Bulls n Bears Daily Market Commentary : 04 October 2022

Wed Oct 5 07:56:32 CAT 2022

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Bulls n Bears Daily Market Commentary : 04 October 2022

ZSE commentary

ZSE retreats further in Tuesday's session.

The market closed mixed in Tuesday's session to see the AllShare Index
trimming 2.10% to 14424.01pts while, the ZSE Top Ten Index succumbed 3.18%
to end pegged at 8821.54pts.The two gainers amongst the indices we review
were ZSE Agriculture Index that inched up 0.22% to 74.57pts and the Mid-Cap
Index which rose 0.67% to 29193.61pts. The market closed with a positive
breadth as gainers outstripped fallers by a count one. Cement manufacturer
Lafarge topped the gainers' category on a 14.96% rise to $113.7000 followed
by insurer First Mutual Holdings that grew 14.29% to $24.0000. Hotelier
Rainbow Tourism Group surged 14.07% to finish at $7.8591 while, milk
processor Dairiboard enhanced 10.09% to close at $25.2791. Meikles Limited
capped the top five risers' list on a 8.70% improvement to $108.6957.
Turnall Holdings led the laggards list after dropping a 12.76% to $3.3150 as
bankers NMB were 9.22% weaker at $18.1146.

Ecocash Holdings lost 8.14% to $51.4425 while, spirit manufacturer AFDIS
Limited eased 8.08% to settle at $275.7742. Tea company Tanganda completed
the top five losers' set on a 5.87% plunge to $80.0070. Activity aggregates
remained mixed for the second consecutive session as turnover enhanced
57.45% to $287.29m while, volumes traded succumbed 30.78% to 3.59m shares.
Simbisa, Delta, Econet, Innscor and Tanganda claimed a combined 83.42% to
the total value traded. Volume drivers of the day were Ariston, OKZIM,
Simbisa, Econet and Tanganda with a shared contribution of 63.38% to the
aggregate. The ETFs traded a total of 48,742 units worth $183,663.65. The
two ETFs that recorded price changes were Datvest and the Old Mutual ETFS
that added 2.90% and 0.0038% to end at $1.7500 and $5.2000 apiece. Morgan &
CO Multisector and MIZ closed at stable prices of $28.5000 and $1.3000
respectivelyefesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand strengthens on weak dollar; stocks jump

(Reuters) - South Africa's rand strengthened on Tuesday, joining a global
risk rally amid weakness in U.S. Treasury yields and the dollar.

At 1532 GMT, the rand traded at 17.6225 against the dollar, 1.3% stronger
than its previous close.

The dollar index , which measures the currency against six rivals, was last
down more than 1% at 110.380.

The South African Reserve Bank (SARB) said on Tuesday it estimates that
scheduled power cuts implemented by utility Eskom will shave off about 1.0
percentage points from 2022 economic growth.

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

The benchmark all-share index (.JALSH) was up 3.25%, while the Top-40
(.JTOPI) index rose 3.44%.

The government's benchmark 2030 bond was stronger in afternoon deals, with
the yield down 4 basis points to 10.640%.

Ghana

Cedi depreciation eases

The cedi posted a mixed fortune in the week ending September, trading
largely stable against the three major international currencies.

Against the US dollar, it was stable for the most part before easing in the
later sessions as demand pressures mounted.

GCB Capital attributed the easing to the Finance Minister, Ken Ofori-Atta's,
presser at midweek, which sought to calm investors and appraised the market
of the progress of negotiations with the International Monetary Fund (IMF),
proved supportive.

It said in its weekly insight that with the rising demand amid the limited
supplies, the cedi, however, changed course to close the week lower against
the three major trading currencies.

Nigeria

Naira gains 0.68% as demand moderates after holiday

Naira on Tuesday reversed 0.68 percent of its lost value, gaining N5 per
dollar as demand moderated at the parallel market after the one-day public
holiday to mark Nigeria's independence celebration.

During the trading hours on Tuesday, naira was exchanging with the dollar
for N735/$ compared to N740/$ on Thursday and Friday. "Demand has slowed a
bit since Friday," a trader told BusinessDay.

The Naira which fell to a record new low of N740 per dollar on Thursday has
depreciated by N175 (23.65 percent) when compared with N565/$ at the
beginning of the year.

Bismarck Rewane, managing director/chief executive officer of Financial
Derivatives Company Limited had said naira is likely to appreciate at the
parallel market towards N670/$ -N680/$ in October 2022.

Nigeria's currency has been on a free fall as a result of rising strong
dollar, import demand, oil theft, fuel subsidies, currency speculation,
record high money supply and weak productivity, analysts have said.

In the face of rising demand for foreign exchange for both goods and
services by Nigerians, the CBN has advised Nigerians to resist the urge of
succumbing to the speculative activities of some players in the foreign
exchange market.

Read also: Buhari presents N19.76 trn 2023 budget to NASS Friday

Black market has gained more popularity up to the point of overshadowing the
official foreign exchange market, a currency dealer said.

This has led to a lot of concerns as to who are the black market operators.

Black market operators are Nigerians who make a living through money
exchange outside the purview of the regulator -the Central Bank of Nigeria
(CBN). They speculate and profit from the premium between official and
unofficial markets.

Godwin Emefiele, the Governor of the CBN, described the parallel market as
"a tainted market in Nigeria, where people desire to deal in illegal foreign
exchange transactions including sourcing of FX cash for purposes of offering
bribes, corruption. That is where they deal.

At the Investors and Exporters (I&E) forex window, Nigeria's official
foreign exchange market, the Naira remained unchanged at N437.03 per dollar
on Friday. Most forex dealers who participated at the FX auction on Friday
maintained bids between N425.00 (low) and N455.00 (high) per dollar.

In May 2021, the CBN adopted the I&E or Nigerian autonomous foreign exchange
(NAFEX) window as the official FX market.

The adoption of the somewhat market driven exchange rate by the CBN was in
response to the pressure from the International Monetary Fund (IMF) and the
World Bank, which demanded a unification of exchange rate as a precondition
for approval of $3.4 billion and $1.5 billion, respectively, loan request by
the Nigerian government, last year

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar slides as U.S. yields ease; euro, sterling jump

(Reuters) - The dollar slid against most major currencies on Tuesday as the
yield on the benchmark U.S. 10-year Treasury fell after Australia's central
bank surprised investors with a smaller-than-expected interest rate hike,
with the euro climbing more than 1%.

The Australian dollar was down 0.2% at $0.6503, dragged down after the move
by the Reserve Bank of Australia, which said rates had increased
substantially in a short period.

The euro was last up 1.6% at $0.9978, recovering from its 20-year low of
$0.9528 on Sept. 26, while sterling shot up 1.2% to $1.1456, off a record
low of $1.0327 also hit Sept. 26.

A calmer British government bond market was a relief for the pound after
recent government-inspired turmoil. In a statement on Monday, the Bank of
England reaffirmed its willingness to buy long-dated gilts and the head of
Britain's debt management office, overseeing the bond market, told Reuters
in an interview the market was resilient.

The moves in the dollar and yields appear to partially reflect market
participants' views on the outlook for rates, some strategists said.
Investors are hoping that recent economic growth concerns may be enough to
force the Federal Reserve and other central banks to become less aggressive
in their fight against inflation. At the same time, stocks were rallying.

"We're seeing a drop in interest rate expectations across the financial
markets on the basis of Reserve Bank of Australia's surprise
smaller-than-expected hike," said Karl Schamotta, chief market strategist at
Corpay in Toronto.

"That has sort of had a canary in the coal mine effect from market
participants globally. People are ratcheting down what they expect from the
Federal Reserve and other central banks and that's really compelling a drive
out of the dollar and into risk sensitive assets."

Also, economic data showed job openings in the United States fell to 10.053
million in August, the most in nearly 2-1/2 years.

"It's a much more-drastic-than-expected drawdown in the number of job
openings, and that is what we would expect to see if the Fed were nearing
the end of their tightening trajectory," Schamotta said.

The yield on 10-year Treasury notes was down 6.6 basis points to 3.585%.

The Fed's aggressive push to raise rates and the recent steady climb in
Treasury yields have helped support the dollar's sharp gains this year.

Investors were still closely watching China's yuan, with Chinese authorities
having come out in recent weeks with maneuvers to slow its slide. But on
Tuesday, the dollar fell against the offshore yuan. The dollar was last down
0.9% at 7.0383 and hit a session low late of 7.0332.

Elsewhere, the dollar was down 0.4% against the Japanese yen at 144.03 yen ,
keeping below 145 after briefly popping above that level on Monday for the
first time since Japanese authorities intervened to support their currency
on Sept. 22.

Japanese finance minister Shunichi Suzuki repeated on Monday that
authorities stand ready for "decisive" steps in the foreign exchange market
if "sharp and one-sided" yen moves persisted.

US dollar

The US dollar is on the bounce, appreciating against global and emerging
market economy currencies as the Fed's hawkish stance has lifted the 182-day
treasury-bill yield above the 10-year UST benchmark.

The combination of a firmer US dollar and elevated demand depressed the
cedi, with our reference interbank cedi retail rate closing the week at 1.4
per cent weaker verse the US dollar (negative 40 per cent year-to-date
(YTD), while the BoG's reference rate closed 0.66 per cent weaker (-37.47%
YTD).

Pounds sterling

The Great British pounds sterling eased to a record low at last week's
opening following the inflation-enforcing tax measures in Britain.

However, the pound trimmed its losses after the Bank of England (BoE)
pledged to purchase unlimited quantities of longer-dated bonds but closed
the week with a net depreciation.

Regardless, the local unit ceded 2.68 per cent and 1.23 per cent of its
value to the pound on the interbank and retail markets, respectively.

Euro

The Euro traded lower verse the US dollar following a surge in inflation in
the Eurozone to 10 per cent, reinforcing concerns about a near-term
recession.

The European Central Bank (ECB) could respond with another significant rate
hike in October 2022, which poses a further downside risk to growth.

The cedi closed weaker, ceding 1.51 per cent verse the euro on the interbank
market last week.

The onset of seasonal foreign exchange (FX) demand pressures and the bearish
market sentiments could further weaken the US dollar-cedi pair in the fourth
quarter of 2022, pending a breakthrough in negotiations with the IMF.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price breaks $1,700 as weak US data shifts sentiment

Gold continued its rally on Tuesday to an advance past $1,700 per ounce, as
weak US data drove a significant sentiment shift in the precious metals
markets.

Spot gold rose 1.1% to $1,719.04 per ounce by 10:40 a.m. ET, its highest in
three weeks. US gold futures gained 1.5% to trade at $1,727.60 per ounce in
New York.

Meanwhile, benchmark US 10-year Treasury yields fell to a near two-week low,
while the dollar extended its decline, making gold cheaper for other
currency holders.

Bullion is now closing in on its 50-day moving average after surging Monday,
when a US manufacturing gauge slumped more than expected. The price has
traded mostly below the technical marker since April, a sign of poor
sentiment that saw the safe-haven metal slump into a bear market.

Now the metal is at a crucial juncture as traders await US nonfarm payrolls
this week for more clues on the future path of central bank monetary policy.
A weaker-than-expected print could further diminish rate hike expectations,
bolstering bullion at a significant technical turning point.

"Gold has broken the $1,700 an ounce mark again meaning that the break below
$1,660-$1,700 an ounce was for me a false break," Georgette Boele, an
analyst at ABN Amro Bank NV, said in a Bloomberg note. "We probably have
seen the lows for now."

Other US employment data, including job openings and the ADP Research
Institute's figures will also be key this week.

"If the jobs data comes out weaker-than-expected, gold will rally. If it
comes out much stronger, the market might interpret that as well, the Fed
can keep going here with rates," Bob Haberkorn, senior market strategist at
RJO Futures, told Reuters.

So far, the Federal Reserve has struggled to weaken the labor market with
tighter policy, a major part of its battle with decades-hot inflation.

Tighter central bank policy typically hurts gold by pushing up bond yields,
making the non-yielding asset less attractive. Safe haven flows and
expectations for more aggressive rate hikes in the US than elsewhere has
also driven a rally in the dollar, which is negatively correlated with gold.

"Risk aversion has eased and investors stopped being interested in the US
dollar as safe haven," Boele added. "Some Fed officials are already a bit
less hawkish."

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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opinions expressed and recommendations made are subject to change without
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