Bulls n Bears Daily Market Commentary : 19 October 2022

Thu Oct 20 05:54:19 CAT 2022

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Bulls n Bears Daily Market Commentary : 19 October 2022

ZSE commentary

ZSE records slight gains.

The ZSE recorded slight gains in mid-week session as gains in selected
heavies lifted the market. The primary All Share Index ticked up 1.25% to
14066.02pts while, the Blue-Chip Index gained 1.55% to 8332.88pts. The ZSE
Agriculture Index advanced 2.28% to 72.02pts as the Mid-Cap Index extended
0.63% to 30684.80pts. Agriculture concern CFI Holdings headlined the
gainers' list after a 15.00% jump to $411.2500, albeit on scrappy shares,
followed by financial services group ZB surged 14.96% to $106.4000. First
Mutual Properties went up 13.05% to $6.8639 while, Zimplow Holdings rose
10.45% to $14.4905. Simbisa capped the top five winner's list on a 9.37%
surge that took it to $197.0082. General Beltings led the laggards of the
day on a 6.90% slump to close at $1.8456 while, Mashonaland Holdings sank
4.76% to $7.5396. Media group Zimpapers trimmed 3.58% to $2.8925 as Star
Africa dropped 3.46% to close at $1.7000. Bankers First Capital rounded off
the top five shakers of the day as it slid 3.18% to end pegged at $9.0207.

Activity aggregates enhanced in the Wednesday's session as volumes surged
190.73% to $3.11m shares while, the value outturn ballooned 236.63%. to
$388.01m. Seventeen counters gained against nine that lost ground, to see
the market recording a positive breadth of eight. Econet highlighted the
session as it accounted for 48.72% of total volumes and 33.39% of turnover.
Other notable value drivers were Innscor, Simbisa, National Foods and Delta
that contributed 21.35%, 17.66%, 10.47% and 10.37% respectively. On the
VFEX, Bindura gave up 1.64% to trade at USD$0.0300 while, Padenga lost 0.32%
to USD$0.3384. Datvest ETF added 0.03% to $1.7330, as Old Mutual ETF gained
0.77% to $5.2748. MIZ and Morgan ETFs dropped 4.29% and 2.11% to close at
$1.1500 and $23.4945 accordingly. -efesecurities

Global Currencies & Equity Markets

Nigeria

Naira may devalue by 20% in 2023- BoA

Nigeria's local currency unit is set to weaken further next year as its
current exchange rate to the dollar is well above fair value, according to
Bank of America.

According to a report by Bloomberg, economist Tatonga Rusike said in a note
to clients on Tuesday that, "three indicators, the widely-used black-market
rate, the central bank's real effective exchange rate, and our own currency
fair value analysis shows the naira is 20 per cent overvalued.

"We see scope for it to weaken by an equivalent amount over the next
six-nine months, taking it to as high as 520 per USD."

While the naira will come under increasing pressure "due to limited
government external borrowing," devaluation is unlikely to happen until
after the February 2023 presidential elections, the bank said.

Africa's largest economy operates a multiple exchange regime dominated by a
tightly controlled official exchange rate and a parallel market where the
currency is freely traded.

The naira exchanged at 440.95 to the dollar in the official spot while
parallel rate went up to N740, according to the bureau de change operators.

The official rate has depreciated by less than 10 per cent since December
2021 even as the parallel rate is down by nearly a third within the same
period, widening the gap to almost 70 per cent, BofA analysis show.

"The greater the disparity with the official market, the higher the
likelihood of increasing excess demand for foreign currency on the parallel
market," the bank said.

South Africa

South African rand flat ahead of inflation, retail sales data

(Reuters) - The South African rand was flat on Wednesday ahead of release of
domestic inflation and retail sales figures later in the day.

At 0615 GMT, the rand ZAR=D3 traded at 18.1300 against the dollar, not far
from its previous close of 18.1400.

September consumer inflation ZACPIY=ECI numbers are due to be released
around 0800 GMT, with analysts polled by Reuters expecting headline
inflation to dip to 7.5% in annual terms from 7.6% in August.

Last week, the central bank governor said inflation might have peaked in the
third quarter but the bank wanted to see inflation decline firmly within its
target range of 3% to 6%.

August retail sales ZARET=ECI will be published around 1100 GMT, with
economists predicting a 4.2% year-on-year rise after July's 8.6% increase
was boosted by base effects.

The government's 2030 bond ZAR2030= was slightly weaker in early deals, with
the yield rising 5 basis points to 10.855%.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar gains with Treasury yields, sterling tumbles on hot inflation

(Reuters) - The dollar bounced from two-week lows on Wednesday as benchmark
10-year Treasury yields rose to 14-year highs, while sterling weakened after
hotter-than-expected UK consumer price inflation fueled concerns about a
deeper recession.

The greenback hit a 32-year peak against the yen, approaching the 150 level
at which some traders think the Bank of Japan and Ministry of Finance might
intervene.

Treasury yields resumed their march higher as investors maintained
expectations that the Federal Reserve will continue to aggressively raise
interest rates to bring down soaring inflation, boosting demand for the U.S.
currency.

The U.S. central bank is expected to lift rates by another 75 basis points
when it meets on November 1-2, with an additional 50 or 75 basis point
increase also likely in December.

It is "still very much premature to try to fade the dollar," said Mazen
Issa, senior foreign exchange strategist at TD Securities. It will likely
continue to gain until momentum in core inflation moderates and the Fed
pivots to a less hawkish stance, and "neither are likely in the short term".

Fed Bank of Minneapolis President Neel Kashkari said on Wednesday that job
market demand remained strong and underlying inflation pressures probably
had not peaked yet.

The Fed's Beige Book on Wednesday showed that U.S. economic activity
expanded modestly in recent weeks, although it was flat in some regions and
declined in a couple of others, in a report that showed firms growing more
pessimistic about the outlook.

The dollar index gained 0.88% against a basket of major currencies to
112.92. The euro fell 0.95% to $0.9771.

The British pound fell 1.02% to $1.1210 after data showed that Britain's
annual consumer price inflation inched up to 10.1% in September, rising more
than expected and returning to a 40-year high hit in July.

"The outlook for the UK economy remains relatively murky, with ballooning
borrowing costs, soaring consumer prices and a government in chaos with its
credibility shot to bits unlikely to inspire much confidence," said Matthew
Ryan, head of market strategy at Ebury.

Investors expect sterling to remain under pressure amid an outlook for
rising inflation and a recession in Britain which could lead the Bank of
England to increase rates by 75 basis points rather than 100 bps at its
November meeting.

While interest rate hikes would normally boost a currency, in the case of
the United Kingdom the focus is on the degree to which they will harm the
already precarious economy.

"The economy is going to suffer and so that means that the currency is going
to have to be the release valve to reflect that shift in the outlook on the
macro side," said Issa.

The dollar was last 0.43% up on the day at 149.87 yen .

Traders are on high alert for Japan's finance ministry and the central bank
to step into the market again, as the currency pair pushes toward the key
psychological barrier at 150. A cross of 145 a month ago spurred the first
yen-buying intervention since 1998 to prop up the currency.

Japanese Finance Minister Shunichi Suzuki said on Wednesday that he was
checking currency rates "meticulously" and with more frequency, local media
reported.

The BOJ remains an outlier among a global wave of central banks tightening
monetary policy to combat soaring inflation, as it focuses on underpinning a
fragile economy.

Analysts at Credit Suisse said that the yen could weaken beyond 150 if the
Japanese central bank maintains this outlook at its meeting on Oct. 27-28.

"We are open to fresh surges higher if the BOJ stands pat at its meeting
this month, with minimal respect for the capacity of FX intervention to
compress movement," analysts led by Shahab Jalinoos said in a report sent on
Tuesday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices to rise sharply in 12 months, forecasts bullion industry

Gold will rebound next year, despite higher interest rates, according to a
survey of the bullion industry. Delegates gathered in Lisbon for the London
Bullion Market Association's annual conference expect prices to rise to
$1,830.50 an ounce by this time next year, about 10% above current levels.
The survey included the world's top traders, refiners and miners.

Gold has fallen about 20% since coming close to a record in March following
Russia's invasion of Ukraine. Tighter monetary policy -- particularly by the
Federal Reserve -- has weighed on the precious metal which bears no
interest.

Still, some investors are holding onto bullion as a hedge against broader
geopolitical and economic risks, from the war in Ukraine to Covid-19
lockdowns in China.

Gold was little changed today as investors assessed mixed signals including
a slightly weaker dollar, rising Treasury yields and more hawkish commentary
from a Federal Reserve policymaker.

Bullion has had a tepid week so far, ekeing out modest gains as the
greenback's strength -- a major headwind over recent months -- fades
slightly. Still, the US currency remains a headwind as the Federal Reserve
pursues an aggressive monetary policy to battle inflation.

"I tend to think that Fed hawkishness is largely now 'in the price'," Philip
Klapwijk, managing director of Hong Kong-based consultant Precious Metals
Insights Ltd., said in an email. "That said, the scope for a near-term major
rebound in gold prices is very limited while rates climb and the US dollar
remains strong."

Atlanta Fed President Raphael Bostic reiterated that the bank is focused on
cooling inflation that's running at its hottest in four decades. Treasury
yields traded near multi-year highs ahead of US housing figures for
September and the Fed's Beige Book due later Wednesday.

Gold was flat at $1,651.49 an ounce by 10:34 a.m. Shanghai time. Silver was
little changed, platinum fell and palladium gained. The Bloomberg Dollar
Spot index was steady.

Expectations of a large Fed interest rate hike were cemented following a
red-hot U.S. consumer inflation print last week, with markets pricing in a
75-basis-point hike in November.

Rising interest rates and bond yields dim gold's appeal as they increase the
opportunity cost of holding the non-yielding asset.

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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