Bulls n Bears Daily Market Commentary : 07 November 2022

Tue Nov 8 07:06:58 CAT 2022

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Bulls n Bears Daily Market Commentary : 07 November 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

ZSE declines in week opener

The market declined for the second consecutive session as three indices that
we track closed pointing south. The mainstream All Share Index declined
0.42% to 15051.42pts while, the ZSE Top Ten Index slipped 0.54% to
8823.03pts. Likewise, the Mid Cap Index shed 0.13% to end at 33603.52pts.
The Agriculture Index was the sole gainer amongst the indices as it edged up
0.06% to 76.09pts. The laggards of the day were led by clothing retailer
Truworths that dipped 13.29% to $2.2025. Trailing was Turnall that tripped
10.49% to $3.5000 as FML went down 4.08% to settle at $23.5000. Banking
group NMB let go 3.99% to trade at $24.0032 as Proplastics capped the top
five fallers’ list on a 3.84% dip to $28.3636. Agriculture concern Ariston
was the top gainer of the day after putting on 4.62% settling at $1.9000.
Star Africa added 2.70% to $1.9000 while, hotelier African Sun improved
2.36% to $26.0000. First Capital extended 0.80% to $9.6745 while, retailer
OKZIM grew 0.63% to $29.8251.

Activity aggregates were mixed in the session as volumes jumped 34.88% to
2.02m while, turnover succumbed 25.70% to $152.69m. Volume leaders of the
day were NMB and Delta with respective contributions of 59.75% and 16.44%.
Value leaders of the day were Delta, NMB and Econet that claimed a combined
81.10% of the outturn. Foreign outflows outstripped inflows to record a net
funds outflow position of $18.60m. Old Mutual ETF rose 12.50% to $5.8651
while, Datvest MCS ticked up 0.06% to $1.7479. Cass Saddle, MIZ and Morgan
and Co MCS were stable at $2.0000, $1.0600 and $21.6500 respectively. A
total of 40,320 shares worth $114,080.80 exchanged hands in the 5 ETFs. On
the VFEX market, Padenga rallied 1.53% to USD$0.2449 on 55,990 shares worth
USD$13,714.45. efesecurities

Global Currencies & Equity Markets

South Africa

South African rand gains on risk-on mood

JOHANNESBURG (Reuters) -The South African rand gained on Monday, supported
by risk-on sentiment across markets, while stocks on the Johannesburg bourse
ended slightly higher.

The rand is highly sensitive to shifts in global risk appetite. It received
a boost last week when U.S. jobs data raised hopes the Federal Reserve could
soon soften its stance on interest rates.

At 1515 GMT, the rand traded at 17.7000 against the U.S. dollar, about 1.0%
stronger than its previous close.

The dollar index, which tracks the dollar against a basket of currencies,
fell by more than 0.6%.

Also supporting the rand were growing expectations that the South African
Reserve Bank (SARB) could announce another big interest rate hike later this
month.

Analysts at Investec said the SARB was "increasingly expected to deliver a
100 basis point hike, which would bring the cumulative size of South African
and U.S. interest rate hikes in line in the current cycle".

On the Johannesburg Stock Exchange, the Top-40 and the All-share indexes
closed up around 0.1% and 0.2%, respectively.

The government's benchmark 2030 bond was stronger, with the yield down 7
basis points at 10.555%.

Nigeria

Naira gains on increased dollar supply

The naira, which fell to as low as N890 per dollar at the parallel market
last week, pared its losses on Monday as it appreciated by 5.94 percent to
N840/$.

The naira appreciation was linked to increased supply of dollars in the
market. “There are enough dollars in the market now. Naira may likely
continue to appreciate this week,” a trader said on Monday.

On Monday morning, the naira traded at between N850 and N870 per dollar but
at the close of business, it strengthened to between N840 and N860/$ in
Lagos street markets, popularly called black market.

This represents 1.16 percent (N10) gain between morning and evening on
Monday. In Abuja, the naira gained 8.54 percent as the market closed at N820
compared to N890/$ on Friday.

Also in Kano, the local currency strengthened by 4.76 percent to N840 per
dollar on Monday as against N880/$ on Friday.

Read also: Naira falls further on increased dollar demand

The currency appreciation in the parallel market rate will increase exchange
rate convergence, reduce parallel market premium and rent seeking activities
and improve market efficiency and diaspora inflows, according to Bismarck
Rewane, managing director/chief executive officer of Financial Derivatives
Company Limited.

Naira had been depreciating in recent days following increased demand for
dollars amid supply shortage. “Despite several initiatives by the Central
Bank of Nigeria (CBN) such as the RT200 programme, the increase in interest
rates, clamping down on Bureau De Change (BDCs), and FX repatriation
policies, the Naira vis-à-vis the Dollar keeps depreciating,” analysts at
FSDH said in a new report.

The report said the recent policy on issuance of new naira notes has also
intensified the currency’s depreciation. While the underlying problem with
Nigeria’s exchange rate is limited FX inflows, “we believe that policies by
the apex are important tools that influence the movement of the naira.”

Nigeria’s central bank last week announced plans to introduce new banknotes
to replace the current N200, N500 and N1,000 notes with effect from December
15, 2022.

Rewane said the naira will test the 900/$ benchmark in early November.

Nigeria’s external reserves declined by 7.75 percent year-to-date to $37.36
billion as of November 3, 2022 from $40.40 billion at the beginning of the
year, data from the CBN show.

One of the reasons for the external reserves decline, according to a report
by FBNQuest, is the exit of foreign portfolio investors from Nigeria.
Portfolio investments account for the majority (61 percent) of total capital
imports into the country.

At the end of October, average Brent crude oil price rose 4.1 percent to
$93.40 per barrel after recording consecutive losses in the last three
months, according to a report by Afrinvest Securities Limited.

This growth was spurred by OPEC+ decision to cut oil production despite fuel
markets remaining tight, especially with inventories in major economies at
low levels. Similarly, oil prices maintained the trajectory in the first
week of November following lingering supply risks and dollar softening.
However, recession fears due to rising interest rates and China’s COVID
outbreaks kept prices in check.

Nigeria possesses 36 percent of stranded airline funds globally, and foreign
airlines’ trapped funds now over $500mn, according to Rewane.

He noted that the CBN planned to release $264 million two months ago and may
release another $150 million. “As operations continue, repatriation proceeds
mount,” he said, adding that the CBN said airlines’ were not its priority.
“Forex backlog to airlines will mount as the festive season approaches.”

The disparity between the Nigerian Autonomous Foreign Exchange Rate Fixing
(NAFEX) and parallel market rate further widened due to speculative
activities, following CBN’s announcement of plans to redesign the country’s
notes, Afrinvest said in a report.

As such, the NAFEX rate at the Investors’ & Exporters’ (I&E) Window
depreciated 75kobo week-on-week to N445.50/$1.00 from N444.75/$1.00 the
prior week. At the parallel market, rates closed at N895.00/ $1.00,
depreciating N130.00 w/w. Activity level in the I&E Window inched higher by
5.3 percent w/w to $389.0m from $369.3m in the previous week.

 <mailto:info at bulls.co.zw> 

Global Markets

Euro, sterling bounce, dollar drops as investors cash in

(Reuters) - Euro and sterling rose against the safe-haven dollar on Monday,
supported by a risk-on sentiment across markets as investors digested
positive euro zone data and looked to cash in on the strength of the U.S.
currency.

A survey showed on Monday that investor morale in the euro zone improved in
November, the first time it rose in three months, reflecting hopes that
recent warmer temperatures and falling energy prices will prevent gas
rationing on the continent this winter.

The euro was up 0.69% to $1.0029, its highest level since Oct. 27, while
sterling was last trading at $1.1534, up 1.40% on the day.

Investors were also cheered by a readout on Monday showing that German
industrial production grew in September, beating analyst expectations.
Industrial output was up 0.6% on the previous month, the Federal Statistical
Office said.

Against a basket of currencies, the dollar index fell 0.91% to 110.070.

Though it had lost almost 2% at the end of last week after reports that
China would make substantial changes to its COVID-19 policy in coming
months, the downward move in the dollar on Monday was likely more about
positioning, said Bipan Rai, North America head of FX Strategy at CIBC
Capital Markets.

"I think the market's got really long US dollars, and is now just taking
profits here. That's behind the move for today," he said.

Investors were also assessing Friday's U.S. jobs report which showed that
firms added a more-than-expected 261,000 jobs in October and hourly wages
continued to rise, evidence of a still-tight labour market.

But hints of some easing of market conditions, with the unemployment rate
rising to 3.7%, fuelled hopes that the much sought-after Federal Reserve
pivot could be on the horizon, capping potential gains for the dollar.

Four Fed policymakers on Friday also indicated they would still consider a
smaller interest rate hike at their next policy meeting.

Investors are now eagerly waiting for a readout of U.S. consumer price index
data on Thursday. Analysts surveyed by Reuters expect headline CPI to land
at an annual 8% for October, down slightly from 8.2% in September.

"If we do get a stronger than expected print, I think the release valve
there will be for a higher terminal rate in the United States, and
ultimately, that's going to matter for the dollar," said Rai.

In crytocurrencies, bitcoin last fell 1.41% to $20,837.00 and ethereum ,
last fell 2.76% to $1,600.30.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price modestly up, but holding Friday's strong gains

(Kitco News) - Gold prices are slightly higher in early U.S. trading Monday,
but importantly are holding Friday's strong gains that included a
technically bullish weekly high close that is one chart clue that a market
bottom is in place. Silver prices are slightly down but the bulls are in
good shape following recent gains. A weaker U.S. dollar index is a bullish
daily factor for the metals markets to start the trading week. December gold
was last up $1.90 at $1,678.30 and December silver was down $0.074 at
$20.71.

Global stock markets were mostly higher overnight. U.S. stock indexes are
headed for higher openings when the New York day session begins. It will be
another busy week of corporate earnings reports.

The U.S. mid-term elections on Tuesday will be a focus for the marketplace
this week.

In overnight news, China's exports in October fell 0.3%, year-on-year, the
worst performance since May of 2020. China's imports were down 0.7% in the
same period. Over the weekend Chinese health officials said the are sticking
with their "zero-Covid" policies despite widespread rumors to the contrary.

The key outside markets today see the U.S. dollar index lower. Nymex crude
oil prices are weaker and trading around $91.50 a barrel. The 10-year U.S.
Treasury note is yielding 4.144%.

U.S. economic data due for release Monday includes the employment trends
index and consumer credit.

Technically, the gold futures bears have the overall near-term technical
advantage. However, recent choppy and sideways price action suggests a
market bottom is in place. Bulls' next upside price objective is to produce
a close above solid resistance at $1,700.00. Bears' next near-term downside
price objective is pushing futures prices below solid technical support at
$1,600.00. First resistance is seen at last week's high of $1,686.40 and
then at $1,700.00. First support is seen at the overnight low of $1,670.00
and then at $1,650.00. Wyckoff's Market Rating: 2.5

The silver bulls have the overall near-term technical advantage. A choppy,
nine-week-old uptrend is in place on the daily bar chart. Silver bulls' next
upside price objective is closing prices above solid technical resistance at
the October high of $21.31. The next downside price objective for the bears
is closing prices below solid support at $19.00. First resistance is seen at
the overnight high of $20.86 and then at $21.00. Next support is seen at the
overnight low of $20.435 and then at $20.00. Wyckoff's Market Rating: 6.0

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

National Unity Day

December 22

Christmas Day

December 25

Boxing Day

December 26

Counters trading under cautionary

CBZH

Meikles

Fidelity

TSL

FMHL

Turnall

GBH

ZBFH

GetBucks

Zeco

Lafarge

Zimre

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
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for guideline purposes only and sourced from third parties.

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