Bulls n Bears Daily Market Commentary : 06 February 2023

Tue Feb 7 08:47:14 CAT 2023

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Bulls n Bears Daily Market Commentary : 06 February 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

ZSE winning streak continue

ZSE winning streak persisted into the new week recording its 8th consecutive
session of gains. The primary All Share Index was up 1.87% to close at
25245.22pts while, the ZSE Top Ten Index improved 2.06% to 15536.68pts. The
Agriculture Index extended 2.01% to 106.92pts while, the Mid Cap Index rose
1.40% to end at 51419.50pts. SeedCo Limited headlined the risers’ pack after
a 14.67% surge to $249.9867. Trailing was sole mining company on the bourse
RioZim that edged up 14.16% to $160.0000. Telecoms giant Econet jumped 7.30%
to settle at $156.2343 as packaging group Nampak notched 7.14% to $15.0000.
Banking group First Capital completed the top five gainers’ list on a 5.30%
uplift to $15.1677. Trading in the negative territory was Star Africa that
declined 6.43% to $1.8058 followed by African Sun that trimmed 5.91% to
$33.8733. General Beltings slid 5.75% to $1.6025 while, brick manufacturer
Willdale came off 1.63% to $3.0003. Capping the top five laggards of the day
was property concern FMP that let go 1.32% to $15.0000.

Volume of shares traded dipped 21.00% to 1.85m as Econet, First Capital,
Delta and SeedCo accounted for a combined 74.95% of the aggregate. Turnover
succumbed 18.16% to $420.64m as Delta, Innscor, Econet and SeedCo claimed
36.25%, 23.88%, 16.43% and 14.29% of the outturn apiece. On the VFEX,
Simbisa and Padenga slipped 7.30% and 0.17% to end pegged at USD$0.4000 and
USD$0.2870 apiece. Nedbank was stable at USD$11.5000 as 194 depository
receipts traded. On the ETF section, Datvest put on 3.78% to $1.5252 while,
Morgan and Co MCS added 2.78% to $24.6667. The Old Mutual ETF tumbled 1.75%
to $7.7107 on 29,255 units. Elsewhere, Tigere REIT declared its maiden
interim dividend of USD$0.00021 per unit and 10.54 ZWL cents per unit which
is payable on the 24th of February. The aforementioned company traded 9,417
units worth $476,688.54 at an unchanged price of $50.6200.-efesecurities

Global Currencies & Equity Markets

South Africa

South African rand weakens as U.S. dollar extends gains

(Reuters) - South Africa's rand weakened on Monday, as the U.S. dollar
jumped on expectations that the U.S. Federal Reserve might pursue its
inflation-fighting interest rate hikes for longer.

At 1550 GMT, the rand traded at 17.6975 against the dollar, 1.24% weaker
than its previous close.

The dollar was last up 0.55% at 103.700 against a basket of currencies
riding on a blockbuster U.S. jobs report last Friday.

In the absence of major local economic developments, the risk-sensitive rand
often takes cues from global drivers.

The markets will keep a close eye on the Investing in African Mining Indaba
conference this week, which is bringing together mining company executives,
investors, and mines ministers from across Africa and beyond to discuss
industry issues and to network.

The focus will also be on President Cyril Ramaphosa's annual State of the
Nation Address in parliament on Thursday and a possible cabinet reshuffle.

Shares on the Johannesburg Stock Exchange followed similar moves as global
equities and ended lower, with both the broader all-share index (.JALSH) and
the top-40 index ending about 0.8% down.

The government's benchmark 2030 bond was weaker in early deals, with the
yield up 11.5 basis points at 9.700%.

Zambia

New statutory reserve ratio will increase cost of loans – BAZ

THE Bankers Association of Zambia (BAZ) says the increase in the minimum
statutory reserve ratio is likely to push the cost of new deposits and cost
of existing and new loans upwards. The Bank of Zambia (BOZ) recently
announced an increase in the minimum statutory reserve ratio by 2.5
percentage points to 11.5 percent from the current 9.0 percent. 

Meanwhile, Economics Association of Zambia Interim National Secretary Gibson
Masumbu says the decision by BOZ shows that the central bank is not getting
the right results from the traditional policy instruments being used.
Responding to a press query, BAZ Chief Executive Officer Leonard Mwanza said
the decision to increase the minimum statutory reserve ratio would reduce
and create pressure on Kwacha’s
...

Ghana

Cedi continues recent gain against dollar; $1 now ¢12.40

The Ghana cedi continued its recent gain against the US dollar, starting the
week on a positive note.

Checks by Joy Business at the forex bureaus indicate that the local currency
gained 10 pesewas early morning of February 6, 2023, to sell at ¢12.40 to
the dollar.

This narrowed its year-to-date loss in the retail market.

The same story can also be said about the pound and the euro as the cedi is
going for ¢14.80 and ¢13 respectively.

The cedi gained about 3.1% value to the American ‘greenback’ last week. A
week before, it improved in value by about 0.78%.

Many market watchers and analysts are surprise about the sudden turn of the
performance of the local currency, especially when the country’s reserves
have gone down drastically to about 2.7 months of import cover, whilst the
government struggles to revive the fiscal economy.

However, the recent resurgence of the cedi could signal that investors are
very certain of an International Monetary Fund bailout programme soon.

The local currency depreciated by about 38.8% to the American greenback in
2022, according to Bloomberg.

It began the year going for ¢11.60, and in the first month of 2023 had lost
about 19% in value to the US dollar, the Bank of Ghana stated in its January
2023 Summary of Economic and Financial Data.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar extends rebound as U.S. data supports; yen slips

(Reuters) - The dollar jumped to a four-week high against the euro on
Monday, as last week's blockbuster U.S. jobs report raised the likelihood of
the U.S. Federal Reserve keeping on with its inflation-fighting interest
rate hikes for longer.

The euro slipped 0.6% against the dollar to $1.0724, its lowest since Jan.
9, following a 1% drop on Friday. The euro remains not far from the 10-month
high of $1.1034 hit last week.

"Friday's NFP (nonfarm payroll) number solidified the likelihood of another
25 basis points hike and reduced the chances of an eventual rate cut at the
end of the year, sending equities lower and the greenback soaring," said
John Doyle, vice president of operations and trading at Monex USA.

"Overall, the dollar's decline since late November has been impressive.
However, it now looks like it was a bit overdone," Doyle said.

On Friday, data showed U.S. job growth accelerated sharply in January while
the unemployment rate hit more than a 53-1/2-year low of 3.4%, pointing to a
stubbornly tight labor market, and a potential headache for Federal Reserve
officials as they fight inflation.

The data came after the Fed on Wednesday raised rates by 25 basis points and
said it had turned a corner in the fight against inflation, leading
investors to price in a slowdown in the pace of rate hikes going forward.

On Monday, U.S. Treasury Secretary Janet Yellen said she saw a path for
avoiding a U.S. recession, with inflation coming down significantly and the
economy remaining strong, given the strength of the U.S. labor market.

The Turkish lira, under pressure from geopolitical risks and surprise
inflation readings out of the country, briefly slipped to a record low of
18.85 , in early trade, as a major earthquake hit the region.

Sterling slipped 0.2% on the day at $1.20245, a fresh one-month low, as
traders look to British growth data and remarks from Bank of England
policymakers about the pace of interest rate hikes for clues to the outlook
for the British currency.

The yen fell more than 1% against the U.S. dollar after the Nikkei newspaper
reported, citing anonymous government and ruling party sources, that Bank of
Japan Deputy Governor Masayoshi Amamiya was being sounded out to be the next
governor.

In a news conference on Monday, Deputy Chief Cabinet Secretary Yoshihiko
Isozaki said there was no truth to the Nikkei report.

Amamiya is considered the "most dovish among the contenders, which is
thrashing hopes that BOJ policy normalisation could progress under the new
chief," Saxo strategists said.

Meanwhile, bitcoin was little changed on the day at $23,015 remaining close
to the more than five-month high of $24,258 touched last week.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Precious metals clouded by 'mixed signals' but a recession could be good for
gold

The precious metals sector is muddled right now by mixed signals in US
economic data, according to a report from Canaccord Genuity (TSX:CF,
LSE:CF).

The firm pointed to strong employment data and the recent FOMC meeting as
reasons why gold has “taken a step back from its recent strong run,” and
fallen more than 4% over the past few days from a recent peak of $1,950 an
ounce. 

However, the commodity is still up 15% from its September 26 low of
$1,622/oz, analysts noted, and gold equities are up 37%. 

READ: Aurion says B2Gold JV discovers new gold-copper mineralization along
Helmi-Kutuvuoma trend

“US economic data continues to confound a lot of investors (including us)
with mixed signals,” the analysts said. “... We believe the biggest question
for investors remains whether the Fed can pull off a soft landing or whether
a recession ensues. In our view, a potential recession would likely
accelerate Fed rate cuts, which should be positive for gold.”

Historically, recessions have been good for gold. The firm noted that gold
has averaged a 16% increase over the past seven recessions dating to the
early 1970s, compared to a 5% drop in the S&P 500.

Ultimately, Canaccord analysts are bullish on gold this year. 

“Our macro view hasn’t changed,” analysts said. “The FOMC’s 25bps increase
was in line with expectations, and the market continues to price in a
terminal rate of ~5%. Despite the short-term pullback, we think gold and
gold equities have more room to run ahead of a Fed pause with a non-trivial
chance of a recession emerging.”

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

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
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