Bulls n Bears Daily Market Commentary : 29 August 2023

Wed Aug 30 06:23:37 CAT 2023

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Bulls n Bears Daily Market Commentary : 29 August 2023

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

Zimbabwe Stock Exchange (ZSE)

The local bourse improved during today's trading session following a 0.13%
increase in overall Market Cap which closed at ZWL$9.76 trillion. Total
turnover subsided by 68.64% on the back of an 61.82% decline in volumes
traded. Meikles, Delta, and Econet were today's three most traded counters,
constituting 98% of the total turnover.

The benchmark All-Share Index added 0.10% to 122,353.47 points at the back
of 15 raisers and 8 declines. The Top 15 Index improved by 0.25% to close at
79,271.13 points and the Top 10 Index dropped by 0.42% to 57,731.90 points.

Leading the raiser's list for the day was Rainbow Tourism Group and Turnall
which added 12.89% and 10.71% to close at $160.00 and $15.50. Ariston and
Zimbabwe Newspapers trailed the list, advancing by 8.97% and 6.92% as each
closed at $27.16 and $10.69. EcoCash Holdings Ltd capped the top-5 winner's
list after gaining 2.57% to close at $138.16.

On the laggards' list, Seed Co lost 13.03% to close at $955.69. Masimba
Holdings and NMBZ Holdings also pulled back by 11.99% and 4.19% to close at
$450.35 and $160.00, respectively.

Victoria Falls Stock Exchange (VFEX) 

The VFEX All Share Index gained 0.89% to close at 70.84 points. Axia
Corporation Ltd was the most traded counter on the VFEX Exchange,
contributing 55.46% to the total turnover.

Global Currencies & Equity Markets

South Africa

South African rand gains before data-heavy end to the week

(Reuters) - The South African rand gained on Tuesday ahead of a raft of
domestic and international data releases due later this week.

At 1522 GMT, the rand traded at 18.4825 against the dollar , nearly 0.6%
stronger than its previous close.

Analysts struggled to pick out a local driver, saying one factor helping the
risk-sensitive rand was a decline in U.S. Treasury yields from the previous
week's highs.

"Whether this positive market sentiment can be sustained remains to be seen
and will likely depend on U.S. labour market data scheduled for release in
the coming days" that could influence the Federal Reserve's interest rate
plans, said Danny Greeff of ETM Analytics.

"This will give U.S. Treasuries and the (dollar) something trade on, with
the (rand) still a passenger to their movements at the moment," he added.

South African data releases this week include July money supply (ZAM3=ECI),
private sector credit (ZACRED=ECI) and budget (ZABUDM=ECI) numbers on
Wednesday, and July producer inflation (ZAPPIY=ECI) and trade (ZATBAL=ECI)
figures on Thursday.

Those data points will shed light on how Africa's most industrialised
economy was performing early in the third quarter.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI)
closed 0.4% weaker. South Africa's benchmark 2030 government bond also fell,
with the yield up 5 basis points at 10.165%.

Nigeria

Naira rate gap widens as dollar supply stays tight

The exchange rate gap between the official and parallel segments of the
foreign exchange market has widened to N150 per dollar from N96/$1 after FX
unification in June amid tight supply of the greenback.

The naira on Tuesday fell to N920- N925 per dollar at the parallel market,
following strong demand for the greenback. Dealers were buying from willing
sellers at N915/$ while selling at N920-N925/$ to willing buyers.

During the intraday trading on Tuesday, the dollar was quoted at
N920-N925/$1, which represents 1.09 percent depreciation compared to N915
per dollar traded during the morning session.

Dollar was quoted at N775.34 on Tuesday at the Investors' and Exporters'
(I&E) window, the country's official FX market.

With the current exchange rates, the gap between the official and parallel
markets has dropped to N150/$ from N301/$ in 2021.

The Central Bank of Nigeria (CBN) on June 14, 2023 collapsed all segments of
FX markets into the I&E window.

Muda Yusuf, chief executive officer of the Centre for the Promotion of
Private Enterprise, said rate unification does not imply that rates will be
exactly the same in all segments of the market.

According to him, the objective is to ensure that the differentials are very
minimal, possibly between 5-10 percent.

The CBN, on August 18, 2023, released a new operational guideline for the
sale of FX by Bureau De Change (BDC) operators.

According to the new guideline, the spread on buying and selling by BDC
operators shall be within an allowable limit of -2.5 percent to +2.5 percent
of the Nigerian FX market window weighted average rate of the previous day.

"The -2.5 to +2.5 percent is the spread the BDCs are allowed to make in
buying and selling on their rates. The anchor rate to be used to calculate
the spread is the closing average weighted rates in the I&E window of the
previous day on the following day," said Aminu Gwadabe, national president
of Association of Bureau De Change Operators of Nigeria.

Gwadabe said the new regulation is aimed at repositioning the BDCs for
compliance with a view of integrating them in the harmonised I&E window.

"Events have indicated over the periods of BDCs effectiveness in engagements
by the apex bank in achieving market convergence. The pass-through effect of
any foreign exchange policies to achieve its objectives must consider the
various stakeholders in the FX ecosystem," he said.

Read also: FX, inflation hits hard on life insurance; NAICOM

The removal of the exchange rate peg in mid-June saw a convergence of
official and parallel market rates. However, limited inflow has led to the
depreciation of the naira in relation to major currencies, said Yemi Kale,
partner and chief economist at KPMG Nigeria, in his presentation at
BusinessDay's CEO Forum in Lagos in July.

He said autonomous FX flows are the dominant sources of FX inflows in
Nigeria, adding that empirically, a 1 percent increase in the exchange rate
gap reduces autonomous flows by 0.4 percent.

Bismarck Rewane, managing director/chief executive officer of Financial
Derivatives Company Limited, had said that naira was expected to cross the
N900/$ threshold before recovering.

"Until there is enough supply to meet FX demand, the ability to stabilise
the exchange rate will be difficult and might force the CBN to use its
limited reserves to intervene to stabilise the rate," Kale said.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar drops on jobs data, yen rises from 10-month low

(Reuters) - The U.S. dollar fell on Tuesday after data showed that U.S. job
openings fell in July, as investors await more comprehensive labor market
numbers in this week's jobs report for August.

The Japanese yen also gained, after earlier falling to a 10-month low.

Job openings, a measure of labor demand, dropped 338,000 to 8.827 million on
the last day of July, the lowest level since March 2021.

The data "have increased confidence that the FOMC will not increase rates at
the upcoming September 19-20 policy meeting, and indeed, could be done,"
noted analysts at Action Economics.

U.S. economic data has shown resilience in the face of higher interest
rates, but investors are on guard for signs of any lagging impacts from the
monetary tightening.

Investors have raised bets that the Federal Reserve could continue hiking
rates, or keep rates higher for longer as it tries to bring inflation down
closer to its 2% target while the job market remains tight.

Markets see an 87% chance of the Fed standing pat on interest rates next
month, but the odds of a hike by the November meeting have risen, according
to the CME Group's FedWatch Tool.

A November rate hike is now seen as a 47% probability, down from 62% on
Monday, but up from 46% a week ago.

Fed Chair Jerome Powell said on Friday that further rate increases may be
needed to cool still-too-high inflation, but also promised to move with care
at upcoming meetings.

Bipan Rai, North American head of FX strategy at CIBC Capital Markets in
Toronto, noted that markets are likely pricing in too many Fed rate cuts in
2024 relative to other central banks, and traders repricing this probability
could boost the greenback further.

"That tells me that the dollar still has some more room to run, at least in
the near term," he said.

Against a basket of currencies, the dollar was last down 0.49% at 103.51. It
is holding below the 104.44 level reached on Friday, which was the highest
since June 1.

U.S. personal consumption expenditures on Thursday and the August jobs
reports on Friday are in focus this week for further clues on the direction
and strength of the U.S. economy.

The dollar briefly reached an almost 10-month high against the Japanese yen
earlier on Tuesday, before dropping on the jobs data.

The Bank of Japan remains an outlier among global central banks with its
loose monetary policy, even as it slowly shifts away from yield curve
control.

"It is moving away from excessively loose monetary policy, but it's doing so
at a very slow and measured pace," Rai said. "It's still punitive to be
short dollar/yen."

The dollar hit 147.375 yen, the highest since Nov. 7, and was last at
145.84, down 0.47% on the day.

Traders are watching for any signs of intervention by Japanese officials to
shore up the ailing currency. Japan intervened in currency markets last
September when the dollar rose past 145 yen, prompting the Ministry of
Finance to buy the yen and push the pair back to around 140 yen.

Charu Chanana, market strategist at Saxo, said that the intervention threat
has retreated at sub-150 levels, given a lack of currency-related comments
from Bank of Japan Governor Kazuo Ueda at the Jackson Hole conference and no
signs of verbal intervention yet.

Euro zone inflation data due on Thursday may be key to whether the European
Central Bank hikes rates at its September meeting, which in turn could set
the near-term tone for the euro.

"We have the euro zone CPI report Thursday which the market is putting a
great deal of weight on with the ECB's decision in September seen as finely
balanced," said Lee Hardman, senior currency analyst at MUFG.

The euro was last up 0.49% at $1.0871. It fell to $1.07655 on Friday, the
lowest since June 13.

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

Currency bid prices at 3:00PM (1900 GMT)

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hits three-week peak after weaker U.S. jobs data

Gold climbed to a three-week peak on Tuesday as the dollar and Treasury
yields slipped after weaker labour market readings cast doubts over the
chances of another rate hike by the Federal Reserve.

Spot gold was up 0.9% at $1,937.1907 per ounce. U.S. gold futures also rose
0.9% to $1,965.50.

The dollar fell against its rivals, reversing earlier gains, after data
showed that U.S. job openings fell in July. The benchmark 10-year Treasury
yields also ticked lower.

The downbeat Job Openings and Labor Turnover Survey (JOLTS)and consumer
confidence reports suggest the Fed may not raise rates as much as previously
anticipated, and that's helping gold along with some short-covering, said
Jim Wyckoff, senior market analyst at Kitco.

Investors now await the U.S. personal consumption expenditures price index
due on Thursday and nonfarm payrolls on Friday for further clues on the
interest rate trajectory.

According to the CME FedWatch tool, traders now see an 86% chance of the Fed
leaving rates unchanged at its September meeting, up from 78% before the
data.

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

Reflecting sentiment, SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings rose 0.3% on Monday.

"The fact that the price has been recovering since the middle of last week
suggests that the selling pressure exerted by speculative financial
investors has abated," Commerzbank analyst Carsten Fritsch wrote in a note.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

Invest Wisely!

Bulls n Bears 

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