Bulls n Bears Daily Market Commentary : 04 August 2023

Fri Aug 4 16:53:25 CAT 2023

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Bulls n Bears Daily Market Commentary : 04 August 2023

 <https://www.dulys.co.zw/>  ZSE commentary

Zimbabwe Stock Exchange (ZSE)

The overall Market Cap acquired 1.84% to close at ZWL9.77 trillion today.
Total turnover advanced by 43.78% to close at ZWL 2.24 billion. Compared to
yesterday, total volumes traded escalated by 407.97% to close at ZWL6.34
million. Delta, EcoCash Holdings Ltd and Nampak Zimbabwe were today's most
traded counters, with a total contribution of 90.42% to the total turnover.

The benchmark All-Share Index attained 1.89% and closed at 122,498.00 points
at the back of 11 risers against 12 decliners. The Top 15 Index advanced by
2.34% to close at 78,721.18 points while the Top 10 Index also increased by
3.48% ending the day at 57,773.36 points.

Trading in the positive was Willdale, Dairiboard and Delta after advancing
by 11.46%, 10.41% and 9.29%, respectively. FBC Holdings and Star Africa
Corporation trailed the list after gaining 5.88% and 5.47% hence closing at
$900.00, and $5.28, respectively.

The shakers list for today was led by Nampak Zimbabwe and TSL Limited with
losses of 15.00% and 14.33%, respectively. Seed Co, Hippo Valley and EcoCash
Holdings Ltd were also among the defeated after pulling back by 5.27% and
2.73%, respectively.

Victoria Falls Stock Exchange (VFEX)

The VFEX All Share Index gained 2.71% to close at 68.29 points.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand gains on U.S. jobs data after 'torrid week'

(Reuters) - The South African rand recouped some losses against the dollar
on Friday after the U.S. currency fell on employment data.

At 1352 GMT, the rand traded at 18.4925 against the dollar , over 1%
stronger than its previous close.

The dollar last traded at 101.87, around 0.6% weaker against a basket of
global currencies.

Payrolls data out of the U.S. on Friday showed that nonfarm employment grew
moderately in the world's biggest economy in July, sending the dollar into a
tailspin and boosting the rand.

Despite Friday's gains, the rand has slumped over 5% against the greenback
this week on concerns over global economic growth amid an escalation in
risk-off sentiment.

"The domestic currency has had a torrid week, retracing sharply from
overbought levels... The depreciation of the rand this week unfortunately
unwinds a lot of progress seen in the weeks preceding," said Shaun Murison,
senior market analyst at IG.

The rand slumped this week after rating agency Fitch on Tuesday downgraded
the U.S. from AAA to AA+, fuelling risk-off sentiment and putting pressure
on emerging market currencies.

Anezka Christovova, an emerging markets strategist at JP Morgan, on Thursday
said further rand weakness was expected after the South African currency
deviated from normal drivers.

The rand had performed well on reduced intensity in rolling blackouts in
June, which drove the market to price out idiosyncratic risks, Christovova
added.

However, the power cuts, locally referred to as "loadshedding", increased in
intensity in July.

"Our economist expects a more sustained improvement in energy availability
only in H2 2024," Christovova said.

Shares on the Johannesburg Stock Exchange were stronger, with both the
blue-chip Top 40 (.JTOPI) and broader all-share (.JALSH) up around 0.3%.

South Africa's benchmark 2030 government bond was stronger, with the yield
down 14.5 basis point to 10.295%.

Nigeria

Weakening naira dents profits in Nigeria

Recent financial results published by some of Nigeria's largest publicly
traded companies show that a weakening naira is denting profits even as
revenues increase.

The naira has shed almost half of its value against the US dollar on
official markets since June, when the new administration led by President
Tinubu encouraged the central bank to stop maintaining an artificially high
exchange rate.

The fall in global oil prices has dented the foreign exchange inflows for
the oil-exporting nation, which has also seen a wider drop in foreign direct
investment (FDI), with both trends putting pressure on the naira.

Emerging market currencies across Africa have generally trended downwards
over the last 12 months or so, with higher interest rates in the US
encouraging traders to obtain greater exposure to the greenback at the
expense of "riskier" currencies such as the naira.

Profits undermined

While many analysts see this as a necessary part of Tinubu's wider package
of economic reform, the speed at which the naira is depreciating has caused
problems for some of the country's biggest companies.

Last week, one of Nigeria's largest companies by market capitalisation, MTN
Nigeria, released its results for the first half of the year. This showed
that revenue accelerated to a record level of N1.2tn (approximately $1.6bn)
in the first half of 2023 but that profits dropped by 29% in the same
period.

This was largely attributed to significantly higher foreign exchange and
financing costs, which soared by over 160%. Higher business costs generally
in light of high levels of inflation, which is currently running at about
23% in Nigeria, also dented profits further. The share price of MTN, which
is listed on the Nigerian Exchange in Lagos, fell by 5% after the results
were announced, before bouncing back at time of writing.

Other major companies in Nigeria have seen similar declines in their profits
as a result of the naira's depreciation. Dangote Cement posted a 14% decline
in the second quarter, having reported an exchange rate loss of N103.8bn
after Nigeria's move to a flexible exchange rate regime. Guinness in Nigeria
also posted a loss for the same reason. Despite rising revenue in the year
ending June 2023, the company reported N49bn in exchange rate losses,
leading to an overall loss of N18.1bn.

Weak naira undermines purchasing power

Rume Ophi, a financial analyst based in Lagos, tells African Business that
these results show "we have the numbers in Nigeria [in terms of revenues]
but our purchasing power is not measurable with the stronger economies of
the world."

As citizens have weaker purchasing power compared to some other markets, in
large part thanks to a particularly weak national currency, this means that
companies cannot expect to see their profits as high in Nigeria: "Take
Dangote for example - if the average Nigerian buys any of their products,
you cannot expect their profits to be the same as in South Africa."

He adds that major companies have suffered under a doubly punitive
macroeconomic environment which forces them to import goods using a strong
and expensive US dollar, and sell them with a weak and non-competitive
Nigerian naira.

The naira continues to hover near all-time lows, which is likely to put
further pressure on companies battling challenging foreign exchange
conditions.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar slips after U.S. July jobs gain lower than expected

(Reuters) - The dollar eased on Friday after the number of jobs created in
July was slightly lower than expected, but wages rose more than forecast and
the unemployment rate fell, suggesting a still strong U.S. labor market that
may keep interest rates higher for longer.

Nonfarm payrolls increased by 187,000 jobs last month, the Labor Department
said. Data for June was revised lower to 185,000 for the 281,000 initially
reported. Economists polled by Reuters had forecast a gain of 200,000 jobs
for July.

The dollar index , a measure of the U.S. currency against six peers, fell
0.185%. The euro edged up 0.31% to $1.0978 and the yen strengthened 0.16% at
142.31 per dollar.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold regains ground as U.S. dollar, yields tick lower after jobs data

Gold prices rose on Friday after a slightly weaker-than-expected U.S. jobs
report pushed the dollar and Treasury yields lower, offering some respite to
bullion which was still on track for its worst week in six.

Nonfarm payrolls increased by 187,000 jobs last month, the Labor Department
said in its closely watched employment report. Economists polled by Reuters
had forecast a gain of 200,000 jobs.

Spot gold rose 0.5% to $1,943.09 per ounce by 09:23 a.m. EDT (1323 GMT).
Bullion, however, was down 1% so far this week.

U.S. gold futures gained 0.5% to $1,978.60.

"The jobs report has allowed the market to propose that the Federal Reserve
is not as likely to raise interest rates. As a result, we've seen bond
yields drop along with the dollar and that is certainly supporting the price
of gold," said David Meger, director of metals trading at High Ridge
Futures.

Following the data, the U.S. dollar fell 0.5% against its rivals, making
gold less expensive for other currency holders. Benchmark U.S. 10-year
yields retreated from a nine-month high.

According to the CME's FedWatch Tool, the probability that the Fed leaves
rates unchanged at its September 19-20 meeting is now around 85% from around
78% just prior to the data coming out.

Gold is highly sensitive to rising U.S. interest rates, as these increase
the opportunity cost of holding non-yielding bullion.

"The data was bit weaker-than-expected, but not dramatically so, which is
why a small slight rise in prices this morning... Any dips (in gold) over
the course of the next couple weeks, is likely going to be buying
opportunity," Meger said.

Elsewhere, spot silver gained 0.4% to $23.64 per ounce and platinum was
steady at $911.18. Both were set for their third consecutive weekly loss.

Palladium slipped 0.6% to $1,250.84 per ounce.

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
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
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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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