Bulls n Bears Daily Market Commentary : 11 April 2022

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Bulls n Bears Daily Market Commentary : 11 April 2022

 

 	

 <https://firstcapitalbank.co.zw/> 

 

 	


ZSE commentary

 

The ZSE shares opened the week, sending a very strong positive sentiment
registering strong gains, however, in subdued turnover and volume. Strong
performance was recorded across all benchmark indices. Activity levels were
lower at 411 against 593 trades recorded at the close of last week. First
Capital was the most active stock at 36 trades while both Delta and Star
Africa tied at 33 trades respectively. Investor sentiment was positive after
the session yielded 29 risers against 4 decliners while 4 of the active
stocks remained unchanged. Ecocash holdings limited anchored volume
aggregate trading 365,000 shares and Hippo anchored value aggregate with a
value of ZW$63.9 m.

 

The All-Share Index added 3.52% to close at 17,822.95 points. The Top 10
Index added 3.07%. The Top 15 Index added 3.26%. The Medium Cap Index was up
by 4.94% to 29,879.83 points whilst the Small Cap Index gained 2.9% to
454,253.37 points. Leading on gains was NMB Bank and Tanganda  which closed
20% higher respectively. Nampak was up by 19.87%. Tanganda added 19.87% and
CFI added 15.34%. Offsetting gains were losses in Zimplow  and Medtech which
shaded 9.03% and 7.41% respectively. General Beltings Holdings was down by
1.65%. Hippo shaded 0.01% to close at 30001.80 cents. The ETFs traded
231,729 units worth ZW$719,154.23 in 134 trades. The DMCS-ETF  added 0.78%
to close at 189.19c while MCMS-ETF was up 0.22% to 1500c and OMTT- ETF was
marginally up 0.047% to 844.05c. On the VFEX, there no trades recorded
during today’s trading session.wealthaccess

 <mailto:info at bulls.co.zw> 

 

Global Currencies & Equity Markets

 

 

South Africa

 

South Africa's rand steady against firmer dollar

 

(Reuters) - South Africa's rand was flat in early trade on Monday,
struggling to make gains against a broadly stronger dollar, ahead of local
manufacturing data due later in the day.

 

At 0615 GMT, the rand traded at around 14.6600 against the dollar, largely
unchanged from its previous close on Friday.

 

The U.S. dollar remains supported as the Federal Reserve readies to move
interest rates sharply higher.

 

The investor calendar this week is packed with central bank meetings -
Singapore, South Korea, New Zealand, and the European Central Bank - and
inflation data, including that from the United States, which will provide
steers on policy tightening.

 

South African-focused investors will also look to the latest manufacturing
figures due on Monday, as well as retail sales and mining data due later in
the week for clues on how the economy has performed at the start of 2022.

 

Government bonds also weakened, with the yield on the benchmark 2030
maturity rising 3 basis points to 9.625%.

 

The Thomson Reuters Trust Principles.

 

 

 

 

 

 

Ghana

 

Cedi’s magical rebound and how to sustain it

After losing more than 14 per cent of its value to the United States (US)
dollar between January 1 and March 15 this year, the cedi is rewriting its
own story against the world’s most used currency.

 

It has rediscovered its strength, steadied the pace of depreciation and
intermittently appreciated against the ‘greenback’ in the two weeks that
followed the government and the Bank of Ghana’s (BoG) interventions.

 

Unlike around March 14 when one US dollar was exchanging for about GH¢8.4,
BoG reported this Monday that one US dollar was equivalent to GH¢7.11.

 

 

Similar gains have also been recorded against the euro and the British
pound, strengthening hopes that the local currency has successfully shaken
off the burden of depreciation that was also weighing down on the economy’s
fragile recovery from the COVID-19 pandemic.

 

By rediscovering its feet, the cedi has also erased the ignoble record of
being among the world’s worst performing currencies in whatever league table
that would be prepared.

 

 

But how sustainable is the recovery?

 

Moral suasion

 

The magical turnaround in the cedi’s fortunes is the result of moral suasion
and confidence boosting rather than structural changes.

 

Since 2017, Ghana had become a familiar face in the Eurobond market in the
first quarter of every year. It frequented the international market to raise
a minimum of $1 billion to fund the budget and roll over maturing debts.

 

 

These hard currencies also played the additional role of boosting the
central bank’s reserves, necessary to assuage market fears, boost investor
confidence and fund actual foreign currency demands.

 

This year, the story changed. Alarmed by the country’s high debts, large
deficits and an unconvincing revenue target, investors lost confidence in
the country’s ability to service its debts.

 

Divestment

 

As a result, they stepped up their divestment from Ghana bonds and signalled
low to no interest in future debt sales from the country.

 

 

This lack of market access to Ghana for a Eurobond sale to fund the budget
and bolster the cedi led to investors shifting from local currency
investments to foreign ones.

 

It also strengthened the positions of speculators and that increased demand
for foreign currencies, particularly the US dollar.

 

This deepened the demand for and the hoarding of the US dollar, resulting in
the bouts of declines that the cedi suffered.

 

Cost of depreciation

 

 

As the cedi lost its value to the US dollar, businesses and consumers
counted their losses.

 

The Ghana Union of Traders (GUTA) said in March that more than 25 per cent
of its capital was eroded by the depreciation.

 

Fuel prices also went up and that fed into prices of goods and services,
resulting in inflation sustaining its upward trajectory to a peak of 15.7
per cent in February.

 

These effects pinched consumers from all angles.

 

 

Relief

 

Following increased complaints over the depreciation, the government and the
BoG intervened in late March in a way that has now helped to turn the story
around.

 

The government announced plans to raise and inject some $2 billion into the
country’s reserves to help meet the demand and douse the anxiety.

 

The central bank also initiated a couple of measures all aimed at soaking
liquidity from the economy and making cedi instruments appetising.

 

 

It raised the policy rate to 17 per cent, the highest since 2018 and
increased the amount of reserve money that financial institutions must keep
with the central bank.

 

These measures, which amounted to reversing the emergency measures
introduced to cushion the financial sector and the economy in general
against the effects of the COVID-19 pandemic, could lead to more than GH¢5
billion being withdrawn from circulation.

 

As these measures bear fruits, they will further anchor the cedi’s rebound,
entrench the stability and strengthen the general economic recovery.

 

The measures will also curb the inflationary pressures and relieve consumers
to spend.

 

 

But for how long can this last, especially given that the factors holding
down this current depreciation are incapable of addressing the structural
challenges that have made the cedi depreciation perennial?

 

Repatriation

 

The country needs credible policies to reduce the pace at which foreign
companies repatriate their profits. The situation where large sums of
foreign currencies are demanded in December into the first quarter needs to
be addressed.

 

It should be possible for the BoG and the government to regulate how much
goes out within these periods but in a way that does not distract the
confidence that investors have in the economy.

 

Also, the open transaction in foreign currencies in the country must be
stopped. It is not only an affront to our foreign exchange laws; it is a
sore show of disrespect to the cedi, which is the symbol of Ghana’s economic
might.

 

If locals and foreigners can sidestep the cedi to use the US dollar to pay
for anything from water to houses, what regard then can they accord it?

 

In other countries, including nearby Nigeria, no transaction, irrespective
of what it is, takes place in any currency other than the one issued by that
nation.

 

But here, it is different. Hotels, vehicle dealers, estate developers and
even supermarkets openly price their goods and services in and receive US
dollars for payments.

 

It is even such that state institutions now advertise some of their tenders
in US dollars in a manner that undermines the authority that the state has
reposed in the BoG to issue and ensure the use of only the cedi as the legal
tender.

 

It is, therefore, good that the BoG has stepped up efforts to stop the
practice. But if similar actions from the central bank in the past are
anything to go by, then we are only in for the show-off, not an enduring
effort to stop an illegality that hurts us all.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

Dollar rises to near 7-yr-high of lower 125 yen level

The U.S. dollar climbed into the lower 125 yen range Monday, its highest
level since June 2015, on prospects of widening interest rate differentials
between the United States and Japan following an upward trend in U.S.
Treasury yields.

 

At 5 p.m., the dollar fetched 125.24-26 yen after briefly rising to 125.43
yen, compared with 124.23-33 yen in New York and 124.04-05 yen in Tokyo at 5
p.m. Friday.

 

The euro was quoted at $1.0909-0911 and 136.63-67 yen against $1.0870-0880
and 135.11-21 yen in New York and $1.0866-0868 and 134.79-83 yen in Tokyo
late Friday afternoon.

 

On the Tokyo Stock Exchange, the 225-issue Nikkei Stock Average ended down
164.28 points, or 0.61 percent, from Friday at 26,821.52. The broader Topix
index finished 7.15 points, or 0.38 percent, lower at 1,889.64.

 

The dollar accelerated its upswing against the yen in the afternoon, rising
to the lower 125 yen, a level unseen in nearly seven years, from the lower
124 yen zone where it had been in the early morning.

 

Market participants sought the dollar on the back of contrasting approaches
by the Bank of Japan and the U.S. Federal Reserve, which last month decided
to raise key interest rates for the first time since 2018 and signaled six
more rate increases this year to tackle high inflation.

 

In contrast, the Japanese central bank has maintained its powerful monetary
easing.

 

The yield on the benchmark 10-year Japanese government bond rose 0.010
percentage point from Friday's close to 0.235 percent, tracking a rise in
its U.S. counterparts after Treasury yields climbed to their highest level
in over three years on speculation that the U.S. central bank would tighten
its monetary policy more aggressively.

 

In the equities market, stocks were in negative territory for most of Monday
trading, tracking declines on the technology-heavy Nasdaq index late last
week.

 

Market participants also remained wary ahead of the U.S. consumer price
index for March, to be released Tuesday, on speculation the data will show
accelerating inflation.

 

On the top-tier Prime Market, decliners were led by precision instrument,
electric appliance, and information and communication issues.

 

"Investors were concerned that the U.S. Federal Reserve may potentially
become more aggressive in its monetary tightening amid growing fears about
long-term inflation and the pace of interest rate hikes," said Makoto
Sengoku, senior equity market analyst at Tokai Tokyo Research Institute.

 

The Nikkei briefly inched into positive territory to retake the 27,000 mark
in the morning, supported by the yen momentarily falling into the upper 124
yen range against the dollar which lifted some export-oriented issues.

 

Meanwhile, the ongoing coronavirus lockdown in China's financial hub of
Shanghai, which on Sunday logged a record number of infections, has been
weighing on sentiment on fears that the country's pursuit of a zero-COVID
policy may constrict supply chains further, analysts said.

 

Fast Retailing, which operates the Uniqlo clothing chain, fell 1,640 yen, or
2.7 percent, to 58,530 yen, on concerns over the impact of the Shanghai
lockdown on sales.

 

Among tech shares tracking their U.S. counterparts, Tokyo Electron lost 350
yen, or 0.6 percent, to 55,070 yen, while Advantest declined 160 yen, or 1.8
percent, to 8,590 yen.

 

Bucking the downward trend, Tokyo Electric Power Company Holdings jumped 62
yen, or 16.2 percent, to 444 yen, after Prime Minister Fumio Kishida
expressed Friday his intention to turn to renewable energy and nuclear power
to combat possible power shortages as Japan attempts to phase out Russian
coal imports.

 

Renewable energy company Renova climbed 53 yen, or 3.1 percent, to 1,789 yen
following Kishida's news conference.

 

Among Prime Market issues, decliners outnumbered advancers 1,189 to 600,
while 50 ended unchanged.

 

Trading volume on the Prime Market fell to 1,148.89 million shares from
Friday's 1,270.96 million.-KYODO NEWS

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold approaches resistance at $1,965

As suggested was the probability, gold is approaching the $1,965 level as of
this writing. Traders who initiated speculative positions at the bottom of
the range around $1,915 may consider taking some profit. Should gold cross
over $1,965 with conviction, bulls can look for a move higher to the round
number of $2,000 with minor resistance around $1,985 first.

 

In overnight trading, the gold to silver ratio fell more than 1%, indicating
further strength. Silver has broken out of a bullish wedge. The catch-up
trade in silver may be on the cusp of manifesting. $25.40 - $25.50 is the
resistance level silver bulls have their eye on. Below is a snapshot of the
breakout in silver on the daily time frame.

 

Palladium has continued to move up and looks set to run to Palladium has
continued to move up and looks set to run to overheard resistance at $2,650.
US indices are pointing to a lower open this morning and frankly, look
poised for a scary drop toward the bottom of the expanding wedge identified
last week. Such a move may mark the bottom of the grind in which indices
have been stuck. Stocks are holding up despite the continuation of the
torrid rise in the US 10 year treasury, now fetching a yield of 2.75%. With
Crude oil continuing it’s move lower (as suggested was the probability with
a weekly close under $105), it will be interesting to see if the Fed can or
will use the falling price of energy as cover to take the edge off it’s
hawkish tone. Gold (and maybe stocks) could already be anticipating an
interest rate policy reversal
 overheard resistance at $2,650.

 

US indices are pointing to a lower open this morning and frankly, look
poised for a scary drop toward the bottom of the expanding wedge identified
last week. Such a move may mark the bottom of the grind in which indices
have been stuck. Stocks are holding up despite the continuation of the
torrid rise in the US 10 year treasury, now fetching a yield of 2.75%. With
Crude oil continuing it’s move lower (as suggested was the probability with
a weekly close under $105), it will be interesting to see if the Fed can or
will use the falling price of energy as cover to take the edge off it’s
hawkish tone.-kitco

 

 

Palladium jumps on supply fears, inflation risks lift gold

Palladium prices briefly jumped on Monday to a more than two-week high
propelled by supply concerns following the suspension of trading of the
metal from Russia, while gold was buoyed by inflation jitters amid the war
in Ukraine.

 

Palladium climbed 3.95% to $2,521.55 per ounce, before settling up 0.82% to
$2,440. The move marked the metal's biggest peak since March 24, when it hit
$2,550.58. Platinum rose 0.40% to $979.50.

 

London Platinum and Palladium Market on Friday said it would suspend both
Russian refiners on its list, JSC Krastsvetmet and the Prioksky Plant of
Non-Ferrous Metals, from trading in London, the metals' biggest trade hub.

 

"The suspension of the Russian refiners certainly increases the concerns
among market participants that the palladium market will be severely
undersupplied going forward," said Commerzbank analyst Daniel Briesemann.

 

Palladium, used in car exhausts as an autocatalyst to filter emissions,
surged to an all-time high of $3,440.76 on March 7 driven by concerns over
supply from top producer Russia.

 

Meanwhile, spot gold rose 0.15% to $1,948.66 per ounce, after hitting a more
than two-week high of $1,958.96. U.S. gold futures were 0.35% higher at
$1,952.5.

 

"The war is continuing and without a clear solution and it's becoming
evident it's becoming a long term matter," said Carlo Alberto De Casa, an
external market analyst at Kinesis, adding the March U.S. consumer price
report could be an important catalyst for gold, which often viewed as an
inflation hedge.

 

U.S. consumer price index data for March is due on Tuesday, with traders
expecting further rises due to the impact of the war in Ukraine on energy
costs.

 

The Russian invasion of Ukraine has left a trail of death and destruction
that has drawn condemnation from Western countries and prompted increasing
sanctions on Moscow, including embargoes on its energy exports.

 

"The recovery above the key level of $1,950 for gold and $25 for silver are
two strong signals from a technical point of view." The dollar index eased
0.2% also making the bullion less expensive for holders of other currencies.

 

Spot silver rose 0.64% to $24.90 per ounce

 

 

 

 


 

INVESTORS DIARY 2022

 


Company

Event

Venue

Date & Time

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

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
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opinions expressed and recommendations made are subject to change without
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for guideline purposes only and sourced from third parties.

 

 	

 

 

 	

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