Bulls n Bears Daily Market Commentary : 28 February 2022

Tue Mar 1 06:58:52 CAT 2022

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Bulls n Bears Daily Market Commentary : 28 February 2022

 <http://www.firstcapitalbank.co.zw/> 

ZSE commentary

The ZSE stocks closed with marginal gains in a mixed trading session with the bourse struggling for direction. Activity levels was at 464 trades. Star Africa was the most active stock at 36 trades followed by Econet and Delta at 23 and 22 trades respectively. Investor sentiment was positive after the session yielded 25 risers against 15 decliners while four (4) of the active stocks remained unchanged. Delta anchored both volume and value aggregate trading 177,200 shares with a value of ZW$40.77 million. The All-Share Index added 0.62% to close at 14,990.42 points. The Top 10 Index added 0.16%. The Top 15 Index added 0.11%. The Medium Cap Index was up by 2.10% to 24,567.08 points whilst the Small Cap Index shaded 0.25% to 406,544.18 points. Leading the risers pack of the day was the wine maker BAT closed at 284,623.85c and African Distillers was up by 19.99%. Masimba Holdings added 15.32% and First Mutual Properties added 13.06% to 695.40c. Edgars  was up by 12.84%. Mitigating the gains were losses in Medtech A Holdings and Axia Corporation which shaded 10.23% and 5.26% respectively. First Mutual Holdings was down by 4.55%. OK Zimbabwe and Cassava shaded 4.09% and 3.95% respectively. The ETFs traded 85,548 units worth ZW$973,979.40 in 98 trades. The Old Mutual Top 10 ETF added 7.20% to close at 1067.09c while the Morgan and Co. Multi Sector ETF added 0.08% to close at 1,445.40c. On the VFEX, Padenga traded 251 shares to close unchanged at US0.21 cents. wealthaccesssecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand weakens in early trade against the US dollar as risk appetite falters

THE rand weakened in early trade on Monday, as risk appetite faltered after Western nations announced fresh sanctions to punish Russia for its invasion of Ukraine, and Vladimir Putin put nuclear-armed forces on high alert.

At 0606 GMT, the rand traded at R15.3350 against the dollar, 1.29 percent weaker than its close on Friday.

The US and its allies on Saturday moved to block certain Russian banks' access to the SWIFT international payment system, which traders and analysts said could disrupt Russian exports of all commodities from oil and metals to grains.

Putin put Russia's nuclear deterrent on high alert on Sunday, the fourth day of the biggest assault on a European state since World War II.

Local focus will be the on economic data releases: the revenue agency will publish January trade balance figures at 1200 GMT and the National Treasury will release January budget balance numbers.

Government bonds also weakened, with the yield on the benchmark 2030 paper rising 7 basis points to 9.335 percent.

REUTERS

Nigeria

Black market pounds to naira rate today 28 February 2022

This is the news about the Pounds to Naira rate at the official and black market exchange rate Today February 28 2022.

How Much is Pounds To Naira Exchange Rate Today Official Rate?

The official rate today, Monday, 28th February, 2022, for £1 pound to naira = ₦556.926/£1.

According to the data from the CBN, exchange rate between the naira and the British pounds opened at ₦556.926/£1 on Monday 28th, after it closed at ₦557.3342to a £1 on Friday, 25th February 2022.

IDOMA VOICE reports that a pound is bought at the official market at ₦556.2566 and sold for ₦557.5953.

How much is exchange rate of Pounds to Naira in Black Market today?

The exchange rate for a pound to naira at Lagos Parallel Market (Black Market) players buy a dollar for ₦740 and sell for ₦745 on Monday, February 28th 2022, according to sources at Bureau De Change (BDC).

 <mailto:info at bulls.co.zw> 

Global Markets

Russia sanctions hike U.S. dollar borrowing costs in funding markets

(Reuters) - The cost of raising U.S. dollar funds in the euro swaps market rose sharply on Monday after Western nations ramped up sanctions against Russia over the weekend, including blocking some Russian banks from the SWIFT international payments system.

Three-month euro cross-currency swaps hit 38.25 basis points, the highest since mid-March 2020, the beginning of the coronavirus pandemic, as foreign banks and companies scrambled for dollar funding.

In other words, investors were willing to pay around 38.25 basis points over interbank rates to swap three-month euros into dollars.

Last Friday, that three-month cost was 21 basis points and it was 8 basis points a month ago.

Cross currency swaps allow investors to raise financing in a particular currency from other funding markets. For example, an institution with dollar funding needs can raise euros in euro funding markets and convert the proceeds into dollar funding obligations via an FX swap.

"There are many question marks around the financial stability impact of sanctions, but it seems likely that they will temporarily make dollar funding more expensive for foreign banks," said Antoine Bouvet, a senior rates strategist at ING.

The ruble plunged nearly 30% to an all-time low versus the dollar on Monday, after Western nations on Saturday unveiled tougher sanctions including blocking some Russian banks from the SWIFT international payments system.

Analysts said the move by the United States and its allies to block Russia from using $630 billion in central bank foreign currency reserves over the weekend will make dollar funding costs expensive for Western companies who were getting paid by Russian counterparties. read more

"For Western companies, it means central banks may have to provide dollar and euro liquidity," said Kenneth Broux, an FX strategist at Societe Generale in London.

According to estimates by Credit Suisse's Zoltan Pozsar, Russia holds about $300 billion in short-term money market instruments: $200 billion in FX swaps and another $100 billion through public and private deposits.

The stress was not limited to euro funding markets. Borrowing costs in pounds and yen also rose to their highest since March 2020.

The jump in borrowing costs hurt trading volumes. A trading desk at a large U.S. bank said that overnight Treasury volumes were lower than recent averages.

Trading in euro zone government bonds slowed sharply on Thursday following Russia's invasion of Ukraine, data from MarketAxess showed on Friday.

Concerns about the Russia-Ukraine war have filtered to U.S. funding markets.

The spread between the U.S three-month forward rate agreement and the three-month overnight index swap rate, a funding stress indicator, rose to 19.14 basis points late Monday , its widest since early July 2020

On an intraday basis, the gap was 23.75 basis points hit early morning in New York, the highest since May 2020. The higher spread reflects rising interbank lending risk or dollar hoarding.

Barclays, in a research note, said that should funding stress worsen, the Fed has several mechanisms in place that could provide relief for short-term funding markets such as FX swap lines. The Fed maintains standing FX swap lines with a number of central banks, including the Bank of Japan, European Central Bank, Bank of England, Bank of Canada, and the Swiss National Bank.

The Thomson Reuters Trust Principles.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price edges higher on fears of economic slowdown following sanctions

Gold prices climbed higher on Monday as Western nations escalated sanctions on Russia for the invasion of Ukraine, heightening fears of a hit to global economic growth.

Spot gold rose 0.6% to $1,901.64 per ounce by 11:20 a.m. ET, maintaining close distance to a 15-month high it reached last week. US gold futures were up 0.9% at $1,905.70 per ounce in New York.

Earlier, bullion surged as much as 2.2% after penalties were placed on the Bank of Russia to prevent it from using foreign reserves to blunt sanctions. Some Russian lenders were also excluded from the SWIFT messaging system that underpins trillions of dollars worth of transactions.

In response to these sanctions, the Russian central bank raised its key interest rate to the highest in almost two decades and imposed some controls on the flow of capital in a bid to shield the economy as its currency plummeted.

Concerns are now growing about whether the financial chaos may damage global economic growth or require action by the US Federal Reserve to supply dollars.

Meanwhile, Russia’s central bank said on Sunday it would resume its gold purchases on the domestic market after a two-year pause. It holds over 2,000 tonnes in bullion already, making it the fifth-biggest sovereign owner.

“The purpose of buying gold (in the domestic market), is to monetize it when required,” Nicky Shiels, head of metals strategy at MKS PAMP SA, wrote in a Bloomberg note. “It’s the fear over potential central bank sales that may overhang the market.”

Gold is now on course for its best month since May amid the fraught geopolitical tensions, having outperformed other haven assets. It will also be getting a boost from lower expectations of aggressive monetary tightening by the Fed to tame the highest inflation in decades.

(With files from Bloomberg)

Oil settles higher on Russian supply disruption

(Reuters) - Oil prices jumped on Monday as Western allies imposed more sanctions on Russia and blocked some Russian banks from a global payments system, which could cause severe disruption to its oil exports.

Brent crude settled up $3.06, or 3.1%, at $100.99 a barrel after touching a high of $105.07 in early trade.

The Brent contract for April delivery expires on Monday. The most active contract, for May delivery, was up $3.14 at $97.26.

U.S. West Texas Intermediate (WTI) crude settled up $4.13, or 4.5%, at $95.72 after hitting $99.10 in early trade.

"The tight global oil market could become even tighter following last week’s Russian invasion of Ukraine," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Russia is facing severe disruption to its exports of all commodities from oil to grains after Western nations imposed stiff sanctions on Moscow and cut off some Russian banks from the SWIFT international payment system. read more

"Russia could retaliate to these harsh measures by reducing or even completely suspending energy shipments to Europe," said Commerzbank analyst Carsten Fritsch.

Russian crude oil grades, which account for about 10% of global oil supply, were hammered in physical markets.

Goldman Sachs raised its one-month Brent price forecast to $115 a barrel from $95 previously. read more

"We expect the price of consumed commodities that Russia is a key producer of to rally from here - this includes oil," the bank said.

President Vladimir Putin put Russia's nuclear deterrent on high alert on Sunday. read more

Russian forces seized two small cities in southeastern Ukraine, the Interfax news agency said, but ran into stiff resistance elsewhere. read more

Talks between Ukraine and Russia have started at the Belarusian border, a Ukrainian presidential adviser said, aiming to agree to an immediate ceasefire.

"If there's any progress made in this meeting, we're going to see a sharp reversal in markets - we'll see stocks rise, the dollar rise and oil fall," said OANDA analyst Jeffrey Halley.

British oil major BP Plc decided to exit its Russian oil and gas investments, opening a new front in the West's campaign to isolate Russia's economy. BP is Russia's biggest foreign investor. read more

The sanctions and the exodus of Western oil companies could impact Russian oil production in the near term, analysts said.

Oil prices came under pressure after the Wall Street Journal reported that the United States and other major oil-consuming nations are considering releasing 70 million barrels of oil from their emergency stockpiles.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, are due to meet on Wednesday. The group is expected to stick to plans to add 400,000 barrels per day (bpd) of supply in April.

Ahead of the meeting, OPEC+ revised down its forecast for the oil market surplus for 2022 by about 200,000 bpd to 1.1 million bpd, underscoring market tightness. read more

The Thomson Reuters Trust Principles.

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

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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