Bulls n Bears Daily Market Commentary : 03 October 2022

Tue Oct 4 08:54:28 CAT 2022

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Bulls n Bears Daily Market Commentary : 03 October 2022

ZSE commentary

ZSE retreats in curtain-raising session

The ZSE commenced the last quarter of the year in the red as all the four
benchmark indices that we review closed pointing southwards. The mainstream
All Share Index was down 0.25% at 14734.12pts while, the ZSE Top Ten Index
shed 0.32% to 9111.15pts. The ZSE Agriculture Index trimmed 1.15% to
74.41pts while, the Mid-Cap Index pared 0.18% to 28999.58pts. A positive
market breadth of eight was registered in a session that saw fifteen
counters gaining ground against seven that faltered. SeedCo Limited was the
major casualty of the day as it dropped 13.43% to settle at $93.5000.
Following was bankers CBZ that let go 1.93% to $137.3000 as conglomerate
Innscor retreated 0.78% to $305.5198. Star Africa slipped 0.63% to close at
$1.6019 while, beverages group Delta capped the top five laggards of the day
on a 0.54% to $247.3977. Leading the upside of the market was General
Beltings that surged 15.00% to $2.3000, trailed by Turnall that jumped
14.63% to close at $3.8000.

Banking group NMB followed with an 8.74% uplift to $19.9542. Insurer FML
extended 6.33% to $21.0000 as FMP completed the top five winners of the day
on a 3.53% rise to end pegged at $7.0955. Activity aggregates were mixed in
the session as reflected in volumes that advanced 83.72% to 5.19m while,
turnover declined 36.43% to $182.46m. Turnall was the top volume leader
claiming more than 75% of the total volumes traded. Value drivers of the day
were Innscor, Simbisa, Delta and Axia with a combined contribution of
87.01%. The ETF market traded sideways in Monday’s session as the Datvest
ETF dipped 14.48% to $1.7007 while, the Morgan and Co and Old Mutual ETFs
improved 3.18% and 0.60% to trade at $28.5000 and $5.1998 apiece. The VFEX
market registered no trades for the second consecutive session. 

efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South Africa's rand firmed on Monday as the U.S. dollar traded lower due to
moderating interest rate hike expectations.

(Reuters) - At 1511 GMT, the rand traded at 17.8200 against the dollar,
1.41% stronger than its previous close.

The dollar index , which measures the currency against six rivals, was last
down 0.597% at 111.560.

Stocks on the Johannesburg Stock Exchange (JSE) closed slightly higher,
mostly due to gains in the mining index (.JRESI).

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The benchmark all-share (.JALSH) and the Top-40 (.JTOPI) indexes both rose
around 0.8%.

New vehicle sales (ZAVEHY=ECI) rose 10.8% year-on-year in September, data
showed on Monday, while separately the Absa Purchasing Managers' Index (PMI)
contracted as extensive power cuts weighed on production and new sales
orders declined during the month.

The government's benchmark 2030 bond was stronger in afternoon deals, with
the yield down 21 basis points to 10.680%.

The Thomson Reuters Trust Principles.

Ghana

Cedi loses 40% value to dollar in nine months of 2022; places 147th position
in world – Bloomberg

The Ghana cedi lost 40.05% in value to the US dollar in nine months of 2022,
ranking it as the second worst performing currency in the world in the 147th
position, according to Bloomberg.

This decline in the local currency against the American currency is the
worst in over three decades.

The performance of the cedi also ranked it as the worst among 30
top-performing currencies on the African continent.

In the last three months, the local currency lost almost 21% in value to the
world’s most important currency.

The situation was worst in the month of August 2022.

The cedi’s woes this year has been complicated by the poor fiscal state of
the economy, causing a downgrade of the country’s credit rating by all the
three top rating agencies in the world.

This has as a result led to liquidation of some investments of Government of
Ghana bonds by investors, further worsening the situation.

Cocoa Syndication Loan to temporarily slowdown cedi depreciation

However, the expected $1.3 billion Cocoa Syndication Loan of which the first
tranche of inflows may come this month will help slow down the rate of
depreciation of the cedi significantly in the short term.

Management of the Ghana Cocoa Board is expected to sign the historic loan
with some international banks to facilitate purchases of cocoa beans from
farmers for the 2022/2023 crop season.

Again, the expected economic programme that the government is seeking from
the International Monetary Fund may halt the rapid fall of the local
currency in the medium term.

Meanwhile, the Sri Lanka Rupee is the worst performing currency in the world
at the 148th position.

Cedi loses 40% value to dollar in nine months of 2022; places 147th position
in world – Bloomberg

Cedi registered unprecedented weekly decline in trading as dollar demand
surges

Last week, the cedi registered a record weekly decline in trading in the
interbank market after sovereign debt downgrade by rating agency, Fitch.

Analysts say the local unit posted heavy losses on the interbank market as
unrelenting foreign exchange demand continued to weigh down the cedi against
the dollar.

Cedi registers unprecedented weekly decline in trading as dollar demand
surges

Cedi loses 16.86% value to dollar in first half-year of 2022

The cedi lost 16.86% in value to the dollar in the first half of 2022 on the
interbank market but over 20% on the retail forex market.

Cedi loses 16.86% value to dollar in first half-year of 2022

 <mailto:info at bulls.co.zw> 

Global Markets

Sterling climbs after tax plan reversal, dollar also weaker against other
major currencies

(Reuters) - Sterling jumped against the dollar on Monday after Britain
reversed a plan to cut the highest rate of income tax, and the dollar was
also down against other major currencies.

The pound rose against the dollar after media reports of the u-turn to its
highest level since Sept. 22, the day before British Finance Minister Kwasi
Kwarteng roiled markets with a new "growth plan" to cut taxes and
regulation, funded by vast government borrowing.

Sterling was last up 1.4% at $1.1320.

"Sterling is getting a boost as the UK tries to reverse some of its tax
cuts," Amo Sahota, director at Klarity FX in San Francisco, said.

British finance minister Kwasi Kwarteng said he would publish details
"shortly" on how he planned to bring down public debt as a share of economic
output over the medium term. read more

The dollar, which is up sharply for the year, weakened also against other
major currencies.

But, "the big macroeconomic themes have not changed, so take this for what
it is, it's a new quarter and a opportunity for a bounce in equities and a
little unwinding of the U.S. dollar," Sahota said.

Elsewhere, the Japanese yen weakened past the 145 mark for the first time
since Sept. 22, when authorities intervened to prop up the currency.

The dollar was last just slightly lower at 144.69 yen.

Monday's fall came as finance minister Shunichi Suzuki said Japan stood
ready for "decisive" steps in the foreign exchange market if excessive yen
moves persisted.

The yen has been weakening due to Japan's policy of keeping interest rates
pinned down at a time when they are rising elsewhere. After much
speculation, authorities last month intervened in markets, spending a record
of 2.8 trillion yen ($19.7 billion) to prop up the currency.

"The central banks are getting more active in trying to defend their
currencies," Klarity's Sahota said.

The greenback was down against China's offshore yuan and hit a low for the
day of 7.0901.

"I think the yuan has strengthened enough that it will give some peace to
the People's Bank of China at this time," Sahota said.

The euro rose 0.3% to $0.9825. Data earlier showed manufacturing activity
across the euro zone declined further last month.

Reports that the OPEC+ group of oil producers is discussing potential output
cuts of more than 1 million barrels per day also weighed on the currency,
given Europe's precarious energy situation.

The Australian and New Zealand dollars gained ground ahead of expected rate
hikes by their central banks this week with the Aussie up 1.6% at US$0.6515
and the kiwi 2% higher at US$0.5717.

Investors were watching for more news on Credit Suisse (CSGN.S), whose
shares slid on Monday, reflecting market concerns ahead of a restructuring
plan due to come with third-quarter results at the end of October.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices jump as Treasury yields decline and move the dollar lower

Yields on U.S. debt instruments such as the 10-year note, and 30-year bonds
have been rising as the Federal Reserve has raised interest rates at each of
the last FOMC meetings since March of this year. Currently, the Fed funds
rate is between 3% and 3 ¼%.

Today US treasury notes declined by 0.87 points moving the yields from
3.829% to 3.642%. When yields on U.S. debt instruments rise it moves the
dollar higher, which also means that when yields decline so does the dollar.
That is exactly what we saw today with the dollar declining by 0.45% a total
of 0.504 points with the dollar index currently fixed at 111.58.

Last week on Wednesday, September 28 the dollar hit its highest value in the
last 20 years at approximately 114.60. The dollar index has closed lower on
three of the last four trading days.

The chart above is a daily Japanese Heikin-Ashi chart of the dollar index.
The Japanese Heikin-Ashi chart is a variation of a standard Japanese
candlestick chart in that it uses the same for data points; open, high, low,
and close. However, it is the open that is calculated differently than a
standard bar or candlestick chart. In both of those charts, the open is
fixed from the actual opening price of trading for that day (on a daily
chart) and on a weekly chart the open is fixed from the opening price on
Monday and the closing price on Friday. This creates the “real body”
regardless of the color.

The Heikin-Ashi chart fixes its opening price from the midpoint of the prior
candle. The result is that this type of chart effectively filters out some
noise and is used to define many aspects of the current trend. It provides
insight into the strength of the trend with two variables. The size of the
candlestick itself. And the absence of a lower wick during an uptrend, and
an absence of a upper wick during a correction. It also provides visual
information at key and critical pivot points when a trend has a key
reversal. In the case of the chart above, you have a series of large green
candles all with no lower wicks up until Wednesday of last week.

On Wednesday the candle that formed was extremely small-bodied (the green or
red rectangle drawn as a box around the open and closing price) with
extremely long upper and lower wicks. This candle configuration when found
after an extended rally or correction can be a strong indication that a key
reversal is imminent. In the case of the dollar chart above following
Wednesday’s candle, the color of the real bodies changed from green to red
indicating the beginning of a correction.

Another type of Japanese chart that is excellent to determine the trend and
more importantly key reversals is called a Japanese three-line break chart.
It is analogous to the Western point and figure chart in that it is based on
price and not time. The chart above is an example of the dollar as seen
through a three-line break chart.

It differs from both the Japanese candlestick and Heinkin-Ashi chart in that
a candle is only created under certain conditions which are based on price
changes and not dates. Each new close can result in one of three
possibilities.

• A new candle is created when the price continues in the same direction

• A new candle in the opposite color is drawn when the price change is large
enough to warrant a reversal

• no candle is created when the current price does not extend the trend or
the change is not enough to warrant a reversal.

Lastly, this type of chart adds a projection candle which is drawn in a
different color than created from a rally or correction as seen in the
dollar index chart above.

Because there is a negative correlation between dollar strength or weakness
and strength or weakness in gold next two charts (charts 3 and 4) also show
a key reversal or pivot point in gold as the overall trend changed from
bearish to bullish. They are the mirror opposites of the dollar charts
above.

The shortcomings of both of these chart types are that during a choppy and
range-bound market you will get alternating candle colors and no clear
picture of the trend. Also although it is clear that a key reversal has
formed in both the dollar and gold, these trends can be short-term and
reverse at any time as the fundamental events behind a rally or correction
change.

As of 5:28 PM, EDT gold futures basis most active December contract is
currently up $36.60 or 2.19% and fixed at $1708.60.

For those who would like more information simply use this link.

Wishing you as always good trading and good health,

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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