Bulls n Bears Daily Market Commentary : 13 October 2022

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Bulls n Bears Daily Market Commentary : 13 October 2022

 

 	

 

 

 	


ZSE commentary

 

ZSE remains in the positive.

The market extended gains in Thursday's session as all the four benchmark
indices we review closed in the positive territory. The mainstream All-Share
Index edged up 0.78% to 13591.97pts while, the Mid-Cap Index added a
marginal 0.06% to 29938.97pts. The Blue-Chip Index and the ZSE Agriculture
Index reversed prior session's losses after adding 1.11% and 1.16% to end at
8009.37pts and 69.73pts respectively. Turnall Holdings topped the winners'
pack on a 12.43% jump to $3.8254 as First Mutual Properties overturned
yesterday's losses to record an 8.33% rise as it closed at $6.5000. Zimre
Holdings advanced 7.44% to $4.8965 while, bankers ZB Financial Holdings
shored up 6.07% to finish at $70.0070. Tobacco processor BAT swelled 5.26%
to complete the top five winners' list at $2999.9000. The worst faller of
the day was OK Zimbabwe that dropped 5.64% to $32.1500, trailed by brick
entity Willdale which fell 4.76% to $2.0000. Ecocash Holdings slid 2.79% to
$48.4545 while, packaging group Nampak eased 1.47% to $9.4541. FBC Holdings
capped the top five decliners' set on a 0.10% retreat to $49.9500.

 

Activity aggregates were depressed in the session as turnover tumbled 31.58%
to $410.87m while, volume of shares traded plunged 65.50% to 3.10m. The
market registered a positive breadth of twelve as twenty stocks advanced
against eight that declined. Top volume drivers of the day were ZB (16.18%),
Innscor (15.45%), Simbisa (14.26%), Econet (13.44%) and Axia (11.95%).
Innscor, Simbisa Brands, Delta and Econet were the most liquid counters on
the bourse as they contributed a shared 74.87% of the value aggregate. The
Morgan & Co ETF was the sole faller amongst the ETFs as it succumbed 4.67%
to settle at $24.0000. On the flip side Old Mutual and Datvest ETFs improved
0.14% and 0.05% to $5.2000 and $1.7100 apiece. - efesecurities

 

 <mailto:info at bulls.co.zw> 

 

Global Currencies & Equity Markets

 

 

Nigeria

 

Naira hits N742/$ at parallel market as FX scarcity bites harder

The naira has dropped to a record low of N742 per dollar at the parallel
section of the foreign exchange (FX) market, popularly called the black
market.

 

The figure represents a depreciation of N5 or 0.7 percent from the N737 it
traded two weeks ago.

 

With the depreciation, the gap between the official and parallel market
exchange rates continued to widen amid increased demand for the greenback.

 

At the official market, the naira gained 0.11 against the dollar to close at
N440.67 on Wednesday, according to details on FMDQ OTC Securities Exchange -
a platform that oversees official FX trading in Nigeria.

 

Currency traders known as Bureaux De Change operators (BDCs), who spoke to
TheCable on Thursday in Lagos, said they purchase the greenback at N735/$,
and then sell at N742 to make a profit of N7.

 

The traders said the FX scarcity continues to bite hard in the market.

 

"People keep coming to buy dollars but there is a shortage of dollars in the
market. There is demand but no supply. Because of that, the price of the
dollar keeps going up," a BDC operator in the Victoria Island area of Lagos
told TheCable.

 

Another trader in Abuja told TheCable that he sold the dollar for N740.

 

Last year, the Central Bank of Nigeria (CBN) stopped FX allocation to BDC
operators.

 

Godwin Emefiele, CBN governor, said the black market traders turned away
from their objectives to become money laundering agents.

 

The CBN has also consistently maintained that the parallel market
represented less than one percent of FX transactions and should never be
used to determine Nigeria's naira/dollar exchange rate.

 

The apex bank later commissioned deposit money banks to cover the expected
demand from the public.

 

 

 

 

South Africa

 

Rand weakens ahead of US consumer prices

The local currency was at 18.38 against the dollar in early trade.

The rand weakened in early trade on Thursday, as traders braced for US
consumer price inflation data, which is expected to spur further Federal
Reserve rate hikes.

 

At 0722 GMT, the rand traded at 18.38 against the dollar, 0.44% weaker than
its previous close.

 

"The USD-ZAR is currently treading water around 18.30, with a break towards
18.50 on the cards in the event that the US CPI data come out higher than
expected, while a retracement back to 18.00 could follow if the data
disappoint," economists at ETM Analytics wrote in a note.

 

Traders will also be looking at data on August mining, which will be
released by Statistics South Africa at 0930 GMT.

 

On the stock market, the Top-40 .JTOPIindex was down around 0.3% while the
broader all-share dropped more than 0.2% in early trade.

 

The government's benchmark 2030 bond was weaker in early deals, with the
yield up 2.5 basis points to 10.855%.

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

 

U.S. dollar slides, falls away from 32-year high vs yen as inflation-driven
gains recede

(Reuters) - The dollar fell against most currencies in volatile trading on
Thursday, after spiking early following a hotter-than-expected U.S.
inflation report, as some investors thought the market's initial response to
the data was excessive.

 

The greenback briefly hit a 32-year peak against the yen of 147.665 after
the data, then pared gains to trade up 0.2% at 147.25 yen.

 

The euro also fell against the dollar initially to a two-week low, then
rebounded to trade 0.7% higher at $0.9773 .

 

Greg Anderson, global head of foreign exchange strategy at BMO Capital
Markets in New York, said the current FX moves "are signs of a distressed
market, freaking out over a mild miss on a data point."

 

"The reversal in the dollar is a shock. It's a super jittery market that a
tiny flow can have an exaggerated impact."

 

Data showed U.S consumer prices increased more than expected in September
and underlying inflation pressures continued to escalate, cementing
expectations the Federal Reserve will deliver another 75-basis-point (bps)
rate increase at next month's policy meeting.

 

The consumer price index rose 0.4% last month after gaining 0.1% in August.
Economists polled by Reuters had forecast the CPI climbing 0.2%. In the 12
months through September, the CPI increased 8.2% after rising 8.3% in
August. read more

 

Following the data, fed funds futures have also priced in a 13.4% chance of
a 100-bps rate hike.

 

"Inflation has persisted despite improvement in factors that were supposedly
keeping it elevated -- think energy prices and prices for used vehicles,
which declined 1.1% in September," said Brian Westbury, chief economist, at
FT Advisors.

 

"That's because overall inflation has been - and always is - a monetary
phenomenon. The problem is that the Fed thinks it can manage inflation just
by targeting short-term rates. We think the Fed needs to focus less on
hiking interest rates and more on keeping the growth in the money supply
under consistent control."

 

MARKET ON YEN-INTERVENTION WATCH

Traders overall remained on the lookout for Japanese intervention to prop up
a struggling yen. Officials have reiterated they stand ready to take
appropriate steps to counter excessive currency moves, though whether they
wish to defend particular levels remains unclear.

 

"I do think that the Ministry of Finance will order another round of
intervention over the next few weeks," said BMO's Anderson. "I think they
will come in somewhere in the 148 yen-handle. That though may buy the MoF
just a few weeks."

 

The greenback also soared against the Swiss franc earlier, hitting its
highest since May 2019. The buck was last up 0.2% at 0.9995 francs .

 

The Australian dollar briefly dropped to a 2-1/2-year low against the U.S.
unit at US$0.6170, before recovering to trade 0.3% higher at US$0.6291 .

 

Sterling, meanwhile, posted steep gains against the dollar after reports of
a possible U-turn by the UK government on its fiscal plans.

 

The pound last changed hands at $1.1306 , up 1.9%. Against the euro,
sterling rose to a five-week high. The euro last traded at 86.41 pence ,
down 1.1%.

 

Sterling volatility

Sky News reported on Thursday that the British government is discussing
making changes to the fiscal plan announced last month and looking at which
parts of the tax-cutting package might be ditched in a further U-turn by
Prime Minister Liz Truss.

 

British finance minister Kwasi Kwarteng said "let's see", when asked in an
interview if financial markets had improved on Thursday because of
expectations of a U-turn on his plans to scrap an increase in corporation
tax, the Telegraph reported.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

 

Gold proves its mettle against Sensex, price rises 2.6% in CY22

Gold's outperformance over equity has been even better in the international
market, thanks largely to a big sell-off in equities in advanced economies
such as the US and Western Europe

 

Rupee slides as US CPI data stokes speculation of 100 bps Fed hike

 

Gold prices are struggling and are down 18 per cent from their March highs.
But stock prices have fallen even more. As a result, the precious metal has
begun to outperform equities - both in the domestic market and international
markets.

 

Gold prices are up 2.6 per cent in the domestic market in the current
calendar year (CY22) so far, according to the World Gold Council (WGC),
compared to a 1.7 per cent decline in the Sensex year-to-date (YTD). The
yellow metal had upended equities in CY20 as well.

 

Gold was trading at Rs 1.37 lakh per ounce (oz) on Thursday, up from Rs 1.34
per oz at the end of December 2021, according to WGC. By comparison, the
equity benchmark BSE Sensex closed at 57,235.33 on Thursday, down from
58,253.8 at the end of last calendar year (CY21).

 

The highly malleable and ductile metal has performed even better in the
domestic bullion market. In the Mumbai bullion market, 24-carat gold was
trading at Rs 52,250 per 10 gram (gm) on Tuesday, up 5.2 per cent from Rs
49,680 per 10 gm at the end of December 2021.

 

Gold price in the domestic market is driven by three elements: international
spot prices, changes in the rupee-dollar exchange rate, and change (if any)
in Customs duty on gold imports.

 

The rupee has depreciated nearly 10 per cent against the US dollar YTD. The
central government raised import duty on gold in June this year. Both these
factors have hoisted gold prices in the domestic market, even as they have
declined in the international market.

 

Gold's outperformance over equity has been even better in the international
market, thanks largely to a big sell-off in equities in advanced economies
such as the US and Western Europe.

 

Gold price in dollars is down 6.9 per cent since the beginning of CY22,
compared to a 19.6 per cent decline in the benchmark Dow Jones Industrial
Average (Dow) during the period.

 

In the US, spot market gold was trading at $1,680.55 per oz on Thursday,
down from 1,805.85 per oz at the end of December 2021. In the same period,
the Dow was down nearly 20 per cent - from 36,383.3 at the end of 2021 to
close at 29,210.85 on Wednesday.

 

Chart

The recent sell-off in the US equity market has made gold an outperformer,
even on a longer-term basis. The Dow has now given up all its post-pandemic
gains and is up only 2.4 per cent from its 2019 closing value of 28,538,
while gold is up 11 per cent during the period

 

Most analysts, however, remain pessimistic about gold prices, given rate
hikes and rising bond yields in the US and a rally in the dollar index.

 

Internationally, gold competes with the dollar and US government bonds for
safe-haven status during times of economic uncertainty, but a higher yield
or US treasury bonds makes gold less attractive to investors. Unlike bonds,
gold doesn't provide any yield or interest rate to its holder.

 

The yield on the benchmark 10-year US treasury bond has more than doubled
YTD to close at 3.9 per cent on Thursday, up from 1.51 per cent at the end
of December 2021. Gold price is also inversely related to the value of the
US dollar or the dollar index. The dollar index is up 18 per cent YTD in
2022, creating headwinds for many assets, including gold.

 

"The rate hike by the US Federal Reserve has led to the dollar strengthening
against major currencies of the world. A firm dollar makes buying gold much
more expensive, thereby reducing the investment appetite," write analysts at
Emkay Wealth Management.

 

However, the gold price is getting support from record high inflation in
advanced economies and growing economic uncertainty.

 

"Notwithstanding geopolitical tensions and global slowdown worries, gold has
not seen much safe-haven buying as investors are largely moving towards the
dollar index. Gold prices might remain under pressure until the dollar
continues to gain momentum," says Ravindra Rao, vice-president-head,
commodity research at Kotak Securities.

 

For Indian investors, gold is also a hedge against depreciation in the rupee
and its adverse impact on inflation in the country and other asset markets.
This could create a situation where gold prices in the domestic market may
continue to rise or at least stay strong, even if they remain under pressure
globally due to a surge in the dollar index and higher bond yields in the
US.

 

 

 

 

 


 

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
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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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