Bulls n Bears Daily Market Commentary : 24 February 2022

Thu Feb 24 17:46:44 CAT 2022

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Bulls n Bears Daily Market Commentary : 24 February 2022

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ZSE commentary

The ZSE stocks fall again in lacklustre session as timid selling continued in some select counters. Activity levels remained above 500 at 530 trades. Star Africa was the most active stock at 50 trades followed by Delta and Econet at 33 each and OK Zimbabwe at 31 trades. Investor sentiment was negative after the session yielded 21 decliners against 14 risers while six (6) of the active stocks remained unchanged. Star Africa anchored volume aggregate trading 34,515,400 shares and Econet anchored value aggregate with a value of ZW$144.16 million.

The All-Share Index shaded 0.83% to close at 14,877.30 points. The Top 10 Index shaded 0.91%. The Top 15 Index shaded 0.86%. The Medium Cap Index was down by 0.63% to 23,488.69 points whilst the Small Cap Index shaded 0.19% to 393,980.59 points. Leading the risers pack of the day was the wine maker Unifreight closed at 2,602.50c and TSL Limited was up by 6.67%. Zimre Holdings added 5.65% and NMB Holdings added 3.73% to 1,249.99c. NTS was up by 2.86%. Mitigating the gains were losses in Edgars and Zimplow which shaded 16.64% and 10.63% respectively. Masimba Holdings was down by 9.49%. Simbisa Brands and Axia shaded 8.18% and 5.97% respectively. The ETFs traded 93,911 units worth W$1,060,728.20 in 56 trades. The Old Mutual Top 10 ETF added 7.25% to close at 953.77c while the Morgan and Co. Multi Sector ETF shaded 0.67% to close at 1,450.09c. on the VFEX, Padenga traded 84,747 shares to close unchanged at US0.21 cents.wealthaccesssecurities

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Global Currencies & Equity Markets

South Africa

Rand drops sharply against the US dollar as investors dump riskier asset after Russia attacks Ukraine

The rand opened sharply weaker on Thursday, as investors dumped riskier assets after Russian forces attacked Ukraine.

Investor sentiment was also dampened by Fitch Ratings pointing to difficulties containing spending and warning that recent strong revenue growth may prove temporary, in response to Wednesday's 2022 budget.

At 0555 GMT, the rand traded at 15.2800 against the dollar, around 0.9 percent weaker than its closing level on Wednesday.

Global stocks dived, while the dollar, gold and oil prices rocketed higher.

Overnight, Russian President Vladimir Putin authorised what he called a special military operation in eastern Ukraine. However, Ukraine's Foreign Minister Dmytro Kuleba said on Twitter that Russia had launched a "full-scale invasion".

Around 0930 GMT, Statistics South Africa was due to release the January producer price index (PPI), providing further clues about inflationary pressures in Africa's most industrialised economy. Economists polled by Reuters predict PPI will ease to 10.5 percent from 10.8 percent in December.

>From 1030 GMT onwards, Finance Minister Enoch Godongwana will address lawmakers on the Budget, which forecast public debt would peak sooner and at a lower level than earlier expected.

REUTERS

Nigeria

Naira Flat Against Dollar Across FX Market 

The Naira recorded no movement against the American Dollar at the Investors and Exporters (I&E) segment of the foreign exchange (FX) market, remaining at N416/$1 on Wednesday, February 23.

This occurred as the value of FX transactions at the special market window depreciated by 36.4 per cent or $50.59 million. At the close of trades, the turnover for the session stood at $88.36 million compared with the $138.95 million recorded at the previous session.

Also, the domestic currency traded flat against the Pound Sterling to remain intact at N564.58/£1 and against the Euro, the Nigerian Naira closed flat at N472.64/€1.

It was a similar situation at the Peer-2-Peer (P2P) forex window as the Naira showed no movement against the United States Dollar, trading at N573/$1.

However, the digital currency closed mixed yesterday with five of the 10 tokens tracked by Business Post across several trading platforms closing bearish.

Ripple (XRP) recorded the highest loss as it dropped 1.7 per cent to trade N424.03, followed by Dash (DASH) which slid by 1.4 per cent to trade at N52,575.75.

In addition, Dogecoin (DOGE) fell by 1.4 per cent to sell at N76.48, Bitcoin (BTC) posted a 1.1 per cent loss to quote at N21,549,185.55, while Binance Coin (BNB) dropped 0.9 per cent to sell for N153,429.04.

On the gainers’ end, Litecoin (LTC) recorded a 1.2 per cent appreciation to trade at N63,460.08, Solana (SOL) added 0.6 per cent to its value to trade at N51,303.46, Ethereum (ETH) saw its value rise by 0.5 per cent to sell at N1,509,776.92, Cardano (ADA) made a 0.4 per cent rise to sell at N524.63, while the United States Dollar Tether (USDT) moved up by 0.1 per cent to trade at N587.87.

 <mailto:info at bulls.co.zw> 

Global Markets

Sterling falls versus dollar, holds ground against euro

(Reuters) - Sterling fell against the dollar but stood its ground versus the euro as investors rushed into safe-haven assets after Russia launched an all-out invasion of Ukraine by land, air and sea.

Ukraine’s President Volodymur Zelenskiy said Kremlin leader Vladimir Putin’s aim was to destroy his state, while U.S. President Joe Biden and other Western leaders promised tough new sanctions in response.

Safe-haven currencies such as the yen and U.S. dollar were in demand after Ukraine said Russia had launched a full-scale invasion while riskier currencies tanked.

The pound fell 0.4% to 1.3484 against the dollar after hitting its lowest level since February 1 at $1.3464.

“GBP-USD will probably limit its margin to the downside below 1.35,” Unicredit analysts said.

Sterling was down 0.05% versus the euro at 83.47 pence, after hitting its lowest level overnight since Feb. 3 at 83.07 pence.

The narrative about future interest rates was still in focus, with investors’ views mixed ahead of Bank of England speakers scheduled for later in the day.

“We doubt they will want to push back on aggressive pricing of the BoE cycle, which is providing support to GBP and helping to insulate against higher energy prices,” ING analysts said.

But MUFG analysts argued “the conflict is likely to encourage market participants to scale back expectations for monetary tightening from major central banks in the near-term.”

“We would expect the UK and US rate markets to continue to adjust expectations more in favour of smaller 0.25 point hikes being delivered at their next meetings in March,” they added.

Money markets are currently pricing in a 55% chance of a 50 bps rate hike from the BoE in March and fully pricing a rate increase of 130 bps by year-end.

The UK rate market had already adjusted in recent days to scale back expectations for a 0.50 point hike following less hawkish comments from Monetary Policy Committee officials.

Bank of England Governor Andrew Bailey said on Wednesday that markets should not get carried away about the likely scale of interest rate rises, while policymaker Silvana Tenreyro said she saw the case for further modest tightening. 

Our Standards: The Thomson Reuters Trust Principles.

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Commodities Markets

Gold, palladium jump after Russia invades Ukraine

(Reuters) - Palladium prices jumped to seven-month highs on Thursday as supplies worries intensified after Russia's invasion of Ukraine, which also propelled gold to a near 18-month high as investors switched to safe-haven assets.

Russia launched an all-out invasion of Ukraine by land, air and sea on Thursday, confirming the worst fears of the West with the biggest attack by one state against another in Europe since World War Two. read more

Palladium climbed 5.7% to $2,622.43 an ounce at 1251 GMT from an earlier $2,695.57 an ounce, its highest since August last year.

"There are fears that palladium supplies from Russia could be disrupted," said Commerzbank analyst Carsten Fritsch.

Traders say the market is worried that sanctions on Russia imposed by the United States and Russia could significantly tighten supplies of palladium used to make autocatalysts.

Russia's Nornickel (GMKN.MM) is the world's largest supplier of palladium and a major supplier of platinum, accounting for about 40% and 10% of global mine production, respectively. read more

Palladium prices are up nearly 40% this year, while gold has gained more than 7%.

Spot gold jumped 2.7% to $1,959.36 per ounce, having earlier touched $1,973.96, its highest since September 2020. U.S. gold futures added 2.7% to $1,961.50.

"There is safe-haven demand for gold... this crisis is very inflationary because it's adding upward pressure on commodities prices," Saxo Bank analyst Ole Hansen said.

Gold is often used as a hedge against inflation, often caused by high oil prices, and as a means of preserving wealth during times of financial and political uncertainty.

Oil prices jumped above $105 a barrel for the first time since 2014 after Russia's attack on Ukraine.

"A protracted escalation could see gold rising to or above $2,000 per ounce in the short-term," UBS analyst Giovanni Staunovo said. "Platinum and palladium are supported on availability concerns."

Silver surged 3.1% to $25.29 per ounce and platinum rose 1.4% to $1,106.66.

The Thomson Reuters Trust Principles.

Oil tops $105 after Russia attacks Ukraine

(Reuters) - Oil prices jumped on Thursday, with Brent rising above $105 a barrel for the first time since 2014, after Russia's attack on Ukraine exacerbated concerns about disruptions to global energy supply.

Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two. read more

The United States and Europe have promised the toughest sanctions on Russia in response.

"If sanctions affect payment transactions, Russian banks and possibly also the insurance that covers Russian oil and gas deliveries, supply outages cannot be excluded," Commerzbank analyst Carsten Fritsch said.

At least three major buyers of Russian oil were unable to open letters of credit from Western banks to cover purchases on Thursday, sources told Reuters. read more

Brent crude was up $7.26, or 7.5%, at $104.10 a barrel as of 1437 GMT, having touched a high of $105.79. U.S. West Texas Intermediate (WTI) crude jumped $6.63, or 7.2%, to $98.73.

Brent and WTI hit their highest since August and July 2014 respectively.

"Russia is the third-largest oil producer and second-largest oil exporter. Given low inventories and dwindling spare capacity, the oil market cannot afford large supply disruptions," UBS analyst Giovanni Staunovo said.

"Supply concerns may also spur oil stockpiling activity, which supports prices."

Russia is also the largest provider of natural gas to Europe, providing about 35% of its supply.

UK Prime Minister Boris Johnson said Britain and its allies would unleash a massive package of economic sanctions on Russia and that the West must end its reliance on Russian oil and gas. read more

China warned of the impact of tensions on the stability of the energy market.

"All countries that are truly responsible should take responsible actions to jointly maintain global energy security," a Chinese foreign ministry spokesperson said.

Global oil supplies remain tight as demand recovers from pandemic lows.

Reflecting the tightness, premiums on crude contracts for loading in one month over contracts for loadings in six months , a metric closely watched by traders, hit a record high at $11.55 a barrel.

"This growing uncertainty during a time when the oil market is already tight does leave it vulnerable, and so prices are likely to remain volatile and elevated," said Warren Patterson, head of ING's commodity research.

Analysts say Brent is likely to remain above $100 a barrel until significant alternative supplies become available from U.S. shale or Iran, for example.

The United States and Iran have been engaged in indirect nuclear talks in Vienna that could lead to the removal of sanctions on Iranian oil sales.

Iran's top security official Ali Shamkhani said on Twitter on Thursday that it is possible to achieve a good nuclear agreement with Western powers after significant progress in negotiations. read more

Analysts are warning of inflationary pressure on the global economy from $100 oil, especially for Asia, which imports most of its energy needs.

"Asia's Achilles heel remains its vast import needs for energy, with surging oil prices bound to take a hefty bite out of income and growth over the coming year," said HSBC economist Frederic Neumann.

The Thomson Reuters Trust Principles.

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

Cafca

AGM

Feb 24, 12PM  

Ariston

AGM

Royal Harare Golf Club

Feb 24, 3PM

Nampak

AGM

March 09, 9AM

Art

AGM

March 10, 2.30PM

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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