Bulls n Bears Daily Market Commentary : 02 February 2023

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Bulls n Bears Daily Market Commentary : 02 February 2023

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

Market maintains gains in Thursday's session.

The market maintained gains in the penultimate session of the week as the
primary All Share Index put on 0.82% to 23653.77pts. The Blue chips Index
rose 0.78pts to 14407.72pts lifted by gains in Delta and Econet while, the
Mid Cap Index added 0.95% to 49388.8. The Agriculture Index was the major
gainer amongst the Indices we review as it eked out 3.73% to close at
103.78pts. Banking Group First Capital headlined the gainers' list of the
day as it surged 6.57% to $14.0676 trailed by Proplastics that advanced
6.19% to $62.5976. TSL closed the day pegged at $52.0000 following a 3.44%
uptick while, construction group Masimba was 2.97% firmer at $118.0000.
Sugar processor Hippo Valley capped the top five risers of the day on a
2.91% ascent to close the day trading at $425.0500. Retailer OK Zimbabwe led
the worst performers of the day on a 4.62% loss to settle at $44.0185 as
General Beltings parred 2.58% to end at $1.7025. Hotelier African Sun shed
1.17% to $32.1899 while; Ecocash Holdings eased 0.42% to $51.3884. Bankers
FBC capped the top five laggards of the day as it went down 0.08% to
$66.0000.

 

Activity aggregates were mixed in the session as the volume of shares traded
declined 74.40% to see 11.83m shares worth $2.59bn exchange hands which,
representing a 100.76% increase in total value traded. Econet, Innscor and
Star Africa drove the volume aggregate of the day as they contributed a
combined 87.19% of the total. Duo in Innscor and Econet were the value
leaders of the day as they claimed 50.77% and 38.65% of turnover
respectively. The ETF's traded mixed in the sessions as the Cass Saddle and
Datvest ETF fell 4.49% and 1.71% respectively. The Old Mutual Top 10 ETF was
up 2.09% at $7.7186 as the two Morgan & Co ETFs remained stable. Tigere REIT
was stable at $50.6200 as 146 units worth $7,390.52 exchanged hands.
Elsewhere, on the VFEX SeedCo International and Simbisa closed 3.58% and
3.23% lower while, Padenga was stable at US$0.2875. A total of 7,381 shares
worth US$3,137.08 exchanged hands.

-efesecurities

 

 

Global Currencies & Equity Markets

 

 

 

South Africa

 

Struggling South African Rand Tipped for Brighter Days Ahead 

"While we acknowledge these domestic risks, we believe that the ZAR's
valuation now appears more attractive and offers room for catch up strength
alongside the ongoing rebound in emerging market currencies" - MUFG.

 

The Rand struggled for traction in the penultimate session of the week as
the Dollar pared earlier losses but some offshore analysts have tipped the
South African currency as a buy and Wednesday's Federal Reserve (Fed) press
conference may have bolstered confidence in its prospects. 

 

South Africa's Rand was one of the bigger fallers among the G20 currencies
on Thursday as the Dollar rebounded from losses sustained after Chairman
Jerome Powell acknowledged that an end of the Fed's interest rate cycle may
be working its way through the pipeline.

 

Further declines in U.S. bond yields were quick to follow, adding to earlier
falls that have been cited by analysts at MUFG as among the reasons for why
the Rand could be likely to outperform in the weeks or months ahead.

 

"Our short-term valuation model which incorporates the impact of US yields
and South Africa's terms of trade is signalling that the ZAR is not fully
reflecting the recent improvement in short-term fundamental drivers," says
Lee Hardman, a senior currency analyst at MUFG. 

 

Hardman and the MUFG team advocated selling USD/ZAR around 17.25 last Friday
in anticipation of a move lower toward 16.60 in what would potentially be a
further headwind for an often-correlated Pound to Rand exchange rate.

 

Above: USD/ZAR shown at daily intervals alongside GBP/ZAR. Click image for
closer inspection. To optimise the timing of international payments you
could consider setting a free FX rate alert here.

 

They have set aside recent market concerns about the domestic economy and
say they expect investors to "continue looking through" the Fed's hawkish
rhetoric now inflation is falling and the bank has slowed the pace at which
it's raising U.S. interest rates.

 

"Investor sentiment towards the ZAR has been hit recently by heightened
concerns over the negative impact on growth in South Africa from worsening
energy supply restrictions, and speculation that an amendment to the central
bank's mandate is imminent," Hardman said.

 

"While we acknowledge these domestic risks, we believe that the ZAR's
valuation now appears more attractive and offers room for catch up strength
alongside the ongoing rebound in emerging market currencies," he added.

 

 

 

The Fed Funds rate was lifted for the eigth time since last March on
Wednesday but the quarter percent increase to 4.75% was the smallest since
the very beginning of the Fed's tightening cycle and many analysts have
cited this as reason for remaining bearish in their U.S. Dollar outlooks. 

 

A softer Dollar is a potential boon for many currencies but especially those
offering positive inflation-adjusted interest rates such as the South
African Rand.

 

"We expect this year to be positive for EEMEA FX. The end of the Fed's
tightening cycle and China's growth outperformance should benefit this asset
class, despite slowing global growth," says David Hauner, CFA and head of
emerging market cross-asset strategy at BofA Global Research. 

 

Source: BofA Global Research.  Click image for closer inspection. To
optimise the timing of international payments you could consider setting a
free FX rate alert here.

 

"However, we do worry about a setback in March/Q2 given our calls for the
Fed to still be hiking in May and not cut this year, and the S&P to correct
15%. The latest slew of increasingly weak US data could become a trigger for
these risks to become priced into a greater extent," he warns. 

 

Hauner and colleagues advocate buying South African assets but also suggest
hedging exposure to exchange rates, which could limit the Rand's ability to
benefit from any capital inflows.

 

Meanwhile, some local analysts have remained cautious about the Rand and its
prospects against non-Dollar counterparts following a month littered with
some of the most severe load-shedding and power shortages on record. 

 

"For South Africa, its gains against the crosses have been typically less
than peer emerging market economies, as investors worry about the country's
declining productive capacity as electricity supply shortages worsen," says
Annabel Bishop, chief economist at Investec.

 

"Global financial markets will continue to watch the Fed closely, with risk
aversion potentially subsiding further this week, benefiting risk assets,
although foreigners remain negative towards SA's portfolio assets as
domestic risks rise," Bishop writes in a Thursday research briefing. 

 

 

 

AFRICA-FX-Kenyan, Zambian currencies to ease versus dollar

 

(Reuters) - Kenya's shilling and Zambia's kwacha are forecast to weaken
against the dollar in the week to Thursday, while Nigeria's, Tanzania's,
Uganda's and Ghana's currencies will be steady, traders said.

 

KENYA

 

Kenya's shilling KES= is expected to weaken next week as continuing demand
for dollars from importers in the oil market weigh on the local currency.

 

On Thursday, commercial banks quoted the shilling at 124.50/70 per dollar,
compared with last Thursday's close of 124.25/45.

 

"The shilling is expected to continue to weaken in the coming week and month
due to... limited supply of dollars," one trader at a commercial bank said.

 

Refinitiv data showed the shilling struck a new all-time low on Thursday.

 

ZAMBIA

 

The kwacha ZMW= is likely to remain under pressure against the dollar next
week as demand for hard currency continues to outweigh supply due to loss of
investor confidence brought about by delays in debt restructuring.

 

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 19.3600 per dollar from 19.1100 at the close of business
a week ago.

 

Zambia's central bank will on Feb 13 hike by 2.5 percentage points the
proportion of deposit liabilities that commercial banks keep as cash with it
on both local and foreign currency deposits, it said in a letter to
commercial banks on Wednesday.

 

"The market has been characterised by weak foreign exchange supply amidst
strong demand by market players," the central bank said.

 

The adjustment to the statutory reserve ratio is aimed at addressing
volatility in the exchange rate and safeguarding stability of the foreign
exchange market, it said.

 

NIGERIA

 

The naira was quoted at 755 to the dollar on the parallel market on
Thursday, compared with 753 at last Thursday's close. It traded within a
range of 460 to 462 on the official market NGN=.

 

The launch of the new notes could keep the naira stable around current
levels until the new bills go into full circulation, currency trading firm
AZA Finance said.

 

"We anticipate a return to gradual depreciation as normal demand for FX
returns."

 

TANZANIA

 

The Tanzanian shilling TZS= is expected to remain stable against the dollar
next week as the country looks for increased investments in its agriculture
sector.

 

Commercial banks quoted the shilling at 2,333/2,343 on Thursday compared
with an average of 2,332/2,342 recorded on last week's close.

 

"President Samia Suluhu Hassan spent much of last month overseas seeking
investment in the country's agriculture value chain. given the prospects of
increased investment, we expect the shilling to remain stable against the
dollar in the week ahead," said Kristine Van Helsdingen, a currency dealer
at AZA Finance.

 

UGANDA

 

The Uganda shilling UGX= is seen trading in a stable range, mostly
underpinned by inflows from companies preparing for crude oil production and
subdued appetite for hard currency from importers.

 

Commercial banks quoted the shilling at 3,680/3,690, compared with last
Thursday's close of 3,675/3,685.

 

"Demand activity from the importer side has been sagging while on the other
hand we're seeing elevated inflows from energy investors," an independent
foreign exchange trader in capital Kampala said, referring to companies
involved in Uganda's planned crude oil production.

 

Activity in the sector has accelerated as the country aims to meet its
target of starting crude oil production in 2025.

 

GHANA

 

Ghana's cedi GHS= is expected to remain stable in the coming week, after it
posted some marginal gains amid demand slowdown and discussions with
bondholders on the domestic debt restructuring.

 

Refinitiv data showed the cedi trading at 12.00 to the dollar on Thursday,
the same as last Thursday's close.

 

Ghana has extended the deadline to register for its domestic debt exchange
programme for a fourth time to Feb. 7 to allow for new agreed terms to be
finalised and finish discussions with other bondholders.

 

"We expect the cedi to hold its ground against the dollar into next week,
ahead of the new DDEP (Domestic Debt Exchange Programme) deadline", said
Chris Nettey, a trader at Stanbic Bank.

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

Euro, sterling dip as investors assess rate outlook

(Reuters) - The euro dipped against the dollar on Thursday after the
European Central Bank raised interest rates by a widely expected 50 basis
points, while the Bank of England adopted a more dovish tone on inflation.

 

The ECB penciled in at least one more hike of the same magnitude next month
and said it will then evaluate the subsequent path of its monetary policy.

 

The BoE also raised rates by 50 basis points and dropped its pledge to keep
increasing them "forcefully" if needed and said inflation had probably
peaked.

 

"The ECB was more or less in line with expectations and the Bank of England
sounded a bit more dovish, so I think that's helping to slow the dollar's
decline," said Joe Manimbo, senior market analyst at Convera in Washington.
"You get the sense that central bankers are taking a little bit of comfort
from inflation moving in the right direction."

 

The euro fell 0.70% on the day to $1.0913 and sterling dropped 1.09% to
$1.2240, the lowest since Jan. 17.

 

The dollar gained 0.74% against a basket of currencies to 101.71.

 

Some of the commentary from the ECB was also interpreted as dovish, and it
seems that "there is more of a global central bank pivot taking place," said
Mazen Issa, senior FX strategist at TD Securities in New York. "Central
banks are in data dependent mode, but that means that they're no longer in
control and so markets are basically leading the central banks at the
moment."

 

The dollar index fell to a nine-month low of 100.80 on Wednesday after
Federal Reserve Chair Jerome Powell was interpreted as taking a more dovish
tone on future monetary policy.

 

The U.S. central bank said it had turned a key corner in the fight against
high inflation, but that "victory" would still require its benchmark
overnight interest rate to be increased further and remain elevated at least
through 2023.

 

Markets reacted by adding to bets that the Fed will stop hiking after an
additional 25 basis points increase that is expected in March, and then cut
rates in the second half of the year.

 

"It certainly sounded like Powell flew the mission accomplished banner
yesterday and sprinkled a lot of doubt on whether or not their December dot
plot is still viable," said Issa.

 

Fed officials in December forecast that they would hike rates above 5%, but
traders are pricing for the benchmark rate to peak at 4.88% in June, and
then fall to 4.40% by December.

 

Data on Thursday showed that the number of Americans filing new claims for
unemployment benefits unexpectedly fell last week as the labor market
remained resilient despite higher borrowing costs and mounting fears of a
recession.

 

U.S. worker productivity also increased faster than expected in the fourth
quarter, resulting in a moderation in labor costs' growth.

 

This week's major U.S. economic release will be Friday's employment report
for January, which is expected to show that employers added 185,000 jobs in
the month. (USNFAR=ECI)

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Oil prices increase with weaker US dollar

 

Oil prices rose on Thursday as the US dollar fell and OPEC+ decided to
maintain its current production policy.

 

International benchmark Brent crude traded at $83.38 per barrel at 9.08 a.m.
local time (0608 GMT), a 0.65% increase from the closing price of $82.84 a
barrel in the previous trading session.

 

The American benchmark West Texas Intermediate (WTI) traded at $76.97 per
barrel at the same time, a 0.73% gain after the previous session closed at
$76.41 a barrel.

 

In an effort to combat inflation, the US Federal Reserve raised its
benchmark interest rate by 25 basis points on Wednesday. Oil prices, which
had been falling ahead of the Fed's interest rate decision, began to rise
following the decision and the speech of Fed Chairman Jerome Powell.

 

Powell stated that cutting interest rates this year would be inappropriate
if the economy generally performed in line with expectations, and he expects
economic growth to continue, albeit at a slower pace.

 

On expectations of softer rate hikes in the US, the US dollar index fell to
nine-month lows. The decline in the value of the US dollar aided higher oil
prices by encouraging traders to use other currencies. A weaker dollar
further fuels strong demand in the global oil market.

 

The Organization of Petroleum Exporting Countries (OPEC) and allies, known
as OPEC+, agreed to adhere to cutting oil output by 2 million barrels per
day until the end of 2023.

 

The decision came at the group's 47th Joint Ministerial Monitoring Committee
(JMMC) videoconference meeting. The group's next ministerial meeting is
scheduled for April 3.

 

Meanwhile, US commercial crude oil inventories increased by 4.1 million
barrels during the week ending Jan. 27, according to data released by the
Energy Information Administration (EIA) late Wednesday.

 

Inventories rose to 452.7 million barrels, against the market expectation of
a decrease of around 1 million barrels.

 

The higher-than-expected increase in inventories signals a drop in demand in
the US, which limits the rise in oil prices.

 

 

 

 


 

INVESTORS DIARY 2023

 


Company

Event

Venue

Date & Time

 

 	

 

 

 

 

 

 	

Axia 

EGM to approve the delisting of Axia from the ZSE and listing on VFEX

virtual

February 2 -  (9am)

 

 	

 

Robert Mugabe National Youth Day

 

February 21

 

 	

Cafca 

AGM

virtual 

February 23  - (12pm)

 

 	

Ariston 

AGM

Centenary Room, Royal Harare Golf Club

February 24 - 3:30pm

 

 	

 

Good Friday

 

April 7

 

 	

 

Easter Saturday

 

April 8

 

 	

 

Easter Sunday

 

April 9

 

 	

 

Easter Monday

 

April 10

 

 	

 

Independence Day

 

April 18

 

 	

 

Workers' Day

 

May 1

 

 	

 

Africa Day

 

May 25

 

 	

 

 

 

 

 

 	

Counters trading under cautionary

 

 

 

 	

CBZH

TSL

Fidelity

 

 	

Willdale

FMHL

ZBFH

 

 	

GetBucks

Zimre

Seed Co

 

 	

 

 

 

 

 	

 

 

 

 

 	

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
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for guideline purposes only and sourced from third parties.

 

 	

 

 

 	

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