Bulls n Bears Daily Market Commentary : 28 January 2022

Sat Jan 29 07:57:20 CAT 2022

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Bulls n Bears Daily Market Commentary : 28 January 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE shares closed today's session registering marginal gains across all
indices. Activity levels were at 489 trades. Econet was the most active
stock at 60 trades followed by Delta and Star Africa at 34 and 33 trades
respectively. Investor sentiment was flat after the session yielded 21
advancers against 17 fallers while four of the active stocks remained
unchanged. Econet anchored both volume and value aggregate trading 1 304 100
shares with a value of ZW$127.77 million. The All-Share Index added 0.14% to
close at 12 120.10 points. The Top 10 Index gained 0.10%. 

The Top 15 Index also added 0.31%. The Medium Cap Index was up by 0.20% to
21 155.21 points whilst the Small Cap Index added 1.67% to 374 941.96
points. Leading the risers pack of the day was General Beltings adding
16.89%. Mashonaland Holdings was up by 14.72%. Dairibord added 7.37% and TSL
added 6.67% to 8000c. Econet was up by 3.79%. Mitigating the gains were
losses Unifreight and ZB Holdings which shaded 10.45% and 8.03%. Zimplow was
down by 7.08%. Masimba Holdings and First Mutual Properties shaded 6.10% and
5.36% respectively. The ETFs traded 25 906 units worth ZW$339 673.40 in 50
trades. The Old Mutual Top 10 ETF added 8.82% to close at 764.50c while the
Morgan and Co Multi Sector ETF added 10.35% to close at 1446.29c. On the
VFEX, Padenga traded 717 shares to close unchanged at US$ 0.21c.-
wealthaccesssecurities

Global Currencies & Equity Markets

South Africa

South African rand recovers slightly but still down 2% on week

The South African rand recovered slightly early on Friday as the dollar
dipped, but was on course for weekly losses of 2% after the country's
central bank signalled a gradual pace of policy tightening and expectations
grew for aggressive rate hikes in the U.S.

On Thursday, the South African Reserve Bank (SARB) raised its main lending
rate in a "measured" move it said should tame inflation risks.

At 0643 GMT, the rand  traded at 15.4350 against the dollar, around 0.4%
stronger than its previous close. The dollar was down about 0.1% against a
basket of currencies.

The rand fell around 1% on Thursday, after the SARB's 25-basis-point repo
rate increase  in line with economists' expectations.

Later on Friday, South Africa will auction inflation-linked bonds and
Treasury bills. December budget figuresI are due around 1200 GMT.

The government's benchmark 2030 bond  was a touch firmer in early deals,
with the yield falling 1.5 basis points to 9.32%.

Nigeria

eNaira: Same Naira, more possibilities for innovation

Background

On October 25, 2021, Nigeria launched its central bank digital currency
(CBDC) - the eNaira. Development began in 2017 with the identification of
possible functions. The Central Bank of Nigeria (CBN) then partnered with
Bitt, a fintech company based in Barbados, to develop eNaira. The main
objectives for developing eNaira were to improve the availability and access
to central bank money, support a resilient payments system, encourage
financial inclusion, and reduce the cost of processing cash. Furthermore,
eNaira aims to enable direct welfare disbursement to Nigerian citizens,
increase the government's revenue and tax collections, facilitate diaspora
remittances, and reduce the cost of cross-border payments.

How it Works

The current version of eNaira focuses on person-to-person (P2P) and
person-to-business (P2B) transactions through the Speed and the Merchant
Wallets respectively. Central Bank Governor Godwin Emefiele announced in
October that 500 million eNaira, an equivalent of $1.21 million, had already
been minted and a total of 200 million eNaira had been issued to banks.

To set up a Speed Wallet, eNaira currently requires users to enter their
phone number, email, and Bank Verification Number (BVN). This means that
only those with bank accounts are currently able to use the eNaira. After an
email verification, users are able to use the wallet in tandem with online
banking apps. To load the wallet with eNaira, users log on to their personal
banking app and transfer the desired amount to their wallet. Users are then
able to send eNaira to anyone with an eNaira wallet by scanning the
recipient's QR code. 

As a young global professional at the GeoEconomics Center, my research has
focused on the evolution of central bank digital currencies. In November, I
traveled to Nigeria, where I had the opportunity to see eNaira in action. In
my experience, using eNaira's Speed Wallet was fairly simple. Once I
obtained the necessary information from my personal bank, I was easily able
to register for the Speed Wallet, and did not experience any of the issues
that were reported during the initial launch of the CBDC, such as technical
bugs for new users trying to register. 

The CBN announced in December of 2021, it has recorded 583,000 personal
wallets and 83,000 Merchant Wallets with total transactions amounting to
N188 million, or $500,000. The central bank could do more to increase the
adoption of eNaira in a country with over 200 million people and an annual
GDP of nearly $500 billion; particularly if President Mohammadu Buhari hopes
to use eNaira to increase Nigeria's GDP by $29 billion over the next 10
years. 

The government should continue to work with private banks to encourage their
customers to transition from a mobile payment transfer system to an eNaira
wallet. In addition, the Speed Wallet needs to be further developed to
facilitate diaspora remittances. The ability to send money directly from
foreign to Nigerian bank accounts would encourage more Nigerians to use
eNaira. The central bank should also focus on integrating the Speed Wallet
and personal banking, so that users could load their Speed Wallet with
eNaira without accessing their personal banking app. Having to switch
between two apps is the most tedious part of using eNaira so fixing this
would make the app more user friendly.

Financial Inclusion 

The Central Bank of Nigeria adopted the National Financial Inclusion
Strategy in 2012, with the primary goal of increasing Nigerians' access to
financial services from 36% in 2012, to 80% in 2020. However, Nigeria fell
short of this goal. The EFinA's Access to Financial Services in Nigeria 2020
Survey indicated that the country had reached a financial inclusion rate of
64% by the end of 2020. The remaining 36% - equivalent to over 38 million
adults -  still do not have access to banking services. CBN's Annual
Financial Inclusion Strategy Report identified "women, youth, rural dwellers
Micro-, Small and Medium-sized Enterprises (MSMEs) and Northern Nigeria" as
the most disproportionately excluded demographics. Widespread use of the
eNaira could promote financial inclusion in Nigeria by making banking
services easily accessible to these excluded groups. Recently, the CBN
reported that northern states, primarily Borno, Sokoto, and Gombe, are
leading in CBDC adoption ahead of Lagos, a center for economic activity in
Nigeria. If this continues, Nigeria's CBDC could aid in closing the
country's regional gap in access to financial services.

Cash remains the dominant form of transaction in Nigeria, especially for
financially excluded groups who are less likely to have access to banking
services. However in recent years the payment landscape in Nigeria has
evolved and continues to do so. In 2019, digital payments were valued at
close to 109 trillion naira, up from only 4 trillion in 2012, when the
National Financial Inclusion Strategy was announced. The next phase of
eNaira will allow people to register for the Speed Wallet with just their
National Identification Number (NIN), thereby facilitating financial
inclusion where the current digital payments infrastructure falls short.
Therefore, Nigerians without bank accounts and a Bank Verification Number
(BVN) would be able to send and receive eNaira.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar posts biggest weekly rise in 7 months on rate bets

(Reuters) - The dollar consolidated gains on Friday and posted its biggest
weekly rise in seven months as markets priced in a year ahead of aggressive
hikes in U.S. interest rates.

Money markets priced in a 28.5-basis-point interest rate hike in March and
as many as 119.5 basis points in cumulative increases by year's end as the
dollar steadily rose in a week highlighted by a more hawkish tone coming out
of a Federal Reserve meeting.

The dollar index rose a scant 0.04%. The index, which measures the dollar's
value against other major currencies, rose about 1.7% for the week to mark
its biggest weekly gains since June. It shot above 97 for the first time
since July 2020.

U.S. labor costs increased strongly in the fourth quarter, but less than
expected, the Labor Department said. The Employment Cost Index (ECI), the
broadest measure of labor costs, rose 1.0% after increasing 1.3% in the
prior quarter. read more

Economists polled by Reuters had forecast a 1.2% advance in the ECI, widely
viewed as one of the better measures of labor market slack and a predictor
of core inflation.

U.S. Treasury yields eased, with 10-year yields falling to about 1.77% for
the day, well below two-year highs of nearly 1.9% hit on Monday.

The two-year Treasury yield, which often moves in step with rate
expectations, slid 2.8 basis points to 1.164%, but was still much higher for
the week.

The euro nursed losses on Friday with the single currency little changed at
$1.1143, a bit up from Thursday's 20-month low of $1.1131.

Major currencies drifted sideways in Asian trading before Lunar New Year
holidays next week even though U.S. yields were marginally higher.

Data has been supportive of the dollar as the U.S. economy registered its
best annual growth in nearly four decades. read more

The greenback is poised to gain further versus the euro and yen as the Fed
raise rates but the European Central Bank and Bank of Japan likely stand
pat. BOJ Governor Haruhiko Kuroda said Friday it was premature to raise the
bank's rate targets. read more

A preliminary estimate next week of euro zone consumer prices in January is
expected to lower the year-over-year rate toward 4.3% from 5.0%, allowing
ECB President Christine Lagarde to keep the hawks at bay, Chandler said.

The yen rose 0.14% to 115.21 per dollar, while the Australian and New
Zealand dollars languished, with the kiwi dipping slightly to a fresh
15-month low of $0.6570.

Sterling was pushed to a one-month low of $1.3360 on Thursday but has
bounced back a bit as traders await the Bank of England's meeting next week.
Rates markets have priced a 90% chance of a hike.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold set for worst week since Nov as rate hike bets boost dollar

(Reuters) - Gold extended declines on Friday and was set for its worst week
since late November as growing expectations for U.S. interest rate hikes
pushed the dollar to a multi-month high, making bullion less attractive for
overseas buyers.

Spot gold fell 0.6% to $1,785.71 per ounce at 14:02 ET (1902 GMT). It hit a
six-week low of $1,779.20 earlier in the session, and was headed to drop
about 2.5% for the week.

U.S. gold futures fell 0.5% to $1,786.60.

Gold prices slipped below its 100-day and 200-day moving averages in the
last session, after the U.S. Federal Reserve reaffirmed plans to end its
pandemic-era bond purchases and signalled an interest rate hike in March.
read more

Rising rates increase the opportunity cost of holding non-yielding bullion.

The rate hike expectations set the dollar on track for its biggest weekly
rise in seven months, making gold more expensive for holders of other
currencies.

However, gold's credentials as an inflation hedge is likely to attract
renewed attention with rising stock market volatility amid a market
adjusting to a rising interest rate environment, Saxo Bank analyst Ole
Hansen wrote in a note.

The World Gold Council (WGC) forecast that demand for jewellery, small bars
and coins would remain strong in 2022 could limit bullion's decline. WGC
also expects central banks to continue buying gold but at a slower pace.

Spot silver dropped 1.8% to $22.33 an ounce, and was set to fall about 8%
for the week.

Platinum fell 1.8% to $1,004.46, while palladium rose 0.1% to $2,378.68,
logging a weekly gain of about 12.7%.

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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