Bulls n Bears Daily Market Commentary : 20 October 2022

Fri Oct 21 07:19:29 CAT 2022

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Bulls n Bears Daily Market Commentary : 20 October 2022

ZSE commentary

ZSE maintains positive sentiment

The market remained in the positive in Thursday’s session as the All-Share
Index rose 0.85% to 14186.15pts while, the heavies Index gained 0.56% to
close at 8379.19pts. The MidCap Index was 1.52% higher at 31152.41pts as the
ZSE Agriculture index picked up 0.67% to close at 72.50pts. Milk processor
Dairibord topped the gainers list on a 15.00% jump to $36.8000 while,
hotelier African Sun climbed 10.33% to $20.1900. First Mutual Properties
trade at $7.4829 after a 9.02% rise as the bankers duo NMB and ZB Financial
Holdings were up 8.30% and 8.08% to finish at $21.3000 and $115.0000
respectively. The day’s laggards were led by Ecocash Holdings that fell
5.35% to $44.9598 while, FBC Holdings lost 3.85% to $50.0000. General
Beltings declined 2.13% to $1.8062 as telecoms firm Econet dropped 0.65% to
$84.8247 on weakening demand. Agro-industrial entity Ariston completed the
top five losers with a marginal 0.50% loss to $3.9501. The market recorded a
positive breadth of nine as seventeen counters edged up against eight
losers.

Activity aggregates weakened to see turnover drop 41.19% to $228.19m while,
volumes traded plunged 26.54% to 2.29m shares. Econet and Delta contributed
a combined 72.54% of the value traded and 51.84% of the volumes exchanged.
Other remaining volume contributors were Star Africa, Masimba and Innscor
that scored 16.78%, 8.61% and 3.96% apiece. On the VFEX, three counters
slipped, led by Seed-Co International which lost 2.63% to settle at
USD$0.37000 as circa 1.02m shares exchanged hands. Bindura dropped 1.67% to
US$0.0295 on 110 shares while, Padenga eased 0.71% to US$0.3360 on 260
shares. The ETF traded mixed as a total of 26,928 units traded. The MIZ
soared 9.57% to $1.2600, Cass Saddle was up 3.00% to $2.0600, and the Old
Mutual ETF increased 2.58% to $5.4110. The two fallers were Datvest and
Morgan & Co that succumbed 1.90% and 6.366% to end at $1.7000 and $22.0000
respectively. -efesecurities

Global Currencies & Equity Markets

South Africa

South African rand pauses; fragile risk appetite seen weighing

The South African rand was little changed in early trade on Thursday, but
analysts said fragile risk appetite globally was likely to weigh on the
currency.

The rand dropped around 1% against the U.S. dollar on Wednesday, as the U.S.
currency gained along with surging Treasury yields.

At 0650 GMT, the rand traded at 18.3075 against the dollar, near its
previous close of 18.3100.

"A hawkish Fed, the chaos in UK politics, and higher inflation data out of
both the UK and Eurozone are weighing on risk sentiment," Andre Cilliers,
currency strategist at TreasuryONE, said in a research note.

South African data on Wednesday showed inflation eased slightly in
September, to 7.5% year on year from 7.6% in August, in line with analysts'
forecasts. But retail sales came in worse than predicted, growing 2.0% in
August compared to economists' expectations for 4.2% growth.

No major domestic economic data releases are due on Thursday.

The government's benchmark 2030 bond was slightly weaker in early deals,
with the yield rising 4 basis points to 10.910%.

Ghana, Nigeria currencies to weaken, others seen stronger

(Reuters) - Ghana's and Nigeria's units will weaken against the dollar in
the week to Thursday, while Uganda's and Tanzania's currencies will
strengthen and Zambia's kwacha will be steady, traders said.

GHANA

Ghana's cedi GHS= is expected to weaken further in coming days as
speculative trading ramps up, following a week of record deterioration.

Refinitiv Eikon data showed the cedi was trading at 12.75 to the dollar on
Thursday compared to 10.50 at last Thursday's close. The World Bank has
called it Africa's worst performing currency.

"We expect the cedi to weaken further into next week largely due to the huge
underlying corporate and individual demand for the greenback, and panic
buying spurred by debt restructuring fears," said Chris Nettey, head of
trading at Stanbic Ghana.

Rumours of domestic debt restructuring or a possible sovereign default have
increased demand for forex liquidity.

Observers last week hoped a $1.3 billion loan for government cocoa purchases
would offset the cedi's losses, but analysts are now dubious.

"It is unlikely that even the flows from [the cocoa loan] will prompt a
course reversal," Absa bank said in a note on Thursday. "This depreciation
shows no signs of slowing."

NIGERIA

Nigeria's naira is seen easing on the parallel market next week after it hit
a record low on the black market as pressure mounted on the currency due to
rising import demand and dwindling forex reserves, traders said.

The currency NGNP= fell to 745 naira per dollar on the parallel market on
Thursday. It closed at 740 naira per dollar a week ago.

"Heavy demand for imports and dwindling FX reserves continue to pile
pressure on the naira, which we expect will translate to further losses
against the dollar in the near term," foreign exchange trading firm AZA
Finance said in a note.

The unit traded in a range of 440 to 441 naira to the dollar on the official
market NGN= on Thursday, compared with a range of 419 to 430 naira in
September. The central bank periodically moves its range to adjust to demand
for the hard currency.

UGANDA

The Ugandan shilling UGX= is expected to firm as dollar inflows from
remittances and commodity exporters outweigh demand from importers.

Commercial banks quoted the shilling at 3,800/3,810, compared to last
Thursday's close of 3,825/3,835.

"Inflows from remittances are quite strong on one hand while on the other
importer appetite is thin," said an independent foreign exchange trader in
the capital Kampala, adding the shilling could trade between 3,770-3,800
range.

Inflows of remittances from Ugandans working abroad typically surge in the
last three months of the year as some return home or send money to relatives
for year-end festivities.

TANZANIA

Tanzania's shilling TZS= is expected to gain ground, supported by dollar
inflows from agricultural exports.

Commercial banks quoted the shilling at 2,327/2,337 on Thursday, unchanged
from last week’s close.

"We expect the shilling to strengthen in the week ahead driven by an
increase in stock trading activity and inflows from export crops including
cashew, tobacco, coffee and cotton," a trader at one foreign exchange
trading, said.

ZAMBIA

The kwacha ZMW= is likely to hold steady, supported by dollar sales by
companies to meet month-end local currency denominated obligations.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 16.1000 per dollar from 16.0000 at the close of business
a week ago.

"Demand for hard currency from the energy and agricultural sectors is likely
to be met by dollar conversions to meet month-end dues like salaries," one
commercial bank trader said.

 <mailto:info at bulls.co.zw> 

Global Markets

Yen slips past ¥150 against the dollar to lowest level since 1990

The yen has slipped past ¥150 against the dollar for the first time in more
than three decades as investors remain on alert for another intervention by
Japanese authorities to prop up the currency.

The yen fell as much as 0.1 per cent to ¥150.08 per dollar on Thursday,
pushing the Japanese currency to its lowest level since August 1990.

The latest decline came as the Bank of Japan said it would launch an
emergency bond-buying operation, offering to purchase ¥250bn ($1.7bn) of
government debt as it works to pin down yields even as long-term interest
rates rise globally.

Despite a $20bn intervention in September, the yen has lost more than 23 per
cent of its value against the dollar year-to-date because of the widening
gulf between the BoJ’s ultra-loose monetary policy and tightening by most
other big central banks.

Traders have speculated that authorities subtly stepped in last week to
strengthen the yen, but there has been no announced intervention following
the September action.

Comments from BoJ governor Haruhiko Kuroda last month that signalled that
interest rates would remain low helped push the yen past the ¥145.90 per
dollar level and prompted the first intervention by Japanese authorities
since 1998.

With $1.2tn in foreign reserves at the end of September, Japan could carry
out additional interventions, but analysts have warned that such action will
not be effective in stemming the depreciation so long as the interest rate
differential between Japan and the rest of the world continues to widen.

“If you look at the interest rate differential between the US and Japan, the
yen could be trading at ¥155 [per dollar] but the important thing for
authorities is to slow down the pace of the depreciation so it stays around
¥150,” said Kenta Tadaide, a senior foreign exchange strategist at Daiwa
Securities.

He added that the government needed to buy time until early next year when
the US Federal Reserve is expected to stop raising rates.

Despite a surge in imported food and energy prices, inflation in Japan has
remained relatively mild compared with the US and Europe. Core inflation,
excluding volatile food prices, is forecast to have reached 3 per cent in
September with data due to be released on Friday, up from 2.8 per cent in
August. But the BoJ has argued that the rate would ease to less than 2 per
cent next year and underlying demand in the economy remained too weak for
the central bank to shift to policy tightening.

In a recent interview with the Financial Times, Japan’s prime minister Fumio
Kishida said the central bank needed to maintain its policy until price
increases led to rising wages.

Strategists at multiple investment banks have downgraded their short-term
forecasts for the yen as it has plunged. Last week, JPMorgan raised its
fourth-quarter estimate for Japan’s currency to ¥155 against the dollar, up
from ¥147 previously, while Goldman Sachs pushed its three-month forecast to
the same level, up from ¥145.

On Wednesday, Naohiko Baba, Japan economist at Goldman Sachs, said he
expected the BoJ to “maintain the status quo across all monetary policy
parameters” at its upcoming meeting next week.

“The key here in our view is the effectiveness of intervention with the
apparently conflicting policy goals”, with the BoJ still committed to
ultra-loose monetary policy and Japan’s Ministry of Finance seeking to keep
depreciation in check, said Baba.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price remains below $1,650 as Philly Fed Survey shows -8.7 reading

(Kitco News) - The gold market is holding modest gains but remains below
$1,650 an ounce even the U.S. manufacturing sector continues to lose more
momentum, according to the latest report from the Philadelphia Federal
Reserve.

Thursday, regional central bank said its manufacturing business outlook rose
to -8.7 in October, up only slightly from September’s contraction of 9.9.
However, the data missed expectations as consensus forecasts called for a
negative reading around 5.

The gold market is not seeing much reaction to the disappointing economic
data. December gold futures last traded at $1,640 an ounce, up 0.35% on the
day.

Looking at the components of the report, the New Orders Index rose to -15.9,
up from August’s reading of 17.6; at the same time, the Shipments Index was
relatively unchanged at 8.6.

The labor market remains a bright spot in the manufacturing sector with the
Number of Employees Index rising to 28.5, up from the previous reading at
12.

The report also noted that inflation remains a persistent issue. The Prices
Paid Index rose to 36.3, up sharply from September’s reading of 29.8.

“The Prices Paid Index — which had fallen 55 points between April and
September of this year — rose 7 points,” the report said.

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
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suitable for all investors. Securities of emerging and mid-size growth
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for guideline purposes only and sourced from third parties.

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