Bulls n Bears Daily Market Commentary : 15 November 2022

Wed Nov 16 04:37:58 CAT 2022

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Bulls n Bears Daily Market Commentary : 15 November 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE All Share Index was up 115.19 points to close at 14,838.12 points.
Trading in the positive: BRITISH AMERICAN TOBACCO ZIMBABWE LIMITED which
added $179.0250 to $3,175.0000, INNSCOR AFRICA LIMITED went up by $8.4234 to
$320.0000 and TANGANDA TEA COMPANY LIMITED gained $4.0000 to $85.0000.
MEIKLES LIMITED  increased by $2.6667 to $102.6667 whilst NMBZ HOLDINGS
LIMITED traded $2.2000 higher at $24.0000. Trading in the negative: ECOCASH
HOLDINGS ZIMBABWE LIMITED  which decreased by $1.6030 to $44.0474, FIRST
MUTUAL HOLDINGS LIMITED lost $0.7321 to $25.0000 whilst DAIRIBORD HOLDINGS
LIMITED traded $0.1875 lower at $49.7500. FIRST MUTUAL PROPERTIES LIMITED
slumped by $0.1400 to $8.9000 whilst ARISTON HOLDINGS LIMITED shed $0.0339
to $3.9661. 

EXCHANGE TRADED FUNDS (ETF)

DATVEST MODIFIED CONSUMER STAPLES ETF added $0.0137 to $1.7437. MORGAN & CO
MULTI SECTOR EXCHANG TRADED FUND , CASS SADDLE AGRICULTURE EXCHANGE TRADED
FUND  and MORGAN & CO MADE IN ZIMBABWE EXCHANGE TRADED FUND remained at
$21.2500, $1.8747 and $1.0600 respectively whilst OLD MUTUAL ZSE TOP 10 shed
$0.0741 to $5.4258.-zse

Global Currencies & Equity Markets

Nigeria

Nigeria's currency redesign plan just got more serious

When Nigeria announced in October that it would redesign three currency
notes as a means to mop physical cash away from private vaults and fight
inflation, it sparked a frenzy that caused the naira to weaken sharply
against the dollar within days. That initial storm has passed, three weeks
later, with the local currency reverting to around N710 to the dollar on the
street after soaring as high as N830.

Nigerians now seem to have accepted the prospect of the new currency notes
and the Central Bank of Nigeria (CBN) is doubling down, with measures to
ensure that anyone with old notes can meet the deadline to return them. One
measure is especially aimed at residents in places with low penetrations of
commercial banks and includes the use of agent banking.

Agent banking grows in strength

By Jan. 31 next year, all old 200, 500, and 1000 naira notes will cease to
be legal tender. But how will people in rural areas who have the notes but
have no bank accounts change theirs before then?

Nigeria has 4.5 bank branches per 100,000 adults, less than Ghana (6.1),
Botswana (9), South Africa (9.2), Mauritius (15.5), and Seychelles (46).
Nigeria's ratio has been declining since 2010 with the rise of cashless
transactions that require less time in physical banks, yet around 40 million
people still do not have bank accounts. The solution to the gap has been the
rise of agent banking-a system that allows authorized (usually low to middle
income) individuals to offer account opening, cash deposit and withdrawal
services to the public using point-of-sale (POS) devices.

Agents typically set up shop in small kiosks by the corner of streets,
charging a fee for their services. The business experienced a boom at the
beginning of the pandemic two years ago.

These agent banking operators will now help the CBN achieve its latest goal,
per the bank's announcement (pdf) on Nov. 11: "Agent locations across the
country have been fully enabled for [bank verification number] registration,
opening banking accounts/wallets & e-Naira wallets, electronic card
distribution, and cash deposit, among others." The agents will be given
priority at bank branches when they come to deposit the cash they have
collected.

In many places in Nigeria today including Lagos, the main way to withdraw
cash is by spotting an agent wielding a POS, not an ATM. While some banks
provide the devices, the major players are fintech companies like TeamApt,
OPay, and Paga.

These companies already process billions of dollars in monthly transactions;
TeamApt's CEO Tosin Eniolorunda said a few days ago that the company now
does $10 billion monthly for 400,000 businesses. The CBN's use of agents to
recover cash within the coming weeks will further increase transaction
volumes across these companies' dashboards.

That could strengthen the case for investments in agent banking startups.
This year, Nigerian startups that have raised money to play in the agent
banking space include Crowdforce ($3.6 million), and Kippa ($8.4 million).

South Africa

Rand strengthens in early trade as dollar on back foot

At 10:57, the rand traded at R17.22 against the dollar.

The rand strengthened in early trade on Tuesday, as the dollar fell on
global markets and appetite for risk was boosted by policy moves in China.

At 10:57, the rand traded at R17.22 against the dollar.

With no major South African economic data releases expected on Tuesday,
traders were looking to US producer price index data later in the day for
more indications about the Federal Reserve's pace of rate hikes.

The dollar index, which tracks the US currency against a basket of others,
was down more than 0.6%.

Some Chinese cities have begun cutting routine community testing, days after
China announced an easing of some of its coronavirus measures. And Beijing
has announced support measures aimed at boosting liquidity in the property
sector, a pillar of the world's second-largest economy.

Those moves drove a bounce in Asian stock markets on Tuesday.

On the Johannesburg Stock Exchange, the Top 40 index was up about 0.9%. The
government's benchmark 2030 bond was slightly stronger in early deals, with
the yield down 2 basis points at 10.185%.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar loses ground after economic data boosts risk appetite

The U.S. dollar lost ground to other currencies after U.S. economic data
provided further evidence that inflation was starting to ease.

Fed Vice Chair Lael Brainard on Monday echoed weekend comments by Fed
Governor Christopher Waller that interest rates need to keep rising to
battle inflation.

The U.S. dollar lost ground to other currencies including the euro, the yen
and sterling after U.S. economic data provided further evidence that
inflation was starting to ease, improving investor appetite for riskier
assets and reducing demand for the safe-haven greenback.

The U.S. producer price index (PPI) increased 8.0% for the 12 months through
October compared with economist expectations for 8.3% and September's 8.4%
increase, according to the Labor Department data.

The report, following last week's smaller-than-expected increase in consumer
prices for October, encouraged investors who have been closely monitoring
inflation data for signs that the Federal Reserve could slow its interest
rate hikes, which are aimed at dampening soaring prices.

"Risk appetite has improved. That tends to weaken the dollar," said Karl
Schamotta, chief market strategist at payments company, Corpay.

"Fed officials will need to see many months of this before they pause the
rate hike cycle but overall price pressures appear to be going in the right
direction."

Schamotta says the dollar likely peaked in September but he also see a risk
for a short-term "sell-off in risk-sensitive currencies and a rally in the
dollar if there is a U.S. government funding squeeze before year end."

Before the U.S. data the euro, sterling and the Swedish crown had already
risen sharply against the U.S. dollar as traders assessed a slew of economic
data, including UK and euro zone job figures plus German economic sentiment.

The euro

was last up 0.19% at $1.0345 after earlier touching its highest since July
1. In Europe traders were also eying encouraging data such as German
economic sentiment ZEW index, which rose in November.

"Due to concerns about a deep recession over the winter the index had
completely collapsed recently. In view of the mild start to the winter
heating period and the well-filled gas stores analysts are likely to have
got their hopes up that things might not turn out to be quite so bad," said
Antje Praefcke, FX Analyst at Commerzbank.

Data also showed employment in the single currency area rose in the third
quarter.

Jane Foley, head of FX strategy at Rabobank in London also pointed to other
headlines supporting risk currencies against the dollar. She saw U.S.
President Joe Biden's summit meeting with Chinese leader Xi Jinping as an
indication that tensions between the two countries may have cooled, and also
mentioned Russia's withdrawal from Kherson in Ukraine.

The dollar index

, which measures the currency against six counterparts including sterling
and euro, was last down 0.09% at 106.56 after earlier touching 105.34, its
lowest point since August.

The greenback was last down 0.29% against Japan's yen

at 139.48.

Sterling

was up 0.97% at $1.1866 after earlier rising as much as 2.27%, which put it
at a three-month high against the dollar.

This was ahead of a tough UK government budget plan due out later this week
and after data showing Britain's unemployment rate unexpectedly rose and
vacancies fell for a fifth report in a row as employers worried about the
economy.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold near three-month high on latest Russia jitters

Gold prices edged up near their highest in three months reached earlier on
Tuesday on some safe-haven buying after news that two people were killed in
eastern Poland near the Ukraine border.

The deaths were in an explosion, firefighters said on Tuesday, with a senior
U.S. intelligence official stating Russian missiles had crossed into Poland.

Spot gold last rose 0.38% to $1,778.48 per ounce. U.S. gold futures

settled little changed at $1,776.8.

"It is almost certainly a mistake and would be portrayed as such but Poland
is a NATO country, so while gold might not erupt higher it will keep the
market nervous for a bit," said Tai Wong, a senior trader at Heraeus
Precious Metals in New York.

Gold prices had turned negative and slipped from their highest since Aug. 15
reached earlier in the session as the dollar index turned higher from its
three-month low.

If gold manages to close above the $1,780 to $1,800 area, then that would be
another bullish development, encouraging more bulls to step back in, Fawad
Razaqzada, market analyst at City Index, said in a note.

Data earlier showed U.S. producer prices increased less than expected in
October, further evidence that inflation was starting to subside.

"The cooling inflation data is good news for gold, but it just seems that we
have a strong price barrier within the $1,800 level," said Edward Moya,
senior analyst with OANDA.

Atlanta Fed President Raphael Bostic on Tuesday said he sees little evidence
that aggressive monetary policy tightening is slowing inflation,
anticipating that more hikes would be needed to get inflation down to the
Fed's 2% target.

Rising interest rates dim non-yielding bullion's appeal.

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
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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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for guideline purposes only and sourced from third parties.

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