Bulls n Bears Daily Market Commentary : 06 January 2022

Fri Jan 7 06:28:32 CAT 2022

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Bulls n Bears Daily Market Commentary : 06 January 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE shares closed in the positive with marginal gains across the board
except for small cap stocks. Activity levels improved significantly to 468
trades. Delta was the most active stock at 46 trades followed by Econet and
Zimre at 29 and 28 trades respectively. Investor sentiment was positive
after the session yielded 18 risers against 13 fallers while nine of the
active stocks remained unchanged. Econet anchored both volume and value
aggregate trading 2 997 300 shares with a value of ZW$257.63 million. The
All-Share Index added 0.69% to close at 10 977.36 points. The Top 10 Index
gained 0.25%. The Top 15 Index also gained 0.45%. The Medium Cap Index was
up by 0.46% to 20 805.09 points whilst the Small Cap Index shaded 0.17% to
410 130.35 points. Leading the risers pack of the day was Turnall Holdings
adding 6.61%.

Mashonaland Holdings was up by 5.22%. Axia Corporation added 5.21% and Seed
Co added 4.76% to 11 000c. Mitigating the gains were losses in African Sun
and General Beltings which shaded 12.45% and 6.43% to 565.67c and 213.33c
respectively. National Tyre Services was down by 4.76% to 600c. CFI Holdings
and National Foods shaded 3.76% and 1.38% respectively. The Old Mutual Top
Ten ETF closed at 451.76c up by 0.27% and the Morgan & Co Multi Sector ETF
closed at 1240.75c up by 0.41%. Total units traded were 394 162 worth ZW$3
277 573.40 in 100 trades. On the VFEX, Padenga shaded a paltry 0.05% to
close at 21c after 212 300 shares traded worth US$44 583 in 12
trades..-wealthaccess

Global Currencies & Equity Markets

South Africa

South Africa's rand boosted by local rate hike bets; stocks fall

(Reuters) - The South African rand strengthened on Thursday, supported by
bets that the central bank will hike interest rates early this year.

At 1615 GMT, the rand traded at 15.6875 against the dollar, roughly 1.4%
firmer than its previous close and extending gains made a day earlier.

It bucked a trend for weakness in some other emerging market currencies,
after U.S. Federal Reserve minutes led investors to price in a
sooner-than-expected start to U.S. rate hikes. read more

Investec economist Annabel Bishop said in a research note that South
Africa's forward rate agreement curve was pricing in a 25-basis-point repo
rate increase as soon as this month's monetary policy meeting on Jan. 27,
and potentially another 25-basis-point lift in the repo rate by March.

The Johannesburg Stock Exchange (JSE) slumped on Thursday in the biggest
drop so far this year, in a move linked to the Fed minutes.

Rate hikes by the Fed typically drain capital from emerging markets (EM),
increasing EM governments and companies' borrowing costs and hurting their
debt repayment abilities.

Investors world over turned jittery at the prospect of higher Fed rates,
resulting in a sell-off across major stock markets including the JSE. read
more

Its All-share index (.JALSH) erased almost all of its gains since the start
of the year with a drop of 1.19% to 74,165 points. The blue-chip index of
top 40 companies (.JTOPI) sunk 1.39% to 67,420 points.

However, companies dependent on the South African economy such as banks,
real estate and consumer goods firms stayed in positive territory.

Government bonds dipped, with the yield on the 2030 maturity adding 4.5
basis points to 9.43%.

The Thomson Reuters Trust Principles.

Kenya, Zambia, Uganda currencies seen softer

NAIROBI: The Kenyan, Zambian and Ugandan currencies are expected to weaken
next week, while those from Nigeria and Tanzania hold steady.

Kenya

Kenya's shilling is expected to ease against the dollar in the coming week
as demand for imports climbs following a quiet holiday period.

Commercial banks quoted the shilling at 113.15/35 per dollar, compared with
last Thursday's close of 113.05/25.

Zambia

The kwacha is expected to remain under pressure against the dollar next week
as the market awaits a full pick up in corporate activity such as exports
after the holiday season.

On Thursday, commercial banks quoted the currency of Africa's second largest
copper producer at 16.7500 per dollar, marginally down from 16.6264 at the
close of business a week ago.

Uganda

The Ugandan shilling is seen trading with a slightly weakening tone due to
demand for dollars from merchandise importers looking to ship in goods to
meet an anticipated spike in demand.

This month authorities are also scrapping long-standing anti-coronavirus
measures, including re-opening schools, bars and allowing other
entertainment activities.

At 0947 GMT commercial banks quoted the shilling at 3,538/3,548, compared to
last Thursday close of 3,540/3,550.

Nigeria

The Nigerian naira is seen flat next week on the unofficial market where it
trades more freely, as demand builds up after the holidays and dealers take
position on the currency, traders said.

The currency was steady on the week at 570 naira per dollar on the parallel
market on Thursday. On the official market, it traded outside an eight-month
range of 409-415 against the dollar last week to a low of 435 naira.

Demand for hard currencies tailed off due to the holidays. Nigeria is
battling dollar shortages brought on by low oil prices, following
disruptions linked to the COVID-19 pandemic.

Tanzania

Tanzania's shilling is expected to hold steady next week with hard currency
inflows seen helping to balance demand for dollars from oil and
manufacturing importers.

Commercial banks on Thursday quoted the shilling at an average of
2,302/2,312, nearly the same as a week earlier.

 <mailto:info at bulls.co.zw> 

Global Markets

Another year of dollar dominance ahead as the Fed lifts rates: Reuters poll

BENGALURU (Reuters) - Most currencies will struggle to make any gains
against the U.S. dollar in coming months, as monetary tightening expected
from the Federal Reserve will provide the greenback with enough impetus to
extend its dominance well into 2022, analysts said.

Nearly two-thirds of 49 foreign exchange strategists polled by Reuters
between Jan. 4-6 said interest rate differentials would dictate sentiment in
major FX markets in the near term, with only two concerned about new
coronavirus variants.

The vast majority of analysts polled said volatility in FX markets would
increase over the coming three months, with well above 80% saying so for
both majors and EM currencies.

In the meantime the Fed, now expected by traders to raise interest rates in
March and begin reducing its asset holdings soon afterward, will provide the
dollar with an edge over other major currencies.

Financial markets are now pricing in at least three U.S. rate hikes this
year.

Median forecasts lined up with that view as analysts do not expect most
major and emerging currencies to make any significant headway against the
greenback during that period.

While the dollar's dominance is nearly universal, as in previous Fed
tightening cycles, emerging market currencies are likely to feel it the
most.

Among the emerging currencies polled on, the tightly-controlled Chinese yuan
was predicted to depreciate nearly 2% to 6.5 per dollar in a year. The
Philippine peso, Malaysian ringgit and Indian rupee were also expected to
weaken about 1% or at best cling to a range.

Turkey's battered lira was forecast to drop another 14% this year after
plunging 44% in 2021, its worst year since President Tayyip Erdogan's AK
Party came to power in 2002 and making it by far the worst performer in
emerging markets.

South Africa's rand, another high-yielder but among the worst-performing
emerging market currencies in 2021, is set to remain rangebound in the next
six months but fall 0.4% to 15.78/$ in a year.

Most major currencies were also not expected to recoup their 2021 losses
over the next 12 months.

The euro, which lost nearly 7% last year was forecast to gain a little under
1.5% by end 2022. Among major safe-haven currencies, the Japanese yen was
expected to trade around current levels and the Swiss franc to drop around
3% in a year.

While the general direction of travel seems to be for the dollar to
strengthen across the board as there is more clarity on Fed policy, analysts
say plenty of risks remain.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices slip as Fed rate-hike bets lift yields

(Reuters) - Gold prices slipped on Thursday as U.S. Treasury yields edged
higher after minutes of the Federal Reserve's December meeting signalled
quicker interest rate hikes to tame broadening inflationary risks.

Spot gold was down 0.5% at $1,801.08 per ounce, as of 0739 GMT. U.S. gold
futures dropped 1.3% to $1,802.30.

Fed officials said the "very tight" U.S. labour market might warrant raising
rates sooner than expected, as well as reducing the bank's overall asset
holdings to control inflation. read more

Some investors view gold as a hedge against higher inflation, but the metal
is highly sensitive to rising U.S. interest rates, which increase the
opportunity cost of holding non-yielding bullion.

Benchmark U.S. 10-year Treasury yields rose to their strongest level since
April 2021, increasing the opportunity cost of holding gold.

The ADP National Employment report showed private U.S. payrolls surged last
month by more than double what economists polled by Reuters had forecast,
raising expectations for the non-farm payrolls numbers due on Friday. read
more

Spot gold may test a support at $1,801 per ounce, following its failure to
break a resistance at $1,830, according to Reuters' technical analyst Wang
Tao.

Spot silver slipped 1.2% to $22.51 an ounce, platinum dropped 1.2% to
$970.55 and palladium shed 0.6% to $1,854.18.

The Thomson Reuters Trust Principles.

Oil extends rally on Kazakhstan unrest and Libyan outages

(Reuters) - Oil prices rose about 2% on Thursday, extending their new year's
rally, on escalating unrest in OPEC+ oil producer Kazakhstan and supply
outages in Libya.

Brent crude futures rose $1.19 cents, or 1.5%, to settle at $81.99 a barrel,
after hitting their highest since late November. U.S. West Texas
Intermediate (WTI) crude gained $1.61, or 2.1%, to $79.46. The contract
touched a session high of $80.24.

Russia sent paratroopers into Kazakhstan to help quell a countrywide
uprising after deadly violence spread across the tightly controlled former
Soviet state. read more

There were no indications that oil production in Kazakhstan has been
affected so far. read more The country produces about 1.6 million barrels of
oil per day.

Meanwhile in Libya, oil output was at 729,000 barrels per day, the National
Oil Corp said, down from a high of more than 1.3 million bpd last year,
owing to maintenance and oilfield shutdowns.

Global benchmark Brent's six-month backwardation stood at about $4 a barrel,
its widest since late November. Backwardation is a market structure where
current prices trade at a premium to future prices and is usually a sign of
a bullish market.

Prices have rallied since the start of the year despite OPEC+ sticking to an
agreed output target rise and a surge in U.S. fuel stockpiles.

OPEC+, a group that includes members of the Organization of the Petroleum
Exporting Countries, Russia and other producers, agreed on Tuesday to add
another 400,000 bpd of supply in February, as it has done each month since
August as it gradually relaxes 2020's cuts as demand recovers from the
pandemic.

However, the increase in OPEC's output in December has again undershot the
rise planned under the OPEC+ deal, a Reuters survey found on Thursday,
highlighting capacity constraints. read more

JP Morgan forecast Brent to average at $88 a barrel in 2022, up from $70
last year.

Government data on Wednesday showed that U.S. gasoline inventories surged by
more than 10 million barrels last week, the biggest weekly build since April
2020, as supplies backed up at refineries because of reduced fuel demand.  

Crude inventories in the United States, the world's top consumer, have
fallen for six consecutive weeks by the end of the year to 417.9 million
barrels, their lowest since September, the data showed.

U.S. crude futures suggest supplies will remain tight early in the new year.
A barrel of oil for delivery in June is selling at a $4.10 premium to a
barrel for delivery in December, the highest since Nov. 2, a signal of
near-term rising demand.  

Meanwhile, the world's top oil exporter, Saudi Arabia, cut the official
selling price for all grades of crude it sells to Asia in February by at
least $1 a barrel, three sources with knowledge of the matter said.  

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
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
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suitable for all investors. Securities of emerging and mid-size growth
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for guideline purposes only and sourced from third parties.

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