Bulls n Bears Daily Market Commentary : 03 January 2022

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Bulls n Bears Daily Market Commentary : 03 January 2022

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

 

The ZSE shares opened the year 2022 in the positive although liquidity and
activity levels were lower. Activity levels were at 385 trades. Star Africa
was the most active stock at 39 trades followed by OK Zimbabwe and Delta at
32 and 22 trades respectively. Investor sentiment was positive after the
session yielded 20 advancers against 14 fallers while four of the active
stocks remained unchanged. OK Zimbabwe anchored volume aggregate trading 434
800 shares and Delta anchored the value aggregate with a value of ZW$16
million.

 

The All-Share Index added 1.61% to close at 10 997.06 points. The Top 10
Index gained 1.78%. The Top 15 Index also added 1.84%. The Medium Cap Index
was up by 1.39% to 20 691.72 points whilst the Small Cap Index shaded 1.49%
to 396 769.27 points. Leading the risers pack of the day was NMB Holdings
adding 16.73%. Axia Corporation was up by 16.47%. Wildale added 16.33% and
Cassava added 15.42% to 4692.31c. Truworths was up by 15.00%. Mitigating the
gains were losses in Turnall Holdings and First Mutual Properties which
shaded 14.66% and 6.23% to 350c and 731.40c respectively. OK Zimbabwe was
down by 4.67% to 2616.53c. African Distillers  and Unifreight shaded 3.18%
and 2.67% respectively. The Old Mutual Top Ten ETF closed at 443.37c up by
0.75% after 20 259 units worth ZW$89 823 exchanged hands in 32
trades.-wealthaccess

 



 

Global Currencies & Equity Markets

 

 

South Africa

 

South African rand starts 2022 stronger on upbeat global mood

(Reuters) - The South African rand strengthened on Monday, the first trading
day of 2022, as an upbeat mood lifted assets globally.

 

At 1602 GMT, the rand traded at 15.8875 against the dollar, around 0.4%
firmer than its previous close.

 

On global markets, U.S. and European equity markets powered higher in
parallel with rising oil prices. read more

 

Among positive drivers, South Africa believes it has passed the peak of a
wave of coronavirus infections caused by the Omicron variant. read more

 

The local economic data calendar is relatively light this week, with vehicle
sales (ZAVEHY=ECI), a purchasing managers' survey (ZAPMIM=ECI) and reserves
figures (ZAFXRS=ECI) among releases that are due.

 

The Johannesburg Stock Exchange, which started Monday well, had given up its
gains by the close.

 

The blue-chip index of top 40 companies (.JTOPI) ended the day down 0.04% at
67,026 points and the All-share index (.JALSH) up 0.02% at 73,723 points.

 

Both indexes had a strong run last year giving a return of around 23%, led
by banks and mining companies.

 

Analysts say 2022's trajectory will be influenced by global inflation and
its impact on interest rates, Chinese stimulus measures and the potential
for new coronavirus variants.

 

In fixed income, the yield on the South African government's benchmark 2030
bond fell 1.5 basis points to 9.335%.

 

The Thomson Reuters Trust Principles.

 

 

 

Nigeria

 

Naira drops to record low amid new year uncertainties

In what has become a trend, Naira fell to a record low over-the-counter on
the last trading day of 2021, closing at N435/$. This came amid uncertainty
about the market outlook as the economy wobbles into a new year.

 

With the closure rate, naira had sold at a discount of over 15 per cent to a
dollar at the official Nigerian Autonomous Foreign Exchange (NAFEX) window
last year.

 

Trading opened last year at N410/$ but the exchange rate fell to about
N415/$ as the year rolled by, though it also traded at N415/$ after the
Christmas holidays, with extremely wide swings, indicating high volatility
of the market.

 

 

Last Friday, the Naira started trading on an upswing at N420.67/$ but slid
to as low as N445.60/$ by mid-day before it appreciated slightly to close at
N435/$. The extremely unpredictable trading session saw the currency
vacillating between N400/$ and N445.60/$.

 

The forward market, which measures the perception about the
near-to-medium-term outlook of the Naira moved on a much narrower range of
between N452.12/$ and N453.12/$.

 

Naira, however, has been relatively stable at the parallel market, closing
the year at N565/$. As at yesterday, the market still traded around N465/$,
suggesting the narrowing of the historic wide differential between the
official and black market rates. Some experts have attributed the many
manipulations (including round-tripping) in the market to the wide gap
between the windows.

 

The dollar traded for about N475/$ in the early days of last year and hit
N575/$ at the height of last year's currency crisis few months ago. There
was a breather weeks ago, with the unofficial exchange rate adjusting to
N550/$.

 

Like it has every year since 2014, the Naira finished 2021 weaker than it
started. It lost about N90 per dollar or 19 per cent at the highly
speculative parallel and six per cent or N25.7 per dollar at the official
trading window.

 

 

About two years ago, the Central Bank of Nigeria (CBN) had pledged its
commitment to rally convergence around NAFEX. Last year, it replaced the
default CBN official rate, the benchmark used for government transactions,
with NAFEX, but a full rate harmonisation has not been attained.

 

Yesterday, the Chief Executive Officer of Economic Associates, Dr. Ayo
Teriba, said nothing short of "a single exchange rate implementation would
help to clear the market and restore equilibrium."

 

NAFEX is often touted as the anchor of the planned liberalised market, but
in its current formation, it is pseudo-market led as the apex bank regularly
intervenes to shore up supply.

 

A former Assistant Director at the CBN, Stan Ukeje, told The Guardian that
the market would need to be deepened with more participants enlisted to
reduce the intervention of the apex bank and make it a truly market-driven
window.

 

The recent tumbling of the Naira at the official window is being interpreted
differently. Some experts see it as the beginning of a more liberalised
market but the Central Bank could not be reached for confirmation. Others
said Naira may adjust upwardly in the coming days.

 

On the last trading day of 2020, there was a similar 'blip' as the Naira
lost 4.2 per cent on the spot market, widely quoted by foreign investors'
and exporters' (I & E) window. The naira closed at N410.25/$, which was
hailed as the effective take-off of the much-expected convergence. But a few
days into 2021, there was an intervention from the monetary authority, an
action that helped the local currency to regain lost ground.

 

Vice-Chairman of Highcap Securities Limited, David Adonri, said the 3.5 per
cent depreciation of the Naira in a single trading day reflected dwindling
supply and a signal that the illiquidity challenge could enter the new year.

 

The monetary authority made frantic efforts to shore up the supply of FX
last year and contain anti-market activities. The Naira-4-Dollar Scheme, a
policy that sought to increase remittances through official channels, was
created as a follow-up to other reforms in the money transfer market that
started in 2020.

 

The eventful year also saw the apex bank withdrawing the weekly funding of
bureau de change (BDCs) operators and handing over business/personal travel
allowance (B/PTA) dollar sales to commercial banks. The efforts,
notwithstanding, the crisis in the FX market has continued.

 

MEANWHILE, the Association of Bureau De Change Operators of Nigeria (ABCON),
the umbrella body for over 53,000 CBN-licensed BDCs has advised the apex
bank to de-risk operations of their members to allow them to access forex
from the autonomous market.

 

In a statement at the weekend, ABCON President, Dr. Aminu Gwadabe, said the
BDC sub-sector is becoming comatose since the July 2021 Monetary Policy
Committee (MPC) meeting where the CBN suspended weekly dollar interventions
to BDCs.

 

He said that while BDCs are licensed to offer retail forex sales, across the
counter forex transactions, they equally contribute to economic development.

 

According to Gwadabe, over N1 trillion annual transaction volume by the BDCs
sector is under threat while huge capital investment in the sector is
becoming redundant and gradually being eroded.

 

He, therefore, advised that just like the apex bank de-risked the
agricultural sector, making it easier for agriculturalists to access cheaper
loans at a single-digit interest rate from banks, the CBN can also de-risk
the BDCs operations to be able to receive diaspora remittances through the
international money supply operators (IMTOs) and deepen foreign capital
flows to the economy.

 

Gwadabe said ABCON understands the challenges faced by the apex bank owing
to the dwindling foreign reserves, declining oil output, COVID-19 induced
economic pains, fiscal policy challenges, debt burden and election spending,
making it difficult for it to sustain the weekly dollar interventions to
BDCs.

 

 

He suggested that the BDCs should be allowed to access diaspora remittances
through the autonomous forex window. They could access IMTO proceeds, carry
out online dollar operations and operate point of sale (PoS) agencies to
enable them to contribute to economic growth, he said.

 

A professor of applied economics, Godwin Owoh, had previously warned that
the expected intra and inter-party campaigns ahead of the 2023 general
elections would exacerbate the financial stress index and compound the
monetary regulation challenges.

 

He said the appetite of politicians for the greenback would increase demand
for FX and put more pressure on the naira. He charged Nigerians to prepare
for harder times, stressing that the odds do not favour a stable FX market
this year.

 

With capital flight expected to increase this year as election approaches
alongside rising insecurity, Owoh said: "Nigerians should expect higher FX
illiquidity.

 

Also speaking, Victor Ogiemwonyi, a retired investment banker, said reforms
are important to stabilising the market, adding that overreliance on
importation was a major challenge the country would need to deal with. He
added that "every year before the general election heightens uncertainty.

 

But a member of the Monetary Policy Committee (MPC) and professor of
economics at the University of Ibadan, Adeola Adenikinju, has a different
perspective about the impact of politics on the FX market.

 

He admitted that demand for FX would increase but also noted that many
politicians would also bring hard currencies for spending.

 

When that happens, the professor argued, the increase in demand would be
balanced out with fresh injection into the system.

 

He said events of previous election years proved that FX liquidity could
increase as a result of political spending.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

Dollar starts off 2022 on higher note as yields climb

(Reuters) - The U.S. dollar rose against a basket of major currencies on
Monday, the first trading day of the new year, in sync with government bond
yields as investors anticipate the Federal Reserve will stay on its path of
interest rate hikes in 2022.

 

While the surge in coronavirus cases caused by the Omicron variant continued
to impact global travel and public services, investors remained optimistic
that lockdowns would be averted.

 

On Monday, the U.S. Food and Drug Administration authorized the use of a
third dose of the Pfizer and BioNTech COVID-19 vaccine for children aged
between 12 and 15 years, and narrowed the time for all booster shots to five
months from six months after primary doses.

 

Yields on U.S. two-year notes, which are sensitive to rate hike
expectations, along with 5-year notes, soared to their highest level since
March 2020. Benchmark U.S. 10-year and 5-year yields rose to six-week peaks.
The U.S. central bank is seen as likely to begin hiking interest rates by
mid-2022.

 

Economic data showed a gauge of manufacturing for December by Markit dipped
to 57.7 from its prior reading of 57.8, but still indicating expansion.
November construction spending rose 0.4%, shy of expectations calling for a
rise of 0.6%.

 

The Japanese yen weakened 0.17% versus the greenback at 115.27 per dollar,
while sterling was last trading at $1.3482, down 0.35% on the day.

 

Trading volumes, however, were expected to be thin as London, Europe's main
FX trading center, is closed for a market holiday.

 

In the broader euro zone, manufacturing activity remained resilient as
factories took advantage of an easing in supply chain constraints and
stocked up on raw materials at a record pace.

 

Turkey's annual inflation rate surged to 36.1% last month, its highest in
the 19 years Tayyip Erdogan has ruled, laying bare the extent of a currency
crisis caused by the president's unorthodox interest rate-cutting policies.
The Turkish lira was last trading up 1.7% at 12.960 per dollar, but off an
early low of 13.92.

 

Bitcoin BTC=BTSP last fell 1.61% to $46,587.63.

 

The Thomson Reuters Trust Principles.

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



Gold steadies near 6-week high as firmer yields offset Omicron woes

Gold scaled a six-week high before it gave up gains to trade flat on Monday,
as safe-haven buying fuelled by an Omicron-driven surge in Covid-19
infections countered pressure from higher US Treasury yields.

 

Spot gold was little changed at $1 826.58 per ounce by 0313 GMT, after
hitting it highest since Nov. 22 at $1 831.49 earlier in the session. US
gold futures were down 0.1% to $1 826.70.

 

Continued focus on the Ukraine border with Russia had brought investors'
interest back to gold as a safe haven, and a weaker dollar provided further
support to the metal, he added.

 

Benchmark 10-year US Treasuries ended 2021 with the largest yield increase
since 2013. Higher yields raise the opportunity cost of holding non-interest
paying gold.

 

The US dollar index held close to one-month lows touched last Friday,
boosting gold's demand by making the metal cheaper for buyers holding other
currencies.

 

Over 4 000 flights were cancelled around the world on Sunday, with more than
half of them US flights, adding to the toll of holiday week travel
disruptions due to adverse weather and the surge in Covid-19 cases.

 

US President Joe Biden told Ukraine's President Volodymyr Zelenskiy that the
United States and its allies would "respond decisively" if Russia further
invades Ukraine, the White House said in a statement.

 

Spot gold faces a resistance at $1 830 per ounce, and it may hover around
this level or retrace towards a support at $1 815, according to Reuters'
technical analyst Wang Tao.

 

Spot silver shed 0.5% to $23.15 an ounce, platinum gained 0.4% to $966.00,
and palladium rose 0.4% to $1 899.81.  

 

Copper prices slip as dollar strength, rising Omicron cases weigh

(Reuters) - Copper prices fell on Tuesday, pressured by a stronger dollar,
while a rapid spread of the Omicron coronavirus cases worldwide also weighed
on sentiment.

 

Three-month copper on the London Metal Exchange was down 1% at $9,619 a
tonne by 0240 GMT, its lowest level since Dec. 24. The most-traded February
copper contract on the Shanghai Futures Exchange fell 0.5% to 69,760 yuan
($10,948.07) a tonne.

 

The dollar index held firm, after rising 0.6% in the previous session,
underpinned by a jump in Treasury yields overnight, as traders bet on an
early U.S. Federal Reserve interest rate hike.

 

While a firmer dollar makes greenback-priced metals more expensive to
holders of other currencies, an early rate rise could trim liquidity in
financial markets and slow recovery in the world's biggest economy.

 

Among other industrial metals, LME aluminium fell 0.9% to $2,782 a tonne,
nickel slipped 1.3% to $20,495 a tonne, lead was down 0.6% at $2,289.5 a
tonne, tin was 1.3% lower at $38,340 a tonne and zinc dipped 0.7% to $3,511
a tonne.

 

* ShFE aluminium fell 1.2% to 20,170 yuan a tonne, while nickel eased 0.4%
to 150,900 yuan and tin slipped 1.4% to 289,620 yuan. Zinc was down 0.6% at
24,095 yuan a tonne and lead edged up 0.3% at 15,410 yuan.

 

* China's factory activity grew at its fastest pace in six months in
December, driven by production hikes and easing price pressures, but a
weaker job market and business confidence added uncertainty, a private
survey showed. read more

 

* For the top stories in metals and other news, click

 

or

 

* Asian stocks were firmer, following Wall Street's record highs on its
first trading day of 2022, despite worries that the widespread Omicron
COVID-19 variant could put the brakes on global economic recovery.

 

 

 

($1 = 6.3719 Chinese yuan)

 

The Thomson Reuters Trust Principles.

 

 

 

 


 

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
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for guideline purposes only and sourced from third parties.

 

 	

 

 

 	

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