Bulls n Bears Daily Market Commentary : 11 October 2022

Wed Oct 12 08:13:20 CAT 2022

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Bulls n Bears Daily Market Commentary : 11 October 2022

ZSE commentary

The market started on a positive note. The ZSE All Share Index added 170.36
points to close the Monday trading session at 13,239 points. Top Gainers
were led by DELTA CORPORATION LIMITED which gained $17.3333 to $198.3815,
UNIFREIGHT AFRICA LIMITED rose by $2.5000 to $50.0000 whilst SIMBISA BRANDS
LIMITED traded $0.7343 higher at $162.0154. NAMPAK ZIMBABWE LIMITED added
$0.5000 to $9.5000 and MASHONALAND HOLDINGS LIMITED increased by $0.4893 to
$7.4893. Losses were recorded in INNSCOR AFRICA LIMITED which decreased by
$1.5265 to $268.1068, FBC HOLDINGS LIMITED was $0.7143 lower at $45.0000 and
ECONET WIRELESS ZIMBABWE LIMITED lost $0.5952 to $84.0952. AFRICAN SUN
LIMITED dropped $0.5242 to $18.1188 and BRIDGEFORT CAPITAL LIMITED went down
by $0.4100 to $7.0000.

EXCHANGE TRADED FUNDS (ETF) CASS SADDLE AGRICULTURE EXCHANGE TRADED FUND
(CSAG.ZW) gained $0.0916 to $1.8967, OLD MUTUAL ZSE TOP 10 added $0.0975 to
$5.2975 whilst MORGAN & CO MADE IN ZIMBABWE EXCHANGE TRADED FUND was $0.0052
higher at $1.2852. MORGAN & CO MULTI-SECTOR ETF remained flat at $27.0000
whilst DATVEST MODIFIED CONSUMER STAPLES ETF decreased by $0.0268 to
$1.7143.- zse

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South africa

South African rand weakens against strong U.S. dollar

(Reuters) - South Africa's rand weakened in early trade on Tuesday, as the
U.S. dollar rose amid expectation of aggressive rate hikes and ongoing
geopolitical tensions.

At 0703 GMT, the rand ZAR=D3 traded at 18.1300 against the U.S. dollar,
0.28% weaker than its previous close.

U.S. dollar index =USD was up around 0.2% at 113.28, inching toward the
20-year high of 114.78 it touched late last month.

"The pair is poised to test technical resistance around 18.2200 again, with
a break of this level likely to open the door for a continuation of its
broader uptrend towards 18.5000 and beyond," economists at ETM Analytics
said.

Local investors will be looking at August industrial production figures at
1100 GMT for clues on the health of the economy.

In the stock market, the Top-40 .JTOPI index was down more than 1%, while
the broader all-share .JALSH dropped 0.83% in early trade.

The government's benchmark 2030 bond ZAR2030= was weaker in early deals,
with the yield up 3.5 basis points to 10.755%.

Ghana

Ghanaian Cedi fell by 72% in 10 months

The Ghanaian cedi has lost 72% of its value against the US dollar since the
start of the year.

At the time of writing this article, the USD/GHS was trading around 1/10.45.
This is indicative of a 45% decline within 6months. 

Despite Ghana’s central bank raising its interest rate to a record high of
24.5% in an effort to reduce inflation and strengthen the Cedi, the currency
has continued to fall.

This implies that corporate operating expenses, particularly those related
to manufacturing, will grow, which will lead to increases in some market
goods’ pricing and, ultimately, inflation.

What you should know

Ghana is battling debt, 20-year-high inflation, a weak currency, and rising
inequality. In August 2022, inflation increased to 33.9% from 9.7% the
previous year. Furthermore, these vulnerabilities have been exacerbated by
the current Russia-Ukraine conflict and the COVID-19 pandemic. 

Hence, Ghana’s government was compelled to seek economic assistance from the
International Monetary Fund (IMF). A new assessment of the country’s debt
sustainability will be part of the engagement. 

Ghana will need to take action to restructure its debt if the new review
finds that the country’s debt levels are unsustainable in order for it to be
eligible for IMF assistance. According to the Fund, lending to nations with
unsustainable debts is prohibited until those nations take action to restore
their financial sustainability, which may include debt restructuring. 

Ghana’s total public debt as of June 2022 was $54.4 billion (78.3% of GDP)
from US$32.3 billion (l55.5% of GDP) in 2017, according to central bank and
finance ministry data. Of this, external debt was US$28.1 billion (40.5% of
GDP), while domestic debt issued in cedis was US$26.3 billion (37.8% of
GDP). 

The outlook for Ghana’s inflation is still bleak, and the Bank of Ghana is
being forced to step up its tightening of policy as a result of the recent
significant policy rate increases by advanced nations. 

The second quarter’s economic growth in the country that produces gold,
cocoa, and oil appeared strong, according to the Bank of Ghana, and the
outlook for the cedi currency has improved as a result of the recent
disbursement of an Afreximbank loan for $750 million and the signing of a
syndicated cocoa loan for $1.13 billion.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar at 24-year peak to yen as U.S. yields jump; sterling on the ropes

The dollar rose to a fresh 24-year high against the yen on Wednesday, moving
above levels that prompted intervention by Japanese officials last month, as
traders braced for U.S. inflation data and its impact on further Federal
Reserve rate hikes.

The dollar strengthened 0.3% to 146.30 yen in Asian trading, after pushing
as high as 146.35, a level not seen since August 1998.

The dollar rose to a fresh 24-year high against the yen on Wednesday, moving
above levels that prompted intervention by Japanese officials last month, as
traders braced for U.S. inflation data and its impact on further Federal
Reserve rate hikes.

Sterling slipped to a new two-week trough after Bank of England Governor
Andrew Bailey reiterated that the central bank will end its emergency
bond-buying program on Friday and told pension fund managers to finish
rebalancing their positions within that time frame.

The risk-sensitive Australian dollar sank to a 2½-year low.

The dollar strengthened 0.3% to 146.30 yen

in Asian trading, after pushing as high as 146.35, a level not seen since
August 1998.

The Japanese currency is particularly sensitive to the gap between U.S. and
Japanese long-term bond yields. The benchmark 10-year Treasury yield

jumped to the cusp of a 14-year high overnight at 4.006%, while the
equivalent Japanese government bond yield is pinned near zero by the Bank of
Japan.

Japanese officials staged their first yen-buying intervention since 1998 on
Sept. 22, when the yen tumbled to as low as 145.90 per dollar.

Japanese Finance Minister Shunichi Suzuki said on Wednesday that authorities
will take necessary steps in the foreign exchange market if needed, adding
that what was important was the speed of currency movements, Jiji Press news
agency reported.

“It is the speed of change rather than the level that will trigger FX
intervention, [meaning] USD/JPY may rise past its pre-intervention of 145.9
without triggering the BOJ to step in if the rise occurs gradually,” Joseph
Capurso, a currency strategist at Commonwealth Bank of Australia, wrote in a
client note.

At the same time, the U.S. consumer price report on Thursday could trigger
the kind of sharp move that would prompt another intervention, Capurso
added, “but we maintain any intervention-induced moves in USD/JPY will be
unwound within a few weeks.”

The Fed has signaled it will continue its aggressive tightening campaign to
rein in inflation, and recent strong U.S. labor market reports have
scuppered hopes among some market participants that policymakers may slow
the pace of rate hikes.

Cleveland Fed President Loretta Mester backed that view on Tuesday, saying
the U.S. central bank has yet to get surging inflation under control and
will need to press forward with rate hikes.

The U.S. dollar index

— which measures the greenback against a basket of six major peers,
including the yen, sterling and the euro — edged 0.16% higher to 113.52,
after touching the highest since Sept. 29 at 113.54.

Sterling

slipped 0.13% to $1.0947, and earlier touched $1.09385, marking a fresh low
since Sept. 29, following the comments by the BoE governor.

Gilt yields soared on Tuesday, lifting yields in the U.S. and elsewhere.

The euro

slumped to its weakest since Sept. 29 overnight at $0.9670 and remained not
far from that level, trading 0.17% lower than Tuesday’s close at $0.96885.

Worries that continued aggressive policy tightening by the Fed and most of
its peers will lead the global economy into recession continues to weigh on
risk sentiment.

Investors will be seeking for further clues when inflation data for
September is released on Wednesday for prices that sellers get for their
products, and on Thursday for prices consumers pay for purchases.

The Aussie

sank as low as $0.62395, a level last seen in April 2020, and last traded
0.5% weaker at $0.62415. The New Zealand dollar

was 0.21% lower at $0.5570, approaching the previous day’s low of $0.5536, a
level not visited since March 2020.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price up slightly on tepid short covering

(Kitco News) - Gold prices are slightly higher in early U.S. trading
Tuesday, on some mild short covering in the futures market and timid bargain
hunting and/or safe-haven demand in the cash market. December gold was last
up $2.60 at $1,677.80 and December silver was down $0.10 at $19.52.

Global stock markets were mostly lower overnight. U.S. stock indexes are
pointed to lower openings when the New York day session begins. Dour
comments on the global economic/political outlook from the respected chief
of JP Morgan, Jamie Dimon, as well as an escalation in the Russia-Ukraine
war, are keeping a “risk-off” trader and investor mentality in the general
marketplace.

It appears the safe-haven assets of choice at present are the U.S. dollar
and U.S. Treasuries. The greenback has been appreciating and U.S. bond
yields have been rising. Meantime, the price of gold has been falling. One
element for which traders should take note: Recent history shows that when
the going gets really tough in the marketplace and anxiety is extreme, gold
still generally performs as a safe-haven store of value. In other words,
don’t rule gold out as a safe-haven asset despite its underperformance in
recent months.

The U.K. government bond market is still roiled, as the Bank of England was
forced to stepped in to buy inflation-linked bonds to its bond-buying
program. There are worries U.K. pension funds could be lost in any more
serious U.K. bond market rout.

The key outside markets today see the U.S. dollar index weaker on a
corrective pullback from recent strong gains. Nymex crude oil prices are
lower and trading around $89.75 a barrel. The U.S. Treasury 10-year note
yield is presently fetching around 3.9%.   

Traders are looking ahead to key U.S. inflation reports on Wednesday and
Thursday mornings. The producer price index report for September is out
Wednesday and the consumer price index report for September is out Thursday.
The consumer price index is expected to come in at up 8.1%, year-on-year,
following a rise of 8.3% in August.

U.S. economic data due for release Tuesday includes the weekly Johnson
Redbook and chain store sales indexes, the NFIB small business index, and
the IDB/TIPP economic optimism index.

Technically, the December gold futures bears have the firm overall near-term
technical advantage and have regained power. Bulls’ next upside price
objective is to produce a close above solid resistance at the October high
of $1,738.70. Bears' next near-term downside price objective is pushing
futures prices below solid technical support at the September low of
$1,622.20. First resistance is seen at $1,700.00 and then at Monday’s high
of $1,707.40. First support is seen at the overnight low of $1,667.50 and
then at $1,650.00. Wyckoff's Market Rating: 2.5.

September silver futures bears have the overall near-term technical
advantage and have momentum. Silver bulls' next upside price objective is
closing prices above solid technical resistance at the October high of
$21.31. The next downside price objective for the bears is closing prices
below solid support at $18.00. First resistance is seen at the overnight
high of $19.725 and then at $20.00. Next support is seen at today’s low of
$19.225 and then at $19.00. Wyckoff's Market Rating: 3.5.

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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