mine is 5 years 2020-2025.

Govt officials, elites in rush for dollars

A senior management staff of a first-generation bank told Daily Trust that many government officials in ministries and agencies, captains of industry, among others spend dollars in Nigeria unhindered.

Schools, hotels, consultants charging in dollars

Hannatu Salihu who works in one of the government agencies said they pay the school fees of their children in dollars.

A financial Analyst, Julius Alagbe, said corporate entities were not exempted from this chase.

Companies spent $55bn on foreign consultants, workers

A review of Nigeria’s current account data from the Central Bank of Nigeria (CBN) revealed that the country and its corporates spent a sum of $55 billion on foreign expatriates for business, professional and technical services in the last 10 years (2011 and Q1 2021).

With a population of over 206 million people largely dominated by youths with varying academic and professional skillset, Nigeria still suffers from huge capital flight spent on paying foreign expatriates for their professional services.

Dollar may hit N1, 000 before January 2022

The Chief Executive Officer, Daniel Young Global Investments Limited, Dr Daniel Young said the development portends danger for the country’s economy.

He predicted that a dollar might be sold at N1, 000 in January 2022 saying the situation calls for introspection on the part of those running the economy.

Young said the only way to stop dollar racketeering was to grow the non-petroleum products and reduce reliance on imported items.

According to Young, “The best time to make money is when there is chaos. Petroleum is no longer an active resource; most countries are growing non-petroleum products. They are growing their economy based on electric cars.

An economic analyst, Mr Aderemi Akande, said that the growing trend of individuals converting their naira savings to dollars will further compound the existing problem.

He said the naira will continue to depreciate against the dollar because more people will need it for various purposes.

To salvage the situation, Akande, a chartered accountant, advised the Central Bank of Nigeria (CBN) to digitalise the operations of the bureau de change operators to regulate their excesses and monitor what they do.

He also advocated for the issuance of debit cards for dollar accounts as well as criminalising physical holding of foreign currency.

He stressed the need for the National Orientation Agency (NOA) in collaboration with the CBN to sensitise Nigerians on the implications of converting their naira savings to dollars and urged Nigerians to deliberately patronise locally made goods.

A lecturer at the University of Nigeria, Nsukka (UNN), Mr David Akwu, said the free fall of the naira was a dangerous trend on the economy.

According to him, while the CBN decision to stop forex sales to the BDCs was good, the banks should not be trusted to support the apex’s bank policy trust.

He also said that the BDC market was not shallow as being speculated in some quarters.

He suggested that the CBN should keep a close eye on the banks not to engage in arbitrage to further make a very bad situation of the naira.

He said the banks might be cashing in on the huge dollar value at the street markets as opposed to the official l market.

 <mailto:info at bulls.co.zw> 

Global Markets

Asian shares fall again, dollar drifts

(Reuters) - Asian shares gave up early gains to fall again on Thursday, weighed by declines in China and Hong Kong, even after a strong lead-in from Wall Street which had also pushed the dollar to the lower end of its recent range.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last down 0.45%, while Japan’s Nikkei , shed 0.47%, after hitting 31-year high it hit on Monday.

He added worries about inflation and supply chain issues could still weigh on shares in the coming weeks, and “of course in Asia we’ve got a slowdown in China.”

There were gains on Thursday in Australia, up 0.65%, but the Hong Kong benchmark fell 0.42% with property names continuing to drag - embattled developer China Evergrande Group fell another 8%

Chinese blue chips lost 0.66%, a day after economic data missed expectations.

U.S. stock futures, the S&P 500 e-minis, were flat.

Overnight U.S. stocks closed higher, as rising crude oil prices boosted energy shares and a raft of positive U.S. data supported those who feel growth in the world’s biggest economy should remain strong.

The Dow Jones Industrial Average rose 0.68%, the S&P 500 gained 0.85% and the Nasdaq Composite added 0.82%.

That risk-on mood pushed the dollar lower overnight against a basket of other major currencies, but it was little changed in Asian hours, with analysts at Westpac saying the greenback was looking set in its recent range.

They said payroll and inflation data meant the U.S. Federal Reserve could take its time tapering its massive asset purchases - which would typically boost the dollar - while the “downside is unlikely to develop anytime soon either, with concerns about Delta (coronavirus variant) impact on global rebound prospects continuing to swirl, as underscored by China’s weaker August activity data.”

U.S. Treasury yields inched down in Asian hours with the yield on benchmark 10-year Treasury notes at 1.299% compared with its U.S. close of 1.304%. Westpac analysts said this, too, looked likely to be largely range-bound.

Oil prices retreated, giving up some of this week’s strong gains on the back of a larger-than-expected drawdown in crude oil stocks in the United States.

Brent crude which touched its highest since late July on Wednesday, fell 0.24% on Thursday to $75.3 per barrel, while U.S. crude dipped 0.22% to $72.45 a barrel.

Spot gold was flat at $1794.41 per ounce, having fallen below the key $1,800 level on Wednesday, hit by a bout of technical selling

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices today near 1-month low after sharp fall, silver rates higher

Gold prices were weak today in Indian markets after a sharp fall in the previous session. On MCX, gold futures were down 0.04% to near one-month low of ₹46,878 while silver edged 0.28% higher to ₹63,468 per kg. In the previous session, gold had slumped 0.77% or about ₹400 while silver had dipped 0.5%. 

In global markets, gold rates were down below key $1,800 level as investors remained cautious ahead of next week's US Federal Reserve meeting. Spot gold fell 0.6% to $1,793.20 per ounce despite a subdued US dollar. The Fed's two-day policy meeting is due on September 21-22.  Analysts expect the US central bank to provide guidance on when it will start withdrawing its asset purchases and on eventual interest rate hike.

Gold had hit a one-week high following U.S. consumer price index data earlier this week but gave up most of its gains as US Treasury yields ticked higher.

ETF flows remained weak. The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2% to 998.46 tonnes on Wednesday.

Among other precious metals, silver was unchanged at $23.81 per ounce while platinum was flat at $947.39. 

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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