Bulls n Bears Daily Market Commentary : 28 November 2022

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Bulls n Bears Daily Market Commentary : 28 November 2022

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

ZSE mixed as Nedbank ZDR debuts…

The VFEX market welcomed a new listing today: Nedbank ZDR, no trades took place in the newly listed counter as it closed at a price of $13. 2603.The mainstream All Share Index ticked up 0.12% to 14238.86pts while, the Blue Chips Index inched up 0.94% to 8282.37pts. On the downside was ZSE Agriculture Index and the Mid Cap Index that lost 1.33% and 1.48% to 72.08pts and 32356.81pts respectively. The top gainer of the day was Mashonaland Holdings that jumped 14.58% to $15.4803 followed by General Beltings that gained 5.88% to $1.8000. Banking group First Capital put on 4.78% to $9.4338 as Proplastics edged up 4.31% to $26.0769. Beverages group Delta added 3.59% to close at a vwap of $228.2384. Leading the shakers of the day was SeedCo Limited that dipped 14.94% to $71.1500 trailed by brick manufacturers Willdale that dropped 14.93% to $1.9525.

 

Hotelier African Sun plunged 14.65% to $21.3385 as Zimre Holdings shed 13.58% to close at $4.4112. Star Africa capped the winners of the day on a 10.96% decline to $1.3969. Activity aggregates were depressed in the session as turnover succumbed 68.48% to $66.27m while, volumes in like manner traded went down 63.90% to see 0.88m shares exchange hands. Top volume drivers of the day were Star Africa, Delta and Hippo that claimed a combined 79.83%. Delta and Hippo were the top traded counters by value as the duo contributed 64.05% and 30.18% apiece. Padenga retreated 17.71% to send at USD$0.2300 as 100 shares worth USD$23.0000 were swapped. A cumulative of 12,833 units worth $106,469.60 were exchanged in three ETFs. The Old Mutual ETF extended 6.93% to $6.0373 while, the Datvest MCS rose 0.12% to $1.7000. Elsewhere, the National Railways of Zimbabwe pension fund plans to list its Retail Investment Trust (REIT) on the ZSE during the first quarter of 2023 to unlock value from its properties.-efesecurities

 

 

Global Currencies & Equity Markets

 

 

South Africa

 

The rand is having a great week – but all eyes are on China for the next move

The South African rand is experiencing a sizeable rebound against the US dollar as markets anticipate the United States to start tapering its rate hikes.

 

However, the market is experiencing some jitters as investors look to the world’s second-largest economy, China, for the direction of its next move against Covid-19.

 

Speaking to Newzroom Afrika, executive director at Citadel Global, Bianca Botes, said that the rand has been enjoying a decent rebound against the dollar, dipping below R17 to the dollar last week and maintaining levels around R17.14 to the dollar on Monday (28 November).

 

While the rand is now back above the R17/$ mark, it is still well below the R18.00 to R18.50 levels seen in recent weeks.

 

The main driver behind the rand’s movements – as has been the case for much of the year – are markets taking direction from the US Fed and its position on rate hikes in the States.

 

Currently, all the focus is on the possibility of the Fed tapering its aggressive hike cycle, Botes said, with markets holding the bullish view that inflation has peaked and the Federal Reserve will be less hawkish in its tone on hikes.

 

Markets are expecting a hike in December of 50 basis points. This has led to a general risk-on position in the market, which has benefitted currencies like the rand.

 

However, the market is still experiencing jitters because of events in China, Botes said, which runs the risk of reversing the rand’s gains if things go south.

 

China has registered record levels of new Covid-19 infections and is implementing various zero-Covid strategies to try and eradicate, rather than control, the virus. This has led to widespread backlash from the Chinese people, who have taken to the streets to fight back against restrictions.

 

Botes said that both the record levels of infections and the civil unrest are unprecedented and have markets on edge to see what happens next.

 

“It’s not a pretty picture for emerging markets,” Botes said, adding that the bull trend currently experienced by emerging markets could reverse if things in China play out poorly.

 

The market will be looking to see how the Chinese government responds to protestors and how it responds to the continued outbreak. If lockdowns in China continue – as they have since the outbreak began at the start of 2020 – then not only will industries slow down but so too will the people suffer.

 

This will have a knock-on effect on all of China’s trade partners, including South Africa, Botes said, as supply chains will be impacted, travel and trade will be restricted, and this can lead to shortages and higher inflation – which is already been felt in China.

 

The effects of the China problem are already being felt in global markets. As a high consumer of commodities, the Chinese lockdown is already impacting oil prices, which have plunged on prospects of weaker oil demand.

 

This comes at a time of greater fuel demand in markets such as the US and the European Union.

 

Local factors, such as ongoing load shedding and interest rate hikes announced by the South African Reserve Bank last week (24 November), have had little impact on the rand as they are largely priced into the market.

 

The holding of South Africa’s credit rating at BB- with a stable outlook by Fitch Ratings was also barely a blip on the radar.

 

According to the Bureau for Economic Research, the holding of the rating suggests that despite South Africa’s much improved public finances relative to what was expected 12 months ago, an outright credit rating upgrade from Fitch is unlikely in the foreseeable future.

 

Risks, meanwhile, are on the downside, with ongoing tensions between labour unions and the government over wages risking a budget blowout if demands of 10% increases are met.

 

On Monday afternoon, the rand was trading at these levels against major currencies:

 

ZAR/USD: R17.14

ZAR/EUR: R17.94

ZAR/GBP: R20.73

 

 

 

Nigeria

 

Naira depreciates against US dollar at official market

 

The Nigerian currency continued its struggles at the official market amid drop in dollar supply over the weekend.

 

Data from FMDQ securities showed that at the I&E window on Friday Naira depreciated against the US dollar to close Friday trade at N446.33/$1.

 

 

This represents a 0.3 per cent or N1.33 loss in value compared to the previous day’s exchange rate of N445/$1.

 

The Naira’s poor performance was as FX turnover reduced by $28.63 million or 19.6 per cent to $117.26 million, lower than the $145.89 million reported a day earlier.

 

However, at the black market and Peer-to-Peer (P2P) window of the foreign exchange (FX), Naira recorded an improved rate.

 

Checks showed that Naira closed stronger against the United States Dollar at the Peer-to-Peer (P2P) window of the foreign exchange (FX) market on the last trading session of last week by N1 to sell at N786/$1 compared with the previous day’s exchange rate of N787/$1.

 

 

Traders on the streets of Lagos, also known as the black market, sold the dollar at N775/$1 a N2 appreciation in contrast to the N777/$1 it closed on Thursday.

 

Meanwhile, in the interbank segment, the Nigerian Naira closed flat against the Pound Sterling and the Euro yesterday at N526.97/£1 or N455.56/€1, respectively.

 

 

 

 

 

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

Dollar rebounds on Fed expectations, Aussie drops

(Reuters) - The dollar clawed back earlier losses on Monday as a hawkish Federal Reserve official laid out the case for further rate hikes, while the Australian dollar sank on concerns about unrest over COVID-19 restrictions in China.

 

The greenback rebounded in early U.S. trading and added to gains after St. Louis Fed President James Bullard said the U.S. central bank needs to raise interest rates quite a bit further and then hold them there throughout next year and into 2024 to gain control of inflation and bring it back toward the Fed's 2% goal.

 

Comments from Fed Chair Jerome Powell on Wednesday will be watched for any new signals on further tightening with key U.S. jobs data for November also due on Friday. The U.S. central bank is expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14.

 

“The markets have hit a bit of a plateau about what they’re expecting. They know that the Fed’s going to raise rates, and that’s behind everything, but they’re not sure how much or when,” said Joseph Trevisani, senior analyst at FXStreet.com.

 

The dollar index has fallen to 106.65 from a 20-year high of 114.78 on Sept. 28 on expectations that its rally may have been over stretched and as the Fed looks to slow its pace of rate increases.

 

Some of the recent decline is also likely due to investors and traders booking profits before year-end, said Trevisani, noting many trading firms curtail activity in December.

 

The greenback was also likely supported after the dollar index reached the 200-day moving average at 105.369.

 

The index also posted an outside day, reaching both a higher high and a lower low than the previous session, which could bode well for further gains, Tom Fitzpatrick, chief technical strategist at Citigroup, said in a note.

 

It is the first bullish outside day on the dollar index since the high reached on Sept. 28 and is the first time it has tested the 200-day moving average since June 2021, he said.

 

The dollar had dipped earlier on Monday despite other safe-haven currencies the Japanese yen and the Swiss franc gaining on concerns about China.

 

Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China's stringent COVID restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country's far west.

 

The greenback was last down 0.23% to 138.82 Japanese yen . The euro dipped 0.62% to $1.0403.

 

The risk sensitive Aussie dollar , which is strongly tied to Chinese growth, was the worst performing major currency, falling 1.61% to $0.6649. The currency was also dented by data showing Australian retail sales suffered their first fall of 2022 in October as rising prices and higher interest rates finally seemed to have an impact on spending.

 

The offshore yuan weakened against the dollar to 7.2468.

 

Bitcoin fell after major cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy protection along with eight affiliates, the latest crypto casualty to follow the spectacular collapse of the FTX exchange earlier this month.

 

The cryptocurrency was last down 1.18% at $16,231.

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold price near steady as marketplace eyes China unrest

(Kitco News) - Gold and silver prices are trading around unchanged levels in early U.S. trading Monday. The marketplace is uneasy to start the trading week, as there is civil unrest in China over its strict zero-Covid policies. Reports said there were demonstrations across China over the weekend. It’s the largest show of discontent since the Tiananmen Square protests in 1989. China is the world’s second-largest economy and the most populous nation. The geopolitical and economic consequences of a further escalation in protests and any crackdown by Chinese authorities would be huge. The gold and silver markets are weighing the bearish aspect of a slowing Chinese economy crimping consumer and commercial demand for metals and other raw commodities. However, some safe-haven demand amid the geopolitical uncertainty is limiting selling interest in gold and silver. February gold was last up $1.00 at $1,755.00 and March silver was down $0.025 at $21.41.

 

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders will continue to very closely monitor fresh developments out of China.

 

Other big market events this week include a speech by Federal Reserve Chairman Jerome Powell on Wednesday afternoon and the U.S. employment report from the Labor Department on Friday morning.

 

Gold needs a new catalyst as prices end the week around $1,750

The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are solidly lower, hit a 10-month low overnight, and are trading around $74.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently 3.692%.

 

U.S. economic data due for release Monday includes the Texas manufacturing outlook survey.

 

Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the November high of $1,806.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at the overnight high of $1,778.50 and then at $1,790.00. First support is seen at the overnight low of $1,760.50 and then at $1,750.00. Wyckoff's Market Rating: 5.5

 

The silver bulls have the overall near-term technical advantage. A choppy, 2.5-month-old uptrend is still in place on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at the November high of $22.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at last week’s high of $21.88 and then at $22.00. Next support is seen at the overnight low of $21.24 and then at $21.00. 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 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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