Bulls n Bears Daily Market Commentary : 21 August 2023

Tue Aug 22 06:17:01 CAT 2023

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Bulls n Bears Daily Market Commentary : 21 August 2023

ZSE commentary

Zimbabwe Stock Exchange (ZSE)

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

The local bourse continues to extend gains. During today's trading session
the market added 0.19% with an overall Market Cap at ZWL$9.59 trillion.
Total turnover aggressively increased by 562.98% to ZWL$ 1.32 million while
Total volumes traded excessively increased by 4,199.17% to 25.30 million.
Delta, Turnall, and Econet were today's three most traded counters,
constituting about 76.18% of the total turnover.

The All-Share Index increased by 0.18% to 120,725.86 points at the back of
12 risers and 7 decliners. The Top-15 index gained 0.56% to close at
77,500.30 points. The Top 10 Index also increased by 0.25% to close at
56,646.32 points.

Rainbow Tourism Group led today's gainer's list after adding 7.41% to close
at $145.00. Nampak Zimbabwe and CBZ Holdings also gained 5.00% and 3.88% to
close at $147.00 and $800.00, respectively.

On the laggards' list, Masimba Holdings lost 13.58% to close at $667.49.
First M. Ltd and Seed Co trimmed 2.86% and 1.15% to close at $170.00 and
$1,124.71, respectively.

Victoria Falls Stock Exchange (VFEX) 

The VFEX All Share Index lost 0.38% to close at 70.99 points. Simbisa Brands
Ltd was the most traded counter on the VFEX Exchange, contributing 51.41% of
the total turnover.

Global Currencies & Equity Markets

South Africa

South African rand weakens ahead of BRICS, CPI

(Reuters) - The South African rand eased on Monday, at the start of a week
when Johannesburg hosts the BRICS summit of emerging market economies and
the government releases monthly inflation figures.

At 1545 GMT, the rand traded at 19.0150 against the dollar , about 0.1%
weaker than its previous close.

The dollar was trading up about 0.07% against a basket of global currencies.

The rand has fallen over 6% against the U.S. dollar this month and nearly
12% this year.

>From Tuesday to Thursday, South Africa will host the BRICS summit of
emerging market economies, welcoming leaders from Brazil, Russia, India and
China.

More than 20 countries have submitted formal requests to join the bloc, with
BRICS' potential expansion on the agenda.

On Wednesday, South Africa's July consumer price index will be published
(ZACPI=ECI), (ZACPIY=ECI). Inflation was 5.4% in June and within the South
African Reserve Bank's (SARB) target range of 3%-6%.

The SARB will use this figure to inform its future interest rate path when
it meets in September.

South Africa's benchmark 2030 government bond was weaker, with the yield up
6.5 basis points to 10.535%.

Shares on the Johannesburg Stock Exchange rose, with the blue-chip Top-40
index (.JTOPI) closing about 1% higher.

Nigeria

Naira flat ahead of new guideline for importers, BDCs

Nigeria's local currency, Naira has for the past three days remained flat at
N860/$ amid cooling demand pressure at the parallel segment of the market.

On Monday August 21, parallel market FX dealers bought and sold dollar to
customers at N855 and N860, almost same with last Thursday August 17 when
they bought the greenback at N840 and sold at N860.

The Naira had in the trading week to August 18 gained ground by 48 basis
points (bps) to close at N739.52/$ at I&E FX Window from N740.60/$ the
preceding week.

The Central Bank of Nigeria recently announced the commencement of the Price
Verification System Portal (PVS) as requisite for Form 'M' application.

The apex bank also announced the operational mechanism for Bureau De Change
Operations in Nigeria.

For BDCs, the CBN said among others that the spread on buying and selling by
BDC Operators shall be within an allowable limit of -2.5percent to +2.5
percent of the Nigerian foreign exchange market window weighted average rate
of the previous day.

This is in addition to mandatory rendition of BDC Operators statutory period
reports on the Financial Institution Foreign Rendition System (FIFX)

CBN said that from August 31, all applications for Form 'M', which is the
declaration of intention to import goods into Nigeria, shall be accompanied
by a valid Price Verification report from the PVS portal. With the PVS, the
apex bank could distinguish those who genuinely need forex and halt the
crisis in the sector.

"We expect to see the appreciation of the Naira continue as the CBN
continues to implement its recent FX policies," said United Capital Research
analysts, who also expect continued pressure on the Naira across all market
segments, "given that FX pressures will persist as Dollar earnings remain
weak".

Kalu Aja, a personal finance consultant, who noted that the system was
created to stop importers from using imports to take dollars out of the
economy, adding that, "To counter this, the CBN is saying that if you want
to import you go through the verification system you have to put the
invoices of imports on the database."

"This way CBN gets a benchmark price for imports of goods and services this
way. He said that if we operate an open market with willing buyers and
sellers, why are we explaining to the CBN what I'm doing with FX?

"This is just bureaucracy. The CBN should focus on other things like
monetary policy, and also remove the ban from the 42 listed items

"We have a gap between the I&E window and the parallel market because the
parallel market has no limitations. People are going to the market without
limits, open up the I&E market to everyone," Aja said.

"The Price Verification System portal is a good development and may partly
checkmate the unfortunate tendencies of importers to inflate invoices for
the purpose of hiking their foreign currency demand. Such excess FX demand
is either to unduly repatriate foreign currency out of the country or to
take advantage of possible roundtripping activities, given the scarcity of
foreign currency and the spread between the official and parallel market
rates," said Abiola Rasaq, former Economist and Head, Investor Relations at
United Bank for Africa Plc.

"Hence, the PVS portal helps to stem inflated foreign currency demand. In my
view, the PVS needs to be used in conjunction with effective verification of
purpose of FX utilization in a way that does not stifle genuine trades and I
say this because there are even some dubious acclaimed importers who may
take advantage of unscrupulous and innocent reviews of bankers to process FX
demand for wrong items," he said.

"We have in the past seen an importer who consistently raised Letters of
Credit for acclaimed importation of hundreds of wheel chairs almost every
quarter at exorbitant amount without even being in such business. So, the
CBN would need the cooperation and diligence of banks to ensure effective
KYC that does not undermine and slow down genuine importers.

"There is also the question of who is the foreign seller, as some importers
can also directly and/or indirectly the sellers of the supposed imports,
under different arrangements that promotes unethical practices of inflating
invoices and unduly exporting the scarce foreign currency in the country,"
Rasaq added.

JP Morgan in its recent report estimates Nigeria's net FX reserves at
$3.7billion, saying that it is "significantly lower than prior estimates,
owing to larger-than-expected currency swaps and borrowing against existing
reserves".

"The foreign exchange market will remain in focus given the likely lower
starting point for net FX reserves, with an overall balance of payments
deficit pointing towards continued FX pressure," JP Morgan said.

The Nigerian National Petroleum Limited (NNPCL) recently secured a $3billion
emergency crude oil loan from the African Export -Import Bank (AFREXIM). The
loan facility allows the NNPCL to pay its taxes and royalties to the Federal
Government of Nigeria (FGN) and better equip the FGN to stabilise the Naira.

The disbursement of this fund is scheduled to occur in multiple tranches, in
line with the FGN's needs. The facility would be repaid from fractions of
the NNPCL's proceeds from future oil production and is not expected to deny
the FGN's future revenue from crude oil production.

"The AFREXIM loan is a welcome short-term fix; however, Nigeria's inherent
FX market issues need permanent respite," according to Meristem research
analysts.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar holds modest gains, offshore yuan rises as Jackson Hole is in view

(Reuters) - The dollar was little changed to slightly higher against a
basket of its peers on Monday, recouping some of its earlier losses as
traders held on to large positions in the greenback ahead of the Federal
Reserve's Jackson Hole, Wyoming, symposium starting on Friday.

The dollar index , which measures the currency against six other majors and
has had five straight weeks of gains, last rose 0.068% to 103.440, still shy
of Friday's two-month high of 103.68.

Karl Schamotta, chief market strategist at Corpay in Toronto, said the
widening in expected growth differentials is currently the big trade in
global market as yields in the UK and Europe play catch-up with the United
States.

"The dollar does look like it is still the cleanest dirty shirt on the
global economic landscape," Schamotta said. "Traders are holding relatively
hefty positions in the dollar going into Jackson Hole just in case Chair
Powell does come out with a more hawkish perspective on recent data."

The euro was up 0.1% at $1.0889, while sterling was last trading at $1.2736,
down 0.03%.

The Japanese yen , which is on intervention watch, weakened 0.65% versus the
greenback at 146.35 per dollar.

Although the yen has fallen to levels around which authorities stepped in
last year, analysts at JP Morgan sees the threshold for currency market
intervention at around 150 per dollar this time around.

Also on watch for intervention is the Chinese yuan, which rose 0.2% in
offshore markets versus the greenback at $7.29 per dollar.

The currency fell to the weaker side of 7.3 per dollar earlier before
rebounding after Reuters reported that state-owned Chinese banks were seen
actively mopping up offshore yuan liquidity, a move that raised the cost of
shorting the currency.

China earlier cut its one-year benchmark lending rate by 10 basis points
(bps) and left its five-year rate unchanged, against economists'
expectations for larger 15-bps cuts to both.

In the United States, Fed Chair Jerome Powell is set to speak on Friday, and
his comments may set the direction for U.S. Treasury yields, which have
driven the rise in the dollar in recent weeks.

Ten-year yields soared to a 15-year high on Monday and were last up 8.7
basis points at 4.337%.

The theme this year for the annual gathering in Wyoming is "structural
shifts in the global economy".

"While China's stimulus was underwhelming, hopes remain high for more action
should the economy continue to slow," said Joe Manimbo, senior market
analyst at Convera in Washington.

"Key for the buck and broader markets this week will be whether the Fed
chair should underscore how inflation remains too high. Having rallied for
weeks now, the dollar may show some fatigue, particularly since U.S.
borrowing rates are likely at or near peak levels."

In cryptocurrencies, bitcoin last fell 0.8% to $25,985 while Ethereum , last
rose 0.3% to $1,661.60

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hovers near 5-month low as yields rise, focus turns to Jackson Hole

Gold prices hovered around a five-month low on Monday, as elevated bond
yields pressured bullion, while investors looked ahead to the U.S. Federal
Reserve's Jackson Hole symposium later this week for more clarity on the
interest rate path.

Spot gold edged up 0.3% to $1,893.82 per ounce by 02:13 p.m. ET (1813 GMT),
but still held near a five-month low of $1,883.70 it touched on Friday.

U.S. gold futures settled 0.3% higher at $1,923.00.

"We seeing some buying interest at these levels, but the buying interest is
being limited because the charts remain bearish," said Jim Wyckoff, senior
market analyst at Kitco.

"The recent rhetoric coming from Fed officials has kind of leaned hawkish.
Treasury yields have been rising. That's bearish for the metals ... path of
least resistance for prices is sideways to lower."

Helping gold, the dollar index slipped 0.1%. However, benchmark U.S. 10-year
Treasury yields extended a rise to 4.3439%, the highest level since October
and lessening the appeal of non-yielding bullion.

Gold prices dropped to their lowest since mid-March at $1,883.70 last week,
as buoyant economic data raised bets for higher-for-longer U.S. interest
rates.

Investors' focus this week will be on Fed Chair Jerome Powell's speech on
Friday, as central bankers from around the world assemble in Jackson Hole
for their annual conference.

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

Meanwhile, receding fears of a U.S. slowdown, surging bond yields and the
robust performance of equities have gradually eroded the appeal of
exchange-traded funds (ETF) backed by traditional safe-haven gold.

"With bond yields, which are typically negatively correlated to the gold
prices, expected to be pressured higher, and the World Gold Council calling
for weaker than normal seasonal demand from India and China, we think ETF
selling and lower gold prices may continue near-term," analysts at Bank of
America said in a note.

Spot silver rose 2.5% to $23.27 per ounce and platinum was up 0.1% to
$910.65. Palladium dropped 1.4% to $1,238.32.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

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
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subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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for guideline purposes only and sourced from third parties.

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