Bulls n Bears Daily Market Commentary : 10 August 2023

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Bulls n Bears Daily Market Commentary : 10 August 2023

 

 	

 

 

 	


ZSE commentary

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

Zimbabwe Stock Exchange (ZSE)

 

The local bourse lost 1.66% to close with an overall Market Cap of ZWL$9.51 trillion. Total turnover and Total volumes traded aggressively gained 1,054.05% and 270.05% to close at ZWL$2.16 billion and ZWL2.95 million, respectively. Delta, Meikles Limited and Econet were today's three most traded counters, with a contribution of 97.71% to the total turnover.

 

The All-Share Index declined by 1.69% to 119,239.18 points at the back of 6 risers and 9 counters trading in the negative. The Top-15 index declined by 1.96% to close at 76,269.50 points. The Top 10 Index also dwindled by 2.36% to close at 55,593.93 points.

 

Willdale topped the risers' list for the day after gaining 2.24% to close at $18.25. EcoCash Holdings Ltd, Zimbabwe Newspapers and Star Africa Corporation capped the list after each added 0.64%, 0.20% and 0.11% to close at $140.72, $10.00, and $5.28, respectively.

 

Meikles Limited traded top of the decliners list for the day after shedding off 14.36% to later close at a price of $600.31. Delta, Ariston, Masimba Holdings and Bridgefort Capital Ltd also traded in the negative today. Each of these counters lost 4.45%, 3.99%, 3.40% and 2.98% to close at $1,949.97, $24.00, $908.60, and $16.59, respectively.

 

Victoria Falls Stock Exchange (VFEX) 

 

The VFEX ALL Share Index advanced by 1.19% to close at 69.67 points.

 

 

 

Global Currencies & Equity Markets

 

South Africa

 

 

South African rand jumps after U.S. inflation data

(Reuters) - The South African rand strengthened against the dollar on Thursday, helped by dollar weakness after data showed a moderate rise in U.S. inflation in July.

 

At 1514 GMT, the rand traded at 18.7375 against the dollar , up about 1.33% on its previous close, having risen as much as 1.7% to the dollar earlier.

 

But it is still down almost 5% so far this month.

 

The dollar was last trading around 0.15% weaker against a basket of global currencies.

 

Traders focused on the U.S. Consumer Price Index (CPI) data which came in at 3.2% in July, up from 3% in June.

 

"The rand appears to be taking the U.S. CPI print in its stride, with the data in itself not supporting a case for further (rand) weakness at this time," Danny Greeff, co-head of Africa at ETM Analytics, told Reuters.

 

Markets are pricing in a more than 50% chance that the Fed is done with interest rate hikes this year as inflation has moderated, but this may change.

 

"Nothing in the data suggested that the U.S. Federal Reserve would need to hike rates again in September, or push out eventual rate cuts for that matter," Greeff added.

 

The rand often takes cues from global drivers like U.S. economic policy.

 

"The rand continues to suffer wild waves, where it underperforms for weeks on end, and then similarly outperforms for weeks," Rand Merchant Bank analysts said in a research note.

 

On a positive note for the South African economy, data on Thursday showed manufacturing output rose more than expected to 5.5% year on year in June, and that mining output rose 1.1% year on year in June when a small contraction was predicted.

 

On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTPOI) closed 1.23% higher. South Africa's benchmark 2030 government bond was also stronger, with the yield down 9.5 basis points to 10.120%.

 

 

 

 

Kenya

 

Shilling wipes out Sh13bn payout to foreign investors

The sharp depreciation of the Kenyan shilling against the dollar has hit foreign-owned firms and investors with steep exchange losses on expatriated dividends and profits, threatening Kenya’s position as a preferred investment destination.

 

An analysis of dividend repatriation across 13 listed companies shows that foreign investors have taken a Sh13 billion haircut on currency depreciation alone.

 

Investors lost the billions as a result of buying the hard currency from the local market to send money abroad, negating most of the year-on-year gains they may have enjoyed in shilling terms.

 

A challenging economy has also forced some of the larger companies at the Nairobi Securities Exchange (NSE) such as Safaricom and East African Breweries (EABL) to cut the actual dividend payouts this year compared to 2022, further deepening the year-on-year hit on repatriated payouts.

 

Since last August, the shilling has depreciated against the dollar by 20 percent to an average of 143.27 units as per the official exchange rate published by the Central Bank of Kenya (CBK).

 

Retail buyers in tier-one commercial bank halls are, however, paying between Sh148 and Sh149 per unit, a Business Daily spot-check in their city centre branches showed on Wednesday. These large lenders supply the bulk of forex to institutional investors.

 

Companies with large foreign ownership are some of the biggest dollar buyers during their dividend season for onward payment to their external shareholders.

 

“Investors will lose when repatriating their profits. In addition, unpredictability in the exchange rate makes investment risky, and investors love predictability,” said Prof XN Iraki, an economist at the University of Nairobi.

 

 

The exchange losses have, for instance, seen Vodacom Group and Vodafone, which own a combined 40 percent stake in Safaricom, miss out on tens of millions of dollars in dividends.

 

In 2022, the two earned a total of Sh22.2 billion in dividends (Sh1.39 per share) from their stake, which at the exchange rate of 119.10 units a year ago was worth $186.7 million.

 

Their 2023 dividend of Sh19.2 billion (Sh1.20 per share), while being Sh3 billion less in shilling terms, is worth $134 million at today’s dollar rate—a fall of $52.7 million (Sh7.6 billion).

 

Standard Chartered Plc, which owns a 73.9 percent stake in its Kenya subsidiary, saw a fall of Sh1.1 billion in dividends after the local unit cut its payout to Sh16 last year from Sh20 in 2022.

 

Factoring in the exchange rate movement, however, the parent saw its dollarized dividend fall by $15.7 million (Sh2.2 billion at today’s rate).

 

The weaker shilling has also had the effect of cutting the gains for parent companies that enjoyed enhanced dividend earnings from Kenya.

 

South Africa’s Standard Bank, the majority owner of Stanbic Kenya, earned Sh3.73 billion this year compared to Sh2.66 billion last year after the unit raised its payout to Sh12.6 per share from Sh9.

 

In dollar terms, however, the change was worth $3.7 million (Sh530 million) once the rate movement between the two periods is considered.

 

The main concern now is on the risk of these exchange losses discouraging investment flows into the country, as well as reinvestment of the earnings into the local economy given the diminishing real return going forward.

 

“It brings investor apathy, especially among those who can easily get a similar rate of return in their home markets. It also discourages reinvestment, and when the repatriation is not matched by inflows it creates more pressure on the local currency and thus a prolonged cycle of weakening,” said Wesley Manambo, an analyst at Genghis Capital.

 

Multinationals that report earnings in dollars for local units have also been hit by exchange losses.

 

Vivo Energy Group Plc, the parent company of Vivo Energy Kenya, disclosed that the local operation recorded a 15 percent drop in revenue to $785 million for the half year ended June, from $924 million in the corresponding period last year.

 

In shilling terms, going by the exchange rate in June last year, the 2022 half-year revenue stood at Sh108.9 billion, while that of June 2023 at the prevailing rate was worth Sh110.3 billion.

 

The multinational partly blamed lower sales seen across its markets on the negative effect of depreciating currencies on margins.

 

Airtel Africa, in its quarter one 2024 financial report covering the three months to June, said that its East Africa region’s revenue of $519 million, which represented a year-on-year growth of 14.2 percent, would have been 22.8 percent higher without depreciation of local currencies.

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

US dollar inches lower ahead of inflation report

(Reuters) - The U.S. dollar drifted lower on Wednesday in thin rangebound trading, with investors looking ahead to Thursday's U.S. consumer prices report for indications on where the Federal Reserve's monetary policy is headed.

 

The greenback posted steeper losses earlier in the session, particularly after data showing the Chinese economy slipped into deflation last month. That raised the chances of China launching additional stimulus measures and nudged investors into risk assets.

 

Reported dollar selling by state-owned Chinese banks also helped the yuan rally from a one-month low, dealers said. The Chinese central bank's stronger-than-expected exchange-rate fixing at 7.1588 per dollar before the open signaled its discomfort with the yuan's recent declines.

 

The greenback was last down 0.1% against the offshore yuan at 7.227 .

 

Investors are now focused on Thursday's U.S. inflation data, which looms large in a market hungry for clues on the path for Fed policy. Wall Streets economists expect the year-on-year core consumer price index (CPI) to have risen 4.8% in July, unchanged from the previous month.

 

"We're still pretty convinced about inflation in the U.S. continuing to ease, led by a disinflation in shelter prices - which is 35% of the headline CPI index," wrote Macquarie analysts led by FX & rates strategist Thierry Wizman.

 

"We expect that CPI may come in on the low side of expectations (4.7% year-over-year) and do so because of disinflation in primary and owner-equivalent rents."

 

The dollar index , which measures the performance of the U.S. currency against six others, slipped 0.1% to 102.46, partly reversing Tuesday's rise.

 

The euro rose 0.2% to $1.0976, while sterling slid 0.2% to $1.2721.

 

European markets gained after equities tumbled the day before as the Italian government announced a surprise 40% windfall tax on banks.

 

Italy's finance ministry subsequently clarified that the one-off measure, which targets gains from banks' higher interest rates, would not amount to more than 0.1% of their total assets.

 

In China, the country's consumer prices fell for the first time in more than two years in July. Rather than lifting safe-haven appetite for the dollar, the figures reinforced the view that the Chinese government might take steps to underpin the economy with monetary stimulus.

 

There were also more dovish signals from Fed officials overnight, with Philadelphia Fed President Patrick Harker suggesting interest rates are high enough already, echoing the view of Atlanta Fed President Raphael Bostic.

 

The message has been far from uniform though, with Fed Governor Michelle Bowman saying on Monday further hikes are likely.

 

Against the yen, the dollar rose 0.2% to 143.70 yen .

 

"With the 10-year yield spread between the U.S. and Japan still holding at roughly 3.4% ... and the prospect of any official BOJ (Bank of Japan ) rate hike seemingly pushed back, dollar/yen has resumed its year-to-date rally and may soon hit fresh 2023 highs, especially if (Thursday's) U.S. CPI report comes in hotter than expected," said Matthew Weller, global head of research at FOREX.com and City Index.

 

========================================================

Currency bid prices at 3:05PM (1905 GMT)

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold declines ₹250 to ₹59,800/10 grams; silver tumbles ₹300

Gold price declined ₹250 to ₹59,800 per 10 grams in the national capital on August 10 amid weak cues in the overseas market, according to HDFC Securities.

 

The precious metal had closed at ₹60,050 per 10 grams in the previous trade.

 

Silver also plunged ₹300 to ₹73,300 per kg.

 

Gold declined further on August 10, with spot gold prices in the Delhi markets trading at ₹59,800/10 grams (the lowest level since July 13), down by ₹250 against its previous day close, Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, said.

 

In the global markets, gold and silver were quoting lower at $1,919 per ounce and $22.80 per ounce, respectively.

 

Today's U.S. CPI inflation data for July will be crucial for the metal. Softer than expected CPI (Consumer Price Index) data may support the metal prices to some extent.

 

However, the upside may remain capped as most of the recent US macroeconomic data have been mostly upbeat, Praveen Singh - Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, said.

 

 

 


 

INVESTORS DIARY 2023

 


Company

Event

Venue

Date & Time

 

 	

 

Heroes’ Day

 

Aug 14

 

 	

 

Defence Forces Day

 

Aug 15

 

 	

Padenga

EGM

Royal Harare Golf Club

August 16 – (10am)

 

 	

Border Timbers

EGM

4 – 12 Paisley Road, Southerton, Harare, or virtually :https://escrowagm.com/eagmZim/Login.aspx” 

August 18 – (10am)

 

 	

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 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.

 

 	

 

 

 	

(c) 2023 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:  <mailto:info at bulls.co.zw> bulls at bullszimbabwe.com Tel: +263 4 2927658 Cell: +263 77 344 1674

 

 	

 

 

 	
							

 

 

 

 

 

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