Bulls n Bears Daily Market Commentary : 01 August 2023

Wed Aug 2 07:14:27 CAT 2023

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Bulls n Bears Daily Market Commentary : 01 August 2023

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

ZSE commentary

Zimbabwe Stock Exchange (ZSE)

The overall Market Cap for today boosted by 2.41% to close at ZWL9.40
trillion. Total turnover gained 34.78% to close at ZWL 3.24 billion. In
addition, total volumes traded accumulated to ZWL2.92 million, that is,
39.05% up compared to yesterday. BAT, Delta and OK Zimbabwe were today's
three most traded counters, with a total contribution of 92.51% to the total
turnover.

The benchmark All-Share Index advanced by 2.44% to close at 117,551.66
points at the back of 10 risers against 10 decliners. The Top 15 Index
gained 3.05% to close at 74,498.96 points and the Top 10 Index acquired
2.76% as it closed at 53,277.42 points.

The mover's list for today was led by BAT Zimbabwe and Dairiboard after
advancing by 13.72% and 13.07%, respectively. Delta, Rainbow Tourism Group
and EcoCash Holdings Ltd trailed the list after gaining 8.46%, 4.84% and
0.79% to close at $1,707.88, $130.00, and $121.00, respectively.

The shakers list for today were led by OK Zimbabwe, Zimre Holdings and Seed
Co which lost 7.55%, 4.30% and 2.59%, respectively. Star Africa Corporation
and TSL Limited were also among the defeated after deteriorating by 0.63%
and 0.33%, respectively.

Victoria Falls Stock Exchange (VFEX)

The VFEX All Share Index dropped by 2.52% as it closed at 66.59 points.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand slams through R18/$ on dollar strength - but EFF jitters, data may have
contributed

However, Elon Musk's public criticism of the EFF and weak local economic
data may also have weighed on the local currency.

For more financial news, go to the News24 Business front page.

The rand took a big hit on Tuesday as the dollar advanced - but local
factors, including jitters over the EFF, may also be weighing on the
currency, analysts say.

By late afternoon, the rand lost almost 1.5% against the dollar to trade at
R18.17/$.

The dollar climbed to a fresh three-week high against an index of different
currencies ahead of a job data release that could give clues on whether the
Federal Reserve is set to stick to its monetary tightening plan, while weak
economic data in Asia raised global growth fears boosting the safe-haven
dollar, Reuters reported.

"The greenback has found renewed strength in recent days thanks to data
highlighting the resilience of the world's largest economy, where signs of
disinflation have been offset by strength in consumption, suggesting that a
severe recession can be avoided, even with interest rates at 5.5 percent,"
market analyst Fawad Razaqzada at City Index and FOREX.com told AFP.

However, the rand also weakened more than 1% against other key currencies -
it was trading at R23.21/pound and R19.94/euro - perhaps reflecting local
concerns as well, says Schalk Louw, a portfolio manager and strategist at
PSG Wealth Old Oak.

As South Africa faces sizeable diesel and petrol price increases on
Wednesday, Louw warned that higher oil prices could bring renewed
inflationary pressures. In July, oil saw its largest monthly increase in
more than a year as demand grew stronger while oil producers were cutting
production, Bloomberg reported.

"There is no guarantee that oil prices could not trigger a second round of
inflation," said Louw.

This could keep interest rates higher for longer, particularly in the US,
where economic data remains strong.

In addition, political jitters may also have hit the rand, says Louw.

On Tuesday, tech billionaire Elon Musk accused EFF leader Julius Malema of
"openly pushing for the genocide of white people in South Africa" on his
social media platform X, formerly known as Twitter. This came after Malema
chanted the struggle song Kill the Boer at the party's 10th-anniversary
rally this weekend.

Meanwhile, new data painted a bleak picture of the South African economy,
which has been hit by load shedding and Transnet woes.

Sentiment in the local manufacturing industry fell to its weakest level
since the July riots in 2021, Bloomberg reported. Absa Purchasing Managers'
Index, compiled by the Bureau for Economic Research, fell to 47.3 in July
from 47.6 a month earlier.

"It is also the sixth consecutive month below 50 - indicating contraction in
an industry that accounts for about 14% of South Africa's gross domestic
product - its most sustained downturn since 2019," Bloomberg noted.

On Monday, South Africa's trade deficit of R3.5 billion in June came in much
weaker than expected. This was due in part to a sharp fall in vehicle
exports.

Since the start of the year, South Africa's total trade balance surplus came
to R5.6 billion - from a bumper R129.6 billion in the same period last year.

"Going forward export activity is likely to be affected by the fragile
global economic environment while imports will be constrained by weak
domestic demand and investment," noted Investec economist Lara Hodes.

Nigeria

Naira to strengthen to N700/$ as Tinubu eyes foreign equity investments -
Edun

The Nigerian naira should exchange at N700 per US dollar once the Central
Bank of Nigeria has fully reversed all the damaging policies of the previous
administration and efforts towards raising equity from foreign investors
lead to more dollar inflows, Wale Edun, who is nailed on to be the country's
next finance minister, said during his Senate screening Tuesday.

"The issue of foreign exchange is clearly uppermost in the minds of the
monetary authorities," Edun said.

"For a country with revenue flows from oil revenues, from remittances, from
other non-oil exports, and from financing of over $100 billion a year, there
is no reason that there should not be a stable exchange rate," Edun said.

"All other things being equal and provided inflation is kept under control,
the N860/$ that we are seeing is not backed up by the fundamentals of the
Nigerian economy," he said.

Edun who said "The fundamental value of the naira should be somewhere around
700," also sounded a note of caution to currency speculators.

"As liquidity flows in and the rate comes rapidly down, there is a chance
that they (speculators) could lose their shares, it is just a warning," Edun
said.

The naira, which has lost over 60 percent of its value against the dollar
since the currency was floated in a marked departure from the previous
practice where the CBN tightly controlled the exchange rate, has come under
pressure since the much-awaited foreign exchange reform in June.

The naira closed at N757/$ Tuesday according to FMDQ data, lower than the
previous day's closing rate. The currency traded even weaker at N871/$ in
the parallel market. Banks are now asking clients on a long queue of dollars
to bid at N900/$ to stand a chance of getting the scarce greenback as the
CBN struggles to meet a huge pile of demand.

"The rate, when you move aside speculation and the fact that there is as a
result of foreign exchange managing practice of the past, the inefficiencies
and the corruption involved has meant that there is an overhang of unpaid
dollar bills and that is what is putting pressure on the exchange rate and
that is what night and day the monetary authorities and the monetary team of
Mr. president is looking to resolve by raising revenue, by looking at other
sources of investment funding, by attracting investment funds, equity funds
not debt, from around the world interested in investing in the Nigerian
economy," Edun said.

Details later.

 <mailto:info at bulls.co.zw> 

Global Markets

Japanese yen extends losses against dollar

The Japanese yen continues to slide and is down 1.41% this week. In
Tuesday's European session, USD/JPY is trading at 143.16, up 0.64%.

Dollar/yen powers above 143

The yen continues to lose ground against the US dollar. Earlier in the day,
the yen weakened to 143.18, its weakest level against the US dollar since
July 7th. The yen has plunged 370 basis points since Friday when the Bank of
Japan stunned the markets and tweaked its yield control (YCC) policy.

The Bank of Japan has loosened its YCC and this has sent the yen sharply
lower. The BoJ had set a rigid cap of 0.50% yields on 10-year government
bonds but has turned that cap into a yardstick, saying it would offer to
purchase JGBs at 1%. The 10-year yield rose has risen to a multi-year high
of 0.61% and there is a strong possibility of the yield continuing to rise.

The BoJ has been an outlier of central banks, sticking to its policy of
negative rates. True, inflation in Japan is much lower than in other
developed economies, but there is growing criticism that this policy is
outdated and the central bank needs to take further steps toward
normalization. Governor Ueda stressed on Friday that the YCC tweak was not a
move towards normalization and we're unlikely to see any tightening from the
BoJ unless inflation moves significantly higher.

In the US, ISM Manufacturing PMI is today's key release. The manufacturing
sector remains in the doldrums and has been in decline since October, with
readings below the 50.0 level. Demand has been weak and production has been
declining due to the lack of orders. In June, the Manufacturing PMI slipped
to 46.0, the lowest level since May 2020. Another decline is expected for
July, with a consensus estimate of 46.8 points.

.

USD/JPY Technical

USD/JPY has pushed above resistance at 142.63. Above, there is resistance at
144.09

There is support at 141.47 and 140.35

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slips 1% as US dollar, Treasury yields tick higher

Gold prices fell over 1% on Tuesday, weighed down by a stronger dollar and
an uptick in bond yields, while investors looked forward to more U.S.
economic data this week that could influence the Federal Reserve's policy
stance.

Spot gold

was down 1% at $1,944.0217 per ounce by 4:17 p.m. ET, while U.S. gold
futures dropped 1.3% to $1,981.6.

"Gold prices are softening as we see movement higher in the U.S. dollar.
There is also some profit taking ahead a nonfarm payroll report in the
week," said Edward Moya, senior market analyst at OANDA.

The dollar index rose 0.5% to a three-week high against its rivals, making
gold more expensive for other currency holders.

U.S. Treasury yields rose as investors positioned for the Treasury's
refunding announcement on Wednesday and anticipated more economic resilience
going forward, despite data on Tuesday showing a slowdown in activity.

Data on Tuesday showed U.S. job openings fell to the lowest level in more
than two years in June, but remained at levels consistent with tight labour
market conditions.

Meanwhile, U.S. manufacturing appeared to stabilize at weaker levels in July
amid a gradual improvement in new orders.

The focus now shifts to the key U.S. nonfarm payrolls report for July due on
Friday. Overall payrolls are forecast to rise by 200,000 jobs in July after
increasing by 209,000 in June.

Gold ended July with 2.5% gains - its biggest monthly increase in four
months- driven by hopes that major global central banks are nearing a peak
with interest rate hikes amid signs of slowing inflation.

"I think the Fed are going to skip rate hike in the next meeting if we see
inflation come down ... gold prices could be range bound in the near-term,
but it will eventually go higher to above $2,000 per ounce," Moya said.

Higher interest rates increase the opportunity cost of holding non-yielding
bullion.

Elsewhere, spot silver fell 1.9% to $24.2897 an ounce, platinum fell 2% to
$930.4544 and palladium dropped 3.2% to $1,241.3754. 

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Heroes' Day

Aug 14

Defence Forces Day

Aug 15

zIMBABWE

2023 harmonised elections

August 23

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

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
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for guideline purposes only and sourced from third parties.

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