Bulls n Bears Daily Market Commentary : 19 April 2023

Thu Apr 20 01:36:38 CAT 2023

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Bulls n Bears Daily Market Commentary : 19 April 2023

 <https://www.cloverleaf.co.zw/> 

ZSE commentary

ZSE slid after a short holiday break…

The market slipped into the red in mid-week trades post a short holiday break as the All-Share Index dropped 0.26% to 36124.87pts. The Mid Cap Index lost 0.89% to close at 78231.82pts. In contrast, the Blue-Chips Index edged up 0.29% to 20947.20pts while, the Agriculture Index added 3.72% to 154.24pts. RioZim was the worst performers of the day after a 14.98% slump to $174.5500, followed by brick manufacturer Willdale Limited that eased 6.21% to $3.5500. First Capital shed 4.07% to $28.3467 while, beverages giant Delta trimmed 2.82% to settle at $796.0624. Retailer Okzim limited capped the top five laggards of the day on a 2.10% drop to $58.5072. Partially mitigating the midweek session’s losses was Turnall Holdings and BAT that surged a similar 15.00% to end pegged at $6.9000 and $4,025.2000 respectively. 

Zimpapers jumped 11.25% to $6.6750 while, General Beltings climbed 10.98% to $2.2195. Tea producers Tanganda capped the winners’ pack on 8.55% uplift to close at $346.6319. Activity aggregates were mixed in the session as volumes traded ballooned 258.98% to 9.37m while, value traded shrunk 32.08% to $436.21m. The market closed with market breadth of four after twelve counters registered gains against 8 counters that tripped. The top volume drivers of the day were Willdale, Ecocash and First Capital as they contributed a combined 85.99% of the aggregate. Top value drivers of the day were Delta (36.44%), Econet (19.20%), Hippo (12.27%) and Ecocash Holdings (10.82%). The Datvest ETF rose 0.03% to settle at $1.8600 while, the MIZ ETF ticked up 2.00% to $2.0400. MCMS and OMTT ETFs slipped 2.20% and 0.38% to settle at $29.2698 and $9.5053 respectively. ETF units traded totalled 1.77m to yield an outturn of $4.49m. The Tigere REIT lost a negligible 0.00138% to $50.1693 on 2957 units. efesecurities

 <mailto:ibc at zitf.co.zw> Global Currencies & Equity Markets

South Africa

South African rand recovers after surprise inflation data

(Reuters) - The South African rand recovered some losses it incurred earlier on Wednesday after local inflation data showed a rise in prices for the second consecutive month.

At 1518 GMT, the rand traded at 18.1300 against the dollar , 0.19% stronger than its previous close.

Inflation in Africa's most industrialised economy rose 7.1% year-on-year in March, driven by a steep increase in food prices, Statistics South Africa said.

The reading was a surprise as analysts polled by Reuters had predicted a drop in March to 6.9%.

The South African currency, which has been on a downward path for the better part of the year, slumped more than 0.8% after the announcement, before regaining some ground.

The earlier weakness in the rand was also due to a stronger dollar and lower export commodity prices, said Shaun Murison, senior market analyst at IG.

Inflation numbers are closely watched for their implications for the South African Reserve Bank's monetary policy.

The central bank has raised interest rates nine times in a row since November 2021 in a bid to tame inflation, with last month's hike a bigger-than-expected 50 basis points.

Separately, South African retail sales fell 0.5% year-on-year in February after falling by 0.8% in January, data showed.

Shares ended lower on the Johannesburg Stock Exchange, with both the blue-chip Top-40 index (.JTOPI) and the broader all-share index (.JALSH) closing around 0.6% lower.

The government's benchmark 2030 bond was weaker, with the yield up 6.5 basis points at 10.115%.

Nigeria

Naira reverses gain against US dollar at official market 

The Nigerian Naira experienced a reversal of its gains against both the US dollar in the official and black markets.

At the beginning of the week, the Naira had appreciated against the dollar.

However, on Tuesday, there was a complete reversal as the Naira tumbled at the official market against the Dollar, closing at N463.25/$1.

According to data from FMDQ Securities Exchange, this performance represents a N1.00 or 0.22 per cent drop compared to Monday’s exchange rate of N462.25/$1.

Additionally, the turnover for the session was $95.45 million, which is 202.5 per cent or $31.55 million higher than the $63.90 million reported on Monday.

Similarly, in the parallel market, the domestic currency depreciated against the American currency on Tuesday by N1 to sell at N739/$1 compared with the preceding day’s rate of N738/$1.

Meanwhile, in the interbank segment of the market, the Naira gained N4.06 against the Pound Sterling on Tuesday to sell at N572.66/£1 versus Monday’s N576.72/£1, and against the Euro, it appreciated by N18.99 to finish at N489.05/€1 versus N508.04/€1

 <https://www.cloverleaf.co.zw/> Global Markets 

USD is suffering 'stunning collapse' as world's reserve currency, warns Eurizon SLJ Capital's Jen

(Kitco News) Markets need to pay closer attention to the de-dollarization trend since the greenback is losing its power as a reserve currency faster than many analysts are noticing, according to Stephen Jen, CEO and co-CIO of Eurizon SLJ Capital.

The dollar's loss of its reserve currency status accelerated last year when the greenback was used against Moscow as part of the sanction package after Russia invaded Ukraine. In 2022, the USD's share as a global reserve currency fell at ten times the average pace of the past 20 years, Jen said in a report.

"The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions," Jen wrote. "Exceptional actions taken by the U.S. and its allies against Russia have startled large reserve-holding countries, most of which are from the Global South."

According to Jen's calculations, the greenback's share of official global reserve currencies dropped from 73% in 2001 to about 55% in 2021. And in 2022, it tumbled to 47% of total global reserves.

Coordinated sanctions against Russia alerted many countries, pushing them to seek currency alternatives — for trade settlements and reserve build-up.

"It seems reasonable to speculate that the main driver of the collapse in USD's reserve status in 2022 may have reflected a panicked reaction to property rights being jeopardised. What we witnessed in 2022 was sort of a 'defund-the-global-police' moment, whereby many reserve managers in the world disagreed with the conduct of both Russia and the U.S.," the note said.

The note added that analysts are failing to notice these changes because the nominal value of the world's central banks' dollar holdings is usually used in calculations and changes in the price of the dollar go unaccounted for.

"Adjusting for these price changes, the dollar, we calculate, has lost some 11 percent of its market share since 2016 and double that amount since 2008," Jen wrote.

Jen is a well-known analyst who coined the "dollar smile" theory while at Morgan Stanley. The theory's premise is that the USD does well when the U.S. economic growth runs at full speed.

King dollar's position as the world's reserve currency hangs on how quickly and successfully other financial markets develop.

"If the financial markets outside the U.S. could thrive (growing in size and becoming ever more energetic, without being unstable), and if the opposite happens in the U.S., the dollar could very well meet its demise. This is, however, not an imminent risk, in our opinion, though the trends are heading in that direction," Jen described.

Analysts who continue to ignore the de-dollarization trend are being too complacent. "If the U.S. makes more policy errors and abandons the culture of self-examination, there will likely come a time when much of the rest of the world will actively avoid using the dollar," Jen wrote. "While the Global South is unable to totally avoid using the dollar, much of it has already become unwilling to do so."

More and more countries, led by China and Russia, are making bilateral trade agreements that exclude the U.S. dollar. The yuan is already the most traded currency in Russia, according to data compiled by Bloomberg. This happened only in February after the yuan surpassed the dollar in monthly trading volume for the first time.

China recently completed the first yuan-settled LNG trade. China also struck a deal with Brazil to trade in their own country's currencies.

At the same time, China and Malaysia are discussing the creation of an Asian Monetary Fund to reduce reliance on the U.S. dollar, while India and Malaysia announced that they abandoned trading in U.S. dollars and can now settle in Indian Rupees.

Also, central banks have been flocking to gold as a preferred reserve asset, buying record amounts in 2022.

Former Goldman Sachs chief economist Jim O'Neill recently called on the BRICS bloc — made up of Brazil, Russia, India, China, and South Africa — to expand and challenge the dominance of the U.S. dollar.

And U.S. Treasury Secretary Janet Yellen admitted this week that using sanctions could threaten the dollar's dominance.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slides as yields climb, doubts grow about Fed's rate-hike pause

(Reuters) - Gold prices fell below the key $2,000 level on Wednesday as U.S. yields marched higher, with investors turning sceptical about potential U.S. rate cuts later this year.

Spot gold was down 0.5% at $1,994.02 per ounce by 1:40 p.m. ET (1740 GMT), having shed as much as 1.8% to a two-week low of $1,969.09 earlier in the session. U.S. gold futures settled down 0.6% at $2,007.30.

"Once gold breached that $2,000 mark, there were a lot of stop losses that were triggered," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

"Anytime you get earnings, you get a lot of people chasing individual stocks and that could also cause them to not invest so much in metal."

The dollar strengthened 0.2%, underpinned by U.S. yields climbing to a near one-month high, with markets now pricing in an 85% chance of a 25-basis point rate hike at the Federal Reserve's May 2-3 meeting, according to CME's FedWatch tool.

St. Louis Fed chief James Bullard said on Tuesday that the U.S. central bank should continue raising interest rates as recent data shows inflation remains persistent while the broader economy seems poised to continue growing, even if slowly.

A stronger dollar weighs on overseas demand for greenback-priced gold, while higher rates blunt non-yielding bullion's appeal.

Rate-hike expectations for the (Fed's) May meeting have risen, which has pressured gold back below $2,000, at least in the short term, said Standard Chartered analyst Suki Cooper.

Markets will scan more upcoming remarks by Fed officials this week, ahead of a blackout period that starts on April 22 before the central bank's May meeting.

Silver rose 0.2% to $25.27 per ounce, platinum gained 0.7% to $1,089.73, while palladium was mostly flat at $1,608.47.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Workers’ Day

May 1

Africa Day

May 25

Counters trading under cautionary

CBZH

TSL

Fidelity

Willdale

FMHL

ZBFH

GetBucks

Zimre

Seed Co

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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