Bulls n Bears Daily Market Commentary : 29 November 2022

Wed Nov 30 07:31:51 CAT 2022

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Bulls n Bears Daily Market Commentary : 29 November 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

Market records modest gains .

The market recorded modest gains in the penultimate session of the month of
November. The Blue-Chip Index was the top gainer amongst the indices as it
ticked up 2.45% to 8485.23pts. The primary All share Index inched up 1.90%
to 14509.78pts while, the Mid Cap Index rose 0.97% to 32669.91pts. The
Agriculture Index added 0.86% to end at 72.71pts. Mashonaland Holdings
headlined the gainers of the day after a 14.98% jump to trade at $17.8000
followed by Zimpapers that surged 7.69% to settle at $2.8000.

Conglomerate Innscor advanced by 7.52% to $344.6042 while, cigarettes
manufacturer BAT climbed 5.26% to close pegged at $3100.0000. Ariston
Holdings completed the winners of the day on a 3.68% uplift to $3.6273. Milk
Processors Dairibord led the laggards of the day on a 7.41% drop to $41.6667
while, Proplastics dropped 4.13% to end the day at $25.0000. First Mutual
Properties slipped 2.44% to $10.0000 while, sugar producers Hippo Valley
capped the losers pack on 0.48% slump to $200.0404.

Activity aggregates were mixed in the session as turnover edged up 8.45% to
$71.86m while, volumes traded plummeted 5.12% to 0.84m shares. Mashonaland
Holdings, Delta, Star Africa, and Axia were the top volume drivers of the
day as they contributed 30.46%, 30.13%, 17.96% and 8.89% respectively.
Delta, Axia, Mashonaland Holdings and Ecocash contributed a combined 95.78%
to the value outturn. Seed Co International dipped 13.82% to USD$0.3100 on
1,600 shares while, Padenga was stable at USD$0.2300 as 500 shares traded in
the name. The ETFs traded mixed with three trading in red against a sole
gainer. The MIZ ETF soared 13.40% to $1.3740 as Old Mutual ETF, Datvest ETF
and Morgan ETF lost 10.79%, 9.84% and 0.79% to $5.3861, $1.5327 and $20.8333
accordingly. efesecurities

Global Currencies & Equity Markets

South Africa

Rand gains as dollar falters; unemployment data due

At 09:06, the rand traded at R17.10 against the dollar.

The rand gained in early trade on Tuesday as the dollar faltered in global
markets, with domestic unemployment figures due to be published later in the
day.

At 09:06, the rand traded at R17.10 against the dollar. The dollar was down
around 0.3% against a basket of currencies.

Statistics South Africa is scheduled to release third-quarter unemployment
numbers around 0930 GMT. The official jobless rate edged lower in the second
quarter but remained very high at 33.9%.

Analysts expect it to remain elevated as economic growth is so sluggish.

Central bank data on Tuesday showed a 9.34% year-on-year expansion in
private sector credit in October, slightly smaller than the previous month's
9.74% growth.

The South African government's benchmark 2030 bond was little changed in
early deals, with the yield falling 2 basis points to 10.255%.

Nigeria

Naira redesign: CBN denies plan to print N5000 note

The Central Bank of Nigeria (CBN) said there's no plan to introduce N5,000
denominated bank note following the naira redesign.

Ahmed Umar, CBN Director of Currency Operations made the clarification on
Tuesday in Port Harcourt, Rivers State.

Umar attended the Nigeria Deposit Insurance Corporation (NDIC) workshop for
Financial Correspondents Association of Nigeria (FICAN) and Business
Editors.

"We are not introducing any new note. Some people have seen one N5000 note
that we don't know about", NAN quoted him saying.

Umar was represented by Amina Halidu-Giwa, Head of Policy Development at CBN
Currency Operations Department.

The official said note restructuring would mean that lower bills like the
N100 note would become coin.

Umar added that the focus of the apex bank is printing notes that would
replace the currencies to be withdrawn.

"What we are printing is going to be very limited because we want other
means of settling transactions to be used," he explained.

 <mailto:info at bulls.co.zw> 

Global Markets

Japan's Weaker Yen Is Here to Stay-for Better or Worse

On Oct. 20, currency traders saw something that hadn't happened since June
1990-the Japanese yen to U.S. dollar exchange rate eclipsed 150 to 1.

The yen has seen shocking depreciation over the past year. In January 2021,
the rate was 103 to 1, which has been roughly the average exchange rate for
the last 30 years. In September 2021, the rate hovered around 110 to 1, and
it didn't surpass 120 until the end of March 2022. But since then, the
exchange rate has skyrocketed, only settling back down slightly to 140 to 1,
which is about where it sits as of late November. It's a new status quo for
the yen after 30 years of consistency, and economists on both sides of the
Pacific say it's not going back to the old norm any time soon.

"The yen-dollar exchange rate is important to Japan because Japan relies on
imports for energy and food," said Takuya Hoshino, an economics researcher
at Dai-ichi Life. "The depreciation of the yen leads to an increased
financial burden on households and businesses." The shift also sinks
Japanese wages relative to the dollar, meaning that more Japanese go abroad
to work and fewer foreign workers come to Japan. That's a disastrous trend
for Japanese industry, which has been facing severe labor shortages in most
major sectors due to a shrinking population and mass migration from rural to
urban areas.

On Sept. 22, the Japanese government intervened for the first time in 24
years by buying yen and selling dollars. But a history of failed past
interventions is a big reason why the Bank of Japan (BOJ) hasn't taken
aggressive action to defend the yen. "The only time the intervention efforts
truly worked was when it was joint interventions with other G-7 nations,"
Kathy Lien, a managing director at BK Asset Management, told CNBC. "The Bank
of Japan and the Ministry of Finance have a history of failed
interventions-we know it; they know it."

60% off unrivaled insights.

And while Japan's government and central bank have adamantly opposed too
much intervention in the yen, the wide-ranging economic effects of this
plummeting exchange rate status quo have hit Japan's households hard. They
also pose serious underlying questions about the path to renewed
competitiveness for Japanese businesses and any hope of better wages for
workers.

The core policy issue underlying this year's depreciation comes from the gap
between interest rates in the United States and Japan. Lower interest rates
encourage borrowing, which stimulates the economy, whereas higher interest
rates restrain borrowing but help curb inflation. BOJ Gov. Haruhiko Kuroda
has been stubbornly against raising interest rates, whereas in the United
States, the U.S. Federal Reserve has raised interest rates from 0.5 percent
to 4 percent so far this year.

This interest rate gap has been the topic of much discussion. Bloomberg
opinion columnists Daniel Moss and Gearoid Reidy note that raising interest
rates would cause Japan's pile of debt to surge, causing increased spending
plans by the government to get thrown out the window and devastating
households. As a result, Moss and Reidy argue that the BOJ is wiser to
accept the weaker yen.

On the flip side, per journalist Leika Kihara at Reuters, Japanese
policymakers are desperate to revive consumer demand and wage growth in 2023
to match inflation. Boosting Japan's stagnant wages has also been a core
policy objective of Japanese Prime Minister Fumio Kishida. "It's a
once-in-a-lifetime opportunity for Japan to finally see a positive
wage-inflation cycle kickoff," a source familiar with the BOJ told Reuters
regarding a potential increase in interest rates.

Atsushi Nakajima, a consulting fellow at Japan's Research Institute of
Economy, Trade, and Industry, told Foreign Policy that interest rates aren't
the only factor in the spiraling yen. "The increase of costs in Japan's
massive imports of energy as well as food plus the deterioration of Japanese
industry's competitiveness compared to American and European businesses are
also affecting the weaker yen," Nakajima said.

In the past, when the yen became weaker, the weak yen supported economic
growth by encouraging exports. "But this time," Nakajima said, "we're not
seeing as much of this effect because Japanese industry has globalized due
to the shrinking market in Japan, so [the weak yen] is a much more of a
mixed bag of pros and cons for businesses." Japanese companies that can take
home profits in U.S. dollars see their money go further. But Japanese
companies that have big costs in imports are seeing those costs surge.

Put simply, Japan's import sector is suffering, whereas the export sector is
benefitting-only not as much as you'd typically expect. The country's huge
automobile industry hasn't been able to take advantage of the exchange rate
because of constraints on acquiring semiconductors and other necessary
components due to lingering supply chain issues from the COVID-19 pandemic.
Still, other export sectors like information technology and the
microprocessor industry have been able to take advantage. The pandemic-hit
tourism sector is also a huge winner, with inbound tourists encouraged to
visit and spend more money in Japan thanks to a favorable exchange rate.

In a list of pros and cons for a weaker yen, the cons certainly seem to
outnumber the pros this time. The growth in purchasing power in Japan hasn't
kept up with a relatively low inflation rate, meaning that real wages are
going down. This trend, combined with a weaker yen, results in a lower
quality of life for ordinary Japanese people: The cost of goods is rising,
wages aren't, and the yen now purchases way less abroad than it used to. So
far, the Japanese government has lessened the blow on households by pouring
3.5 trillion yen into energy and food subsidies, a hefty budgetary
investment that can't last forever.

"Some companies do have 'inflation allowances' that allow them to
temporarily raise wages to compensate for price hikes," Hoshino said. "[But]
the increase in prices of necessities and energy makes it harder for
personal consumption to increase."

The weak yen further hurts companies by driving away foreign talent.
Hundreds of thousands of foreign workers in Japan from countries like Nepal
and Vietnam wire money to their home countries and are now struggling to
support their families back home. Industries like food processing,
agriculture, and manufacturing already heavily rely on foreign laborers,
especially in rural areas. The exacerbated wage difference between Japan and
other countries with labor market gaps, such as Germany and Australia, poses
a real risk to companies that need these workers.

The government budget is also a victim of a sliding yen. A weaker yen means
that foreign currency payments on defense equipment are a lot more
expensive. The exchange rate also affects public works and infrastructure
projects that rely on imported raw materials. And while the Ministry of
Finance has funds set aside to compensate for exchange-rate fluctuations,
agencies are already struggling to make ends meet, looking to trim
low-priority budget items where possible.

Nakajima pointed out that in some ways, Japan's economic situation is
currently better for ordinary consumers than that of most other developed
countries. "There is a rebound in demand after the lifting of pandemic
lockdowns and restrictions, so we're seeing pent-up demand affect the
economy," he said. "The Japanese government also just lifted the restriction
on inbound travel, which gives an additional stimulus to the economy." Those
factors, along with new government subsidies to promote domestic travel,
combine to stimulate the economy at just the right time.

"A historically weak yen plus the fear of geopolitical risk is good timing
for Japan," Nakajima explained. "The government intends to put trillions of
yen to advance high-tech industries, so this kind of support of the
government can both reduce future risks and provide better possibilities for
growth."

These major investments offer some hope to help begin correcting Japan's
weakened economic competitiveness. However, many of the problems are more
structural. Per a recent study by Takeshi Makita at the Japan Research
Institute, the biggest factors for Japan's decline in business
competitiveness are slow-to-react management, a lack of enthusiasm for and
understanding about digital technology, and a delayed response to
globalization.

"The growth of added value, or productivity, in Japan has been weaker for
the last 20 years. The result is that many Japanese companies are seeing
their profit margins getting reduced, which means that they can't raise the
wage for employees either," Nakajima said.

"What is required are reforms that improve Japan's underlying efficiency,"
writes Richard Katz, a senior fellow at the Carnegie Council for Ethics in
International Affairs. "The Kishida administration is set to issue a
five-year plan that could do a lot to improve the situation if lofty goals
about income distribution and nurturing startups are turned into concrete
policies. Unfortunately, recent conversations with policymakers in Tokyo
suggest that, while a few of the necessary positive steps will be taken,
they will not be nearly enough to turn the ship around."

With Kuroda's refusal to nudge interest rates, for better or worse, the
weaker yen is here to stay. And although the current situation for Japanese
people on the ground isn't as bad as it could be given the lower yen, a
trend that started under former Japanese Prime Minister Shinzo Abe's famous
Abenomics continues: Ordinary people in Japan are simply getting poorer,
even as the economy and corporate profits grow overall.

Employment is high, but wages aren't going up; interest rates are low, but
households hoard their savings; the GDP has grown, but productivity has
failed to keep up. And now with the plummeting exchange rate, the cost of
food and utilities are spiking.

"I don't foresee a change in the current situation with the yen in the
coming months," Nakajima said. "My interest is in the measures pushed by the
government to improve the competitiveness of Japanese industry. That's what
matters more."

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Price To Hit New Record By End Of 2027, Expert Forecasts

Gold prices will hit new records relatively soon. Investors just need a
little patience, according to one of the world's best precious metals
experts.

"We still expect to see record prices over the next, say, five years," says
Jeff Christian, founder and managing partner of commodities consulting firm
CPM Group, in a recent video.

He notes that prices for bullion have remained at record levels on an annual
average basis last year and so far this year.

The recent price was around $1,752 a troy ounce, down from its record level
of $2,067 on August 7, 2020. That was the closing price on just one day.
What matters significantly to most investors is the average price, which is
what Christian points to as an important metric. And yes, the price is still
elevated by historical standards.

Just look at a price chart of the SPDR Gold Shares (GLD +0.5%)
exchange-traded fund which holds bars of solid bullion and closely tracks
the price of gold. Its clear to see that from late 2020 through today prices
have remained high, especially when compared to much of the last decade.

Right now the market is consolidating, or moving sideways, after a
significant rally after the government's response to the COVID-19 pandemic
in 2020.

Currently, investors are concerned about a variety of things, Christian
says. However, the key is they are less worried than they were a few months
ago. For instance, inflation may have peaked and will likely drop down to
4-5%. Second half growth is stronger than in the first half of 2022.

CPM doesn't see a full blown recession in 2023, and geopolitical tensions
are lower than they were.

"There are still a lot of things there [to worry about]," Christian says.
Lower levels of cooperation between countries is likely to become fact of
life. China has internal tumult. Europe has a new right-wing government in
Italy. And in the United Kingdom there is a growing tension between
Westminster (the set of the U.K.'s government) and breakaway desires from
Scotland.

"There are a lot of problems here," Christian says.

In other words, its messy out there, and that mess has the potential
overtime to cause hiccups across the world.

Those things will be good for gold.

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
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subscribe for any securities. The information contained in this report has
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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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