Bulls n Bears Daily Market Commentary : 20 December 2022

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Bulls n Bears Daily Market Commentary : 20 December 2022

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

The ZSE upholds its gains


The market maintained stable gains as three of the main indices reviewed
close in the positive. The mainstream All Share went up 2.67% to 16138.51pts
while the Heavies index soared 4.80% to end at 9724.77pts.The ZSE
Agriculture index firmed 0.87% to 71.36pts while the Midcap Index, the only
faller, gave up 1.45% to close at 34180.98pts. VFEX bound Innscor leapt
14.77% to $437.0000 to top the gainers group as sugar processor Star Africa
rose 6.75% to $1.6000.Zimplow was 5.99% stronger at $16.9579 as Hippo Valley
added 5.86% to $180.0000.Delta closed the risers set at $298.2475 after a
4.42% increase. On the fallers side, property outfit Mashonaland Holdings
led with a 11.76% drop to $15.0000 after the major shareholder ZB announced
a minority offer of ZWL$8.0000 per share. Trailing was clothing retailer
Edgars

that lost 11.49% to $8.0500.Hotelier African Sun dropped 10.22% to $21.8156
as First Mutual Holdings went down 10.05% to $20.9641.Plastics pipes
producer Proplastics capped off the top losers’set with 3.53% retreat to
$25.1209.

 

Econet, Delta and Proplastics emerged as the counters of choice dominating
the volumes and values category. They contributed 79.27% of volume and
81.96% value. Other notable value drivers in the session were BAT (10.63%)
and Axia(3.88%). Activity aggregates recovered from previous trades to see
value soar 292.31% to $337.37m while volume climbed 293.14% to 4.77m shares.
On the VFEX two counters registered trades. It was Padenga whose price fell
0.004% to USD$0.2280 on 30,992 shares while, Seedco traded 32,996 shares at
a flat price of USD$0.2995.A total of 20,216 units exchanged hands on the
ETF front as two ETF stocks improved against one that fell. Old Mutual grew
9.56% to $6.0260 while, Datvest picked up 2.82% to $1.5963.MIZ shrunk 4.22%
to close at $1.1367.The market recorded a negative breadth of three as
thirteen counters drew back against ten that advanced. A net outflow
position was recorded on foreign trade as sales shore 101658.75% to $15.27m
against foreign buys of $483,840.00.-efesecurities

 

 

 

 

Global Currencies & Equity Markets

 

 

 

South Africa

 

South African rand gains as Ramaphosa's ANC win calms markets

(Reuters) - South Africa's rand held on to gains against the dollar on
Tuesday after President Cyril Ramaphosa was re-elected as leader of the
governing African National Congress (ANC) party on Monday.

 

At 1535 GMT, the rand traded at 17.2875 against the dollar, 0.36% stronger
than its previous close.

 

The local currency jumped on Monday as Ramaphosa beat former health minister
Zweli Mkhize to secure a second five-year term as ANC leader, clearing the
way for him to contest the presidency again at 2024 elections.

 

ETM Analytics said in a note that the news of Ramaphosa's re-election came
as a relief to investors.

 

"All eyes will return to offshore developments, including global equity
market performance, China's unfolding COVID experience and the guidance from
global central banks," analysts said, suggesting a calmer end to the year.

 

Shares on the Johannesburg Stock Exchange fell slightly, with the Top-40
index (.JTOPI) down 0.51%, while the broader all-share index (.JALSH) closed
0.43% lower.

 

The government's benchmark 2030 bond was marginally down, with the yield up
1.5 basis points at 10.155%.

 

-The Thomson Reuters Trust Principles.

 

 

 

 

Nigeria

 

New naira notes yet to circulate amid fear of counterfeiting

Just a week into the introduction of new naira notes by Central Bank of
Nigeria (CBN), checks have shown that many states are yet to receive
reasonable share of the currency.

>From Lagos to Rivers, Oyo to Borno, the narrative is the same. The notes
drop in trickles, with Automated Teller Machines (ATMs) still dispensing the
old denominations.

   

Meanwhile, reports of fake notes are flooding media space, making players in
the informal sector increasingly wary of new banknotes.

In the face of continuous debate on appropriateness of handing down a tight
demonetisation timeline of old notes, the Bank of England (BoE), yesterday,
unveiled the King Charles III banknotes.

   

To “minimise the environmental and financial impacts” of the change, old
notes will continue to exist side-by-side with the new ones, allowing them
to phase out naturally. Worn-out bills, the BoE said, would not be replaced
going forward.     

    

“The King’s portrait will appear on all four of our polymer banknotes (£5,
£10, £20 and £50). The rest of the design on the banknotes will remain the
same. The King’s image will appear on the front of the banknotes, as well as
in the see-through security window. You can check these notes in the same
way you can check our polymer banknotes featuring Queen Elizabeth II


“You will still be able to use polymer banknotes that feature the portrait
of Queen Elizabeth II. Banknotes featuring Queen Elizabeth II and the King
will be in circulation at the same time.

“The new banknotes will only be printed to replace those that are worn and
to meet any overall increase in demand for banknotes. Our approach is in
line with guidance from the Royal Household, to minimise the environmental
and financial impact of this change,” a notice released on the Bank’s
website reads.

  

On the other hand, Nigerians have just between now and January 31, 2023 to
return old notes in their vaults and have them replaced with new ones.

Some experts have faulted the rigid timelines and called for a flexible
process that would allow the old naira notes to phase out over time.  

   

But damning the criticisms, National Association of Nigerian Students (NANS)
applauded CBN Governor, Godwin Emefiele, for the decision to redesign the
naira and pursue, more aggressively, implementation of the cashless policy,
which started 10 years ago.

   

But with about 40 days to phase out the old notes and six days into
circulation of the new, most Nigerians are yet to set their eyes on the
redesigned legal tenders.  

   

In Port Harcourt, Rivers State, some bank workers along Ikwere Road revealed
that they received very limited quantities of the new notes.

Branches on Ikwerre and Aba Roads showed that customers were still being
paid the old naira notes. Also, some ATMs were still dispensing the bills,
with most bank users saying they had not seen the new N1,000 denomination.

    

When the reporter disguised as a bank customer to withdraw the new notes
from an old generation bank on Ikwere Road, one of the staff at the counter,
said: “It depends on the amount you are collecting, because we have limited
new naira notes.”

    

A branch manager of one of the new-generation banks, along Aba Road, said he
had been receiving complaints from customers, asking why his branch
continues to dispense the old notes. He said those who have collected the
new notes also complained that the texture of the money looks inferior to
the old one.

    

He added: “The cashless policy will affect the customers because you do not
expect a person to deposit all his money and be happy to be conditioned on
how to withdraw it. But our role is to carry out whatever policy CBN puts
out there.”

     

Reacting, Lucky Goodness, a customer at one of the banks, said: “Yes, I have
seen the new naira note. I have seen the N1,000 note but not all the
denominations.”

  

Also, George Erezi, said: “For me, the redesigned naira note is a good
initiative because CBN wants to checkmate cash flow and track the naira in
circulation. But to the masses, such policies are very harsh, especially on
small-scale businesses. For instance, from January 9, with the application
of the new policy, the withdrawal limit will be N20,000 per week, which is
very harsh. With the situation in the country, it is going to wreck a lot of
businesses in the country. Both small and medium-scale businesses will go
bankrupt and many people will be unemployed.

   

“The note itself, to me, is not something that seems to be an improvement on
the old one. It looks inferior; it looks more like counterfeit.”

In Ibadan, many banks and ATMs were still dispensing the old notes. During a
visit by The Guardian to a popular commercial bank, the tellers were seen
giving out old notes. Many residents also claimed they had not seen the new
notes.

   

Another twist is rejection of the new notes by motorcyclists. A motorcyclist
in the Bodija area refused to collect the money, saying the N1,000 note is
fake, on account of its colour. Other traders equally expressed this
concern.

    

A POS operator, Dayo Oyadeji, said he preferred the old notes. According to
him, “The quality of the note is low. It is prone to counterfeiting. It is
not as good as the old one. If it is mistakenly washed alongside clothes, it
is gone. I prefer the old one. Let us be using the old one.”

    

A businesswoman, Mrs. Idowu Oriloye, said she had not seen the new money,
adding: “The information I got is that there are lots of new fake notes in
town. I will not collect them. As we speak, people are rejecting them. They
are not as good as the old.”

   

Visits to several commercial banks, POS operators, ATM and business centres
showed that old notes were still being used to transact business.

It was also discovered that many people in possession of the new notes were
reluctant to spend them, deciding instead to hoard them.

   

A trader at Gbagi Market in Ibadan said, on account of unstable policies of
the government, it could be wise for people to hoard the notes.

   

Although many commercial banks have started paying with new notes, the
outflow remains largely insufficient.

    

A customer, who came to a first generation bank, said he only received one
new N1,000 note, out of the over N20,000 he withdrew from the counter.

Another resident who withdrew money from one of the ATMs at Mokola, said:
“The machine still dispensed the old notes.”

   

Also at Ojoo and Iwo Roads, most of the POS operators were using old notes
to pay their customers. They complained that the banks were yet to give out
the new notes.

IN Kano, the new currency is in short supply, as commercial banks continue
to dispense old notes.

 

“We queued up to withdraw some money here. As you can see the cashier has
given us old notes, despite the fact that the Central Bank released the new
currency to commercial banks about a week ago,” some customers told The
Guardian at banks along Zoo Road and Murtala Muhammed way.

 

A bank customer, Aminu Yahaya, who was issued new notes worth N3,000 out of
the N30,000 he demanded, alleged that the currency was being diverted to
politicians and bureau de change operators.

Investigation revealed that some residents bought the redesigned notes from
black market operators, who had acquired them from unofficial channels at
commercial banks. These were then sold to end users for a fee.

 

Isa Abdullahi, a businessman, told The Guardian: “I met one of the operators
who sold the new notes to people who spray them during social events, like
parties or wedding receptions, as a status symbol.”

 

There were also reports of fake old naira notes circulating, with many
residents saying they had come across such during transactions.

 

A victim, Ade Samuel, said he withdrew money from a POS operator, only to
discover some of the notes were false.

Meanwhile, from Abuja, NANS, which commended Emefiele, urged CBN to come up
with stiffer measures that would save the naira from further depreciation.

 

NANS, in a statement by its Senate President, Comrade Felix Attah Nnalue, at
the end of an emergency meeting, argued that the policy would curtail
nefarious activities of money launderers and drugs dealers.

    

The students’ body urged Nigerians to embrace the change, while banks
improve upon their online applications to boost consumer confidence. 

The group expressed concern that Nigeria, which is Africa’s largest economy,
has experienced an unbelievable exchange rate in the last seven years, which
needs to be stabilised.

    

It noted: “We cannot continue like that. The CBN must come up with stiffer
measures that will save our naira. We cannot abandon our currency to the
activities of money launderers, exchangers, drug and narcotics traders and
the bewildering information that over 80 per cent of the currency in
circulation, over N2.7 trillion, is outside the banks. What are our law
enforcement agencies doing?

“Our interest is in the future of Nigeria. This is why we support the
redesign of the naira, so that N2.7 trillion and more should go right back
into the banks. The currency change is necessary at this political period.
It is long overdue.

“Even stakeholders agreed that the advantages of the cashless policy and
redesign of the naira far outweigh its vilification. It helps in effective
monetary policy, fighting corruption, stabilisation of the exchange rate,
reducing inflation, and ensuring free and fair elections.

   

“While a lot of concerns have been raised over the withdrawal limit, it is
commendable. Nigerians are always afraid and impatient about everything,
even progress. The strategic limit seems harsh for political bandits. In the
same way, they rejected Bank Verification Number (BVN).

   

“There was a drastic fall in the exchange rate as soon as the policy was
announced. There have been humongous deposits coming into the banks. The
masses are looking out for stashed funds. Cash handling fees are available
for a fee and more documents are required. We believe and urge Nigerians to
embrace this change.”

 

In another development, Senator Aliyu Magatakarda Wamakko of Sokoto State
joined Nigerians in criticising Emefiele over redesign of the naira notes
and the controversial cash withdrawal limit set by CBN.

    

Wamakko, a former governor of Sokoto State, described the twin policies as
unnecessarily diversionary, controversial, and designed to plunge
Northerners into deeper misery.

   

Noting that the policies were the sole creation of the apex bank, Wamakko
warned that Emefiele would be called to account for all the sufferings that
result from the policies.

   

He said: “We note with concern the imminent hardship on innocent Nigerians
that would arise from the CBN’s imposition of harsh policies on cash
withdrawal limit, noting especially, that the livelihood of many
individuals, particularly, in the North and their enterprises would be
impacted.”

  

He regretted that this is another not-well-thought-out policy initiated by
Emefiele and the CBN, plunging the country and especially, Northern Nigeria,
into an economic crisis involving high inflation, poor exchange rate and
dwindling foreign reserve.

   

“It is equally absurd that the CBN Governor would so insist on the
enforcement of this policy, despite an order of the National Assembly to the
contrary, in addition to mounting anger in the land,” he said.

    

The Senator also noted that the timing of the policy, without adequate
preparation and sensitisation of critical drivers of the economy, could
prove counter-productive and further drive many people below the poverty
line.

   

“We are bothered that the banking infrastructure and mobile/digital facility
to drive the cashless policy in Nigeria and in the North, in particular, are
not sufficiently developed,” Wamakko said.

   

He said the policy introduced by the CBN is totally against Northern
Nigeria’s interest, given the region’s lowest financial inclusion rate.

   

This policy, he said, potentially aims to cripple Northern entrepreneurs who
are generally micro and medium industry investors that normally transact and
deal with cash payments, given the unavailability of banks in their
localities.

   

“Inadequate banking system, presence, and acceptance in the North, compared
to several banks in Southern Nigeria, and the large population of the North
living in rural areas with few microfinance banks
this policy will make it
difficult for them. There is also non-functioning Internet connectivity in
many communities across the North,” he said.

Also, World Bank has aligned with claims that the new policy would
negatively impact SMEs and the vulnerable poor in the North.

According to the financial institution, redesign of the notes could have
negative effects on the local economy of rural areas.

   

The World Bank raised the alarm, yesterday in its 2022 new report, titled:
“The Nigeria Development Update,” released in Maiduguri, the Borno State
capital.

It said: “The naira redesign might harm SMEs and the vulnerable poor; due to
its timing and short transition period, slated for January 31, 2023.”

  

The report warned that the timing of and short transition period for the
demonetisation might have negative impacts on economic activities.

It explained that the most affected of the naira redesign are the poorest
households living in rural and urban centres.

    

While citing international experience, the report disclosed: “The rapid
demonetisation can generate high short-term costs,” stating that small-scale
business operators and vulnerable poor households will be most affected by
liquidity squeezes.

“The SMEs and vulnerable poor heavily rely on the day-to-day transactions
with cash,” said the Report.

   

“At present, households and firms already face increased financial pressures
from the lingering high costs of food and fuel,” it noted.

 

The report added that inflation has also hit 24 per cent in six months.

 

 

 

 

 

 

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

Yen surges to 130 per dollar after surprise BOJ policy shift

NEW YORK -- Japan's currency on Tuesday touched its strongest level against
the dollar since early August as investors saw the Bank of Japan's loosening
of its cap on interest rates as a sign of change in a nearly decadelong
policy of ultraeasy money.

 

The yen reached 130.66 to the dollar during New York trading, up 3.5% from a
day earlier, as momentum continued from the Tokyo session. It later slipped
to around 131.10.

 

The yen was hovering around 137.30 per dollar before the BOJ surprise
decision was announced earlier in the day.

 

On the following day in Tokyo, investors mostly did not follow suit over the
central bank's move. The benchmark Nikkei Stock Average was down by 1.1% at
one point and ended the morning session down by 0.2%. The dollar traded at
131-132 yen in the morning.

 

An interest rate gap between Japan and the U.S., where the Federal Reserve
has aggressively raised rates, had kept the yen under downward pressure. The
currency fell to nearly 152 per dollar in October, hitting a 32-year low.

 

But Tuesday's decision by the BOJ to widen its target band for long-term
interest rates suggests a policy shift. With the U.S.-Japan rate gap now
expected to narrow, or widen by less, investors bought back the yen,
triggering a sharp rise.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold price rises to 4-month high after Bank of Japan’s surprise policy tweak

Gold prices rose above the key $1,800 level on Tuesday as the US dollar
dropped after the Bank of Japan’s surprise policy tweak, while markets
continue to weigh the outlook for the Federal Reserve’s interest rate
strategy.

 

Spot gold jumped 1.5% to $1,814.22 per ounce by 11:30 a.m. ET, its highest
since mid-August. US gold futures also gained 1.5% to trade at $1,824.50 per
ounce.

 

Earlier in the day, the Bank of Japan shocked global markets with a surprise
tweak to its bond yield control that allows long-term interest rates to rise
more, a move aimed at easing some of the costs of prolonged monetary
stimulus.

 

Stock markets tanked following the BOJ decision, while bond yields spiked,
and the yen surged to a four-month peak against the dollar.

 

Lifting bullion’s appeal among overseas investors, the US decided to review
its own yield curve control policy. On the day, the US dollar index was down
by 0.7%.

 

The new US spending bill is putting more pressure on the dollar, with gold
prices rallying based on more liquidity being injected into the system, said
Jeffrey Sica, chief executive officer of Circle Squared Alternative
Investments, in a Reuters report.

 

The US Congress was moving forward with a $1.66 trillion government funding
bill, scrambling to pass a measure.

 

“I see that it’s going to be a dark shadow on the gold market, but I still
think we’re headed for an upside based on all the chaos,” Sica added,
referring to the prospect of the Fed continuing to raise rates.

 

“Gold is being given another chance to shine thanks to the dollar’s
pullback,” said Han Tan, chief market analyst at Exinity, adding that “the
next leg down for the dollar should send spot gold onto a new cycle high
past $1,824.50.”

 

“Traders and investors should keep the precious metal well bid going into
2023, as markets brace for the prospects of a US recession and the
accompanying Fed pivot,” he predicted.

 

Fed Chair Jerome Powell last week said the US central bank will deliver more
interest rate hikes next year even as the economy slips towards a possible
recession.

 

Bullion has shed more than $260 since its March peak as central banks around
the world stepped up efforts to fight soaring inflation.

 

Uncertainty remains

Despite the latest price surge, gold’s outlook remains murky heading into
2023.

 

“On the chart, $1,800 continues to be a tricky area for buyers which already
faced a reversal back in August
 (but) for now, it looks like the path of
least resistance continues to be higher,” said Daniela Hathorn, a market
analyst at Capital.com.

 

According to Matt Simpson, a senior market analyst at City Index, the
“prospects of a higher terminal Fed rate could prevent gold enjoying a
runaway rally next year.”

 

Meanwhile, China continues to grapple with surging covid-19 cases, and the
World Bank has now cut its growth outlook for this year and the next for the
top bullion consumer.

 

“If China brings back restrictions and if that were to happen over the
holiday period, it is the perfect catalyst for large moves (in gold) to the
downside,” Simpson added.

 

(With files from Reuters)

 

 

 


 

INVESTORS DIARY 2022

 


Company

Event

Venue

Date & Time

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

National Unity Day

 

December 22

 

 	

 

Christmas Day

 

December 25

 

 	

 

Boxing Day

 

December 26

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

Counters trading under cautionary

 

 

 

 	

 

 

 

 

 	

CBZH

Meikles

Fidelity

 

 	

TSL

FMHL

Turnall

 

 	

GBH

ZBFH

GetBucks

 

 	

Zeco

Lafarge

Zimre

 

 	

Invest Wisely!

Bulls n Bears 

 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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