Bulls n Bears Daily Market Commentary : 12 October 2022

Thu Oct 13 08:11:27 CAT 2022

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Bulls n Bears Daily Market Commentary : 12 October 2022

ZSE commentary

FBC block trade highlights the session

Banking group FBC Holdings highlighted Tuesday’s session as circa 21m shares
worth $1.05bn exchanged hands in the name. The trade accounted for 76.30% of
the total shares traded and 76.45% of the value outturn. Volume of shares
traded jumped 50.88% to 27.56m while, turnover grew 14.13% to end at
$1.38bn. Leading the gainers’ pack was ART Corporation that swelled 15.00%
to $19.5500 while, mining house RioZim went up 14.78% to $132.0000. The
banking duo FBC Holdings and ZB surged 11.10% and 10.00% to end pegged at
respective prices of $49.9958 and $66.0000.

Retailer OK Zimbabwe capped the risers’ set on a 5.97% gain that took its
price to $32.9225. First Capital was the worst faller of the day after
dipping 10.12% to close at $9.0047 as tobacco processor TSL Limited slipped
6.75% to $37.3000. Hotelier African Sun suffered a 5.64% knock to $17.0971
while, Seed Co Limited slid 3.37% to end pegged at $77.3034. Agriculture
concern Ariston Holdings dropped 3.07% to $3.6833 as it completed the top
five decliners of the day. Gainers outweighed fallers by a count of eight,
leaving the market with a positive breadth. The primary All-Share Index
edged up 1.24% to 13404.34pts while, the ZSE Top 10 Index was 1.28% firmer
at 7927.47pts. The Mid-Cap Index added 1.20% to close at 29268.57pts as the
ZSE Agriculture Index faltered 0.59% to 69.38pts. Foreigners were net
sellers in the

session as foreign sales claimed 78.82% of the turnover while, purchases
accounted for a mere 0.78% of the same. The ETF segment traded 86,183 units,
yielding a turnover of $260,512.90. The Cass Saddle EFT emerged the only
gainer amongst the ETFs as it shored up 5.45% to $2.0000. Morgan & Co MCS
succumbed 6.75% to $25.1765 while, the MIZ declined 5.98% to $1.2084. Old
Mutual ETF eased 1.84% to $5.2000 as the Datvest ETF trimmed 0.25% to close
at $1.71000. – efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand firms against dollar in early trade

As traders braced for US inflation data.

The  rand strengthened against a weaker dollar on Wednesday, as traders
braced for US inflation data and its implications for further Federal
Reserve rate hikes.

At 0655 GMT, the rand traded at 18.15 against the dollar, 0.26% firmer than
its previous close.

The US dollar index, which measures the greenback against a basket of six
major peers, dropped around 0.2% to 113.14, after earlier touching the
highest since September 29 at 113.59.

“The rand remains vulnerable over the near term, notwithstanding how much
risk is already priced in at current levels,” economists at ETM Analytics
wrote in a note.

ETM Analytics economists said volatility will likely remain the order of the
day until there are more signs of a potential Fed pivot, improving economic
conditions in China or de-escalation of Russia’s war in Ukraine.

The government’s benchmark 2030 bond was little changed in early deals, with
the yield at 10.735%.

Ghana

1 dollar hits ¢11.30

The woes of the Ghana cedi continued unabated as the local currency is going
or ¢11.30 to a dollar in the retail market.

This is coming after it breached the ¢11 to a dollar mark on Saturday
October 8, 2022.

Checks by Joy Business in some forex bureaus within the capital, Accra,
indicate that most forex bureaus are selling a dollar for between ¢11.10 and
¢11.35.

The same could be said about the euro and pound which are also trading very
high against the cedi. The cedi is going for ¢12.30 and ¢10.83 against the
pound and euro respectively.

The situation, if not given urgent attention by managers of the economy may
be dire for the economy as most businesses have seen a significant increase
in their cost of doing business, whilst households have also witnessed
substantial rise in their cost of living.

Some of the forex bureaus operators, who spoke to Joy Business on condition
of anonymity emphasised the recent action by Bank of Ghana against them as
ineffective since the problem is more of an economic issue.

However, some analysts are cautiously optimistic that the $1.13 billion
cocoa syndicated loan which the first tranche is expected to come in by the
end of this month will help improve supply and slow down the rate of
depreciation of the currency.

But that is a temporary measure which will be short-lived if medium to long
term measures are not implemented.

Finance Minister, Ken Ofori-Atta, yesterday October 12, 2022 met with the
Director for the Africa Department of the IMF, Abebe Aemro Selassie at the
ongoing Annual IMF/World Bank Spring Meetings to push for a quick completion
of negotiations with the International Monetary Fund for an economic
programme.

The IMF move is seen by many as the only measure that will restore Ghana’s
macroeconomic and structural challenges.

Though it will come with painful conditionalities, many market watchers
believe it will boost the country’s credibility and improve its credit
rating, following downgrades by Moody’s and Fitch.

Dollar breaks ¢11 mark; forex bureaus sell a dollar for ¢11.2

The dollar broke the ¢11 mark over the weekend, following days of
consecutive fall.

Also a report by Databank Research disclosed that the cedi was likely to
endure depreciation pressures in the near term as the foreign exchange
market still awaits news on the Debt Sustainability Analysis [DSA] conducted
by the IMF

“The local unit [cedi] is likely to endure depreciation pressures in the
near term as the market still awaits news on the DSA conducted by the IMF.
The syndicated loan of $1.13 billion signed last week is expected to bolster
FX supply and provide some reprieve to the cedi”, Databank Research said.

As portfolio outflows drained reserves, Ghana’s gross international reserves
fell to 2.9 months of import cover. This is despite impressive earnings from
exports of crude oil and gold.

 <mailto:info at bulls.co.zw> 

Global Markets

U.S. dollar soars to new 24-year high versus yen; sterling rebounds

(Reuters) - The dollar climbed to a fresh 24-year peak versus the yen on
Wednesday, holding above levels that prompted intervention by Japanese
officials last month, while sterling rose after a sharp fall in the previous
session as investors pondered the Bank of England's next steps.

The greenback pared gains after minutes from the last Federal Reserve
meeting showed some dovish undertones. Several participants noted the
importance of calibrating the pace of further tightening to mitigate the
risk on the U.S. economy, the minutes said. The Fed though remained
committed to raising interest rates in order to bring down inflation. read
more

"Maybe there is a bit of hope within the minutes that basically officials
are weighing the risk of going too hard or going too high on hiking," said
Juan Perez, director of trading at Monex USA in Washington.

"That's not the number one concern right now. Number one concern continues
to be inflation."

The pound, on the other hand, rose following a drop to a two-week low versus
the dollar and euro late on Tuesday, after the Financial Times reported that
the BoE has signaled privately to lenders it is prepared to prolong its bond
purchases.

Data showing U.S. producer prices increased more than expected in September,
further boosted the dollar against the yen. The producer price index for
final demand rebounded 0.4%, above the forecast for a 0.2% rise. In the 12
months through September, the PPI increased 8.5% after advancing 8.7% in
August. read more

In the wake of the U.S. PPI data, the greenback rose as high as 146.98 yen ,
its strongest since August 1998. It was last up 0.7% at 146.85, marking a
fifth straight session of gains.

Japan staged its first yen-buying intervention since 1998 on Sept. 22, when
the dollar was at 145.90 yen.

"This just reaffirmed that the BoJ (Bank of Japan) did not defend a
particular level, but was addressing volatility," said Marc Chandler, chief
market strategist, at Bannockburn Global Forex in New York, adding that the
three-month yen volatility was lower on Wednesday than when Japan intervened
last month.

Three-month implied volatility on the yen was 11.9% , compared with a high
of 13.26% on Sept. 22 when Japan stepped in to prop up the Japanese unit.

Officials have reiterated they stand ready to take appropriate steps to
counter excessive currency moves, though whether they wish to defend
particular levels is less clear.

Yields outside Japan have been pushed higher by spillover from the turmoil
in Britain's bond market.

Long-dated gilt yields jumped again, with the 20-year hitting a 14-year high
a day after BoE Governor Andrew Bailey reiterated late Tuesday that the
central bank would end its emergency bond-buying programme on Friday,
telling pension fund managers to finish rebalancing their positions by then.

Sterling fell to a two week low of $1.0925 after Bailey's remarks, which
were reiterated by a central bank spokesperson on Wednesday. The currency
later rebounded to stand 1.2% higher at $1.1083, after the FT report which
said the BoE had suggested to private lenders that it was open to extending
its bond purchases.

Against the euro, the pound gained. In afternoon trading, the euro was down
1.2% at 87.40 pence .

Elsewhere, the euro remained under pressure, down 0.1% at $0.9696.

The risk-sensitive Australian dollar sank to a 2 1/2-year low of US$0.6236,
and was last flat at US$0.6274.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices remain under pressure as U.S. PPI rises 0.4% in August

(Kitco News) - The gold market remains under pressure but is largely
ignoring the ongoing inflation threat as producer prices rise more than
expected in September.

Hopes that inflation in the U.S. has peaked were dashed Wednesday after the
U.S. Labor Department said its Producer Price Index (PPI) rose 0.4% in
September, following August’s 0.1% drop; The data was hotter than expected
as economists were looking for a 0.2% rise.

For the year headline PPI rose 8.5%, the report said.

Core PPI, which strips out volatile food and energy prices rose 0.3%,
following August’s rise of 0.4%. The data was in line with market
expectations.

Annual core inflation rose 7.2% in August, the report said.

The gold market is not seeing much reaction to the latest inflation data as
it has seen solid selling pressure overnight. December gold futures last
traded at $1,6743.50 an ounce down 0.78% on the day.

Economists pay close attention to producer prices as it is a leading
indicator for consumer prices. Traditionally, companies pass on higher costs
to their customers. Some market analysts note that the latest inflation data
will force the Federal Reserve to maintain its aggressive monetary policy
stance through 2023. Markets have largely priced in an other 75 basis point
move in November and are starting to expect a 75 basis point move in
December.

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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