Bulls n Bears Daily Market Commentary : 08 February 2023

Thu Feb 9 08:09:15 CAT 2023

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Bulls n Bears Daily Market Commentary : 08 February 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

Bullish sentiment prevails.

The ZSE rally persisted in the mid-week session as the market registered
gains for the 10th consecutive session. The primary All Share Index jumped
7.57% to 28676.92pts while, the Midcap Index soared 4.22% to 54301.03pts.
The Agriculture Index climbed 3.65% to 112.75pts while, the Blue-Chip Index
rose 8.86% to 18149.19pts. Nampak Zimbabwe headlined the winners of the day
on a 15.00% jump to close at $17.2500 followed by Beverages group Delta that
grew 14.98% to $649. 8546.Telecoms giant Econet surged 14.97% to $190.0500
as fintech group Ecocash Holdings ticked up 13.82% to settle at $61.4194.
Hotelier African Sun completed the winner's pack on a 12.51% uplift to close
the day pegged at $42.0000. Seed producers SeedCo Limited led the laggards
of the day on a 4.02% slump to $239.9515 trailed by Proplastics that lost
3.88% to $60.1733. Brick manufacturers Willdale sank 0.87% to $2.9683 while,
Star Africa trimmed 0.45% to $1.8978.

Spirits and wine manufacturer Afdis capped the losers pack  on a 0.24% slid
to end the day pegged at $260.2681. The market closed with a positive
breadth of ten as eighteen counters registered gains against eight that
faltered. Activity aggregates were mixed in the session as volumes traded
dropped 54.82% to 7.97m shares while, turnover enhanced 30.23% to $1.78bn.
OKZim, Delta, Innscor and Econet anchored the volume aggregate as they
claimed a total contribution of 87.91%. Delta (44.85%), Innscor (33.02%),
OKZim (12.46%) and Econet (4.88%) were the top value drivers of the day. A
total of 5,470 shares exchanged hands on the VFEX market with SeedCo
International trading 366 shares at a constant price of $0.2695. Simbisa
edged up 1.39% to $0.4300 while on contrary, Padenga withdrew 0.17% to
$0.2865. On the ETF section, Datvest and MIZ ETF declined 0.34% and 0.81% to
close at $1.5680 and $1.2908. The OMTT ETF was the sole riser on the market
on a 4.52% uplift to $8.3327. The Tigere REIT traded 1245 shares at a stable
price of $50.6200.efesecurities

Global Currencies & Equity Markets

South Africa

South African rand weakens ahead of president Ramaphosa's speech

(Reuters) - South Africa's rand weakened against the dollar on Wednesday as
investors awaited potential news from President Cyril Ramaphosa's State of
the Nation address on Thursday.

At 1532 GMT, the rand traded at 17.7900 against the dollar, about 1.3%
weaker than its previous close.

The dollar recovered slightly against a basket of six major rivals and was
last up 0.16% at 103.47 after slipping on Tuesday as
less-hawkish-than-expected comments from Federal Reserve Chair Jerome Powell
fuelled investor hopes that the central bank may soon ease monetary policy.

South African markets will be turning their focus to the president's speech
to parliament, where he is under pressure to offer some solution to address
a worsening power crisis.

Daily power cuts since last year have hammered economic growth and are
proving a major test for the governing African National Congress, whose
support among voters is sliding.

Investors are demanding some leadership, guidance and clarity on the steps
being taken to extricate South Africa from the electricity generation
crisis, ETM Analytics said in a research note.

On the Johannesburg Stock Exchange, the broader all-share index (.JALSH)
ended 0.55% higher while the top-40 index (.JTOPI) closed up 0.73%. It was
boosted by the weakened rand as rand-hedged stocks climbed.

Rand-hedged shares such as dual-listed luxury goods retailer Richemont ,
miner BHP Group and technology investor Prosus make the bulk of their
revenue outside South Africa and tend to rise as the currency weakens.

Trade was choppy as investors were cautious to make big bets ahead of
Ramaphosa's address as they awaited clues on his plans to tackle crippling
power crisis.

Many companies have warned that their margins will be under pressure as they
take on additional costs to fire up diesel generators to manage power
outages.

The government's benchmark 2030 bond was weaker, with the yield up 1.5 basis
points at 9.775%.

-The Thomson Reuters Trust Principles.

Nigeria

Nigerian court suspends Friday deadline to swap banknotes

(Reuters) - Nigeria's Supreme Court on Wednesday prevented the government
from enforcing a Friday deadline for citizens to swap old banknotes for new
ones, as the International Monetary Fund flagged disruptions to trade and
payments.

Nigerians were due to turn in old 1,000, 500 and 200 naira banknotes in
exchange for newly designed notes by Friday as part of a central bank
initiative to curb cash in circulation and control double-digit inflation.

The plan has caused huge controversy, with people saying there are not yet
enough new notes available, leading to chaotic scenes at banks and acute
cash shortages.

Some politicians have criticised the timing ahead of Feb. 25 elections for a
new president and lawmakers, as campaigns are funded by mostly hard to trace
cash.

Supreme Court Judge John Inyang Okoro said the decision to suspend the
deadline was unanimous, pending a legal challenge from three states who had
argued that the note swap plan was causing hardship ahead of the elections.

The court is due to hear the states' challenge on Feb. 15.

Earlier on Wednesday, the IMF's resident representative in Nigeria urged the
Central Bank of Nigeria (CBN) to consider extending the deadline for notes
to be swapped given disruption caused by the shortage of new notes.

The central bank says the plan also aims to reduce fraud as the security
features on the new notes will make them harder to counterfeit and that it
will foster a move towards a cashless economy.

About 1.3 trillion naira ($2.8 billion) in old notes has been deposited into
the bank since the announcement in October, according to the bank.

Some ruling party officials have publicly accused the CBN of a plot to turn
voters against its candidate in the presidential election, Bola Tinubu.

President Muhammadu Buhari is not running he will complete his
constitutionally allowed two terms in May.

Inflation and a flagging economy are likely to be major issues for voters at
the elections, with many saying life is harder than when Buhari took office
in 2015.

($1 = 459.92 naira)

 <mailto:info at bulls.co.zw> 

Global Markets

U.S. dollar flat to moderately higher, weak outlook intact on Fed outlook

(Reuters) - The dollar was little changed to marginally higher on Wednesday
as investors paused selling the greenback a day after Federal Reserve Chair
Jerome Powell did not significantly change his interest rate outlook despite
a strong U.S. jobs report last week.

The greenback's outlook, however, remained tilted to the downside as the Fed
nears the end of its tightening cycle and the markets price in rate cuts by
the end of the year, analysts said.

In a question-and-answer session before the Economic Club of Washington on
Tuesday, Powell said interest rates might need to move higher than expected
if the U.S. economy remains strong, but reiterated he felt a process of
"disinflation" is underway.

The greenback slipped as Powell spoke.

"The dollar weakened because Powell was not hawkish. There were a few
nuggets in his speech that suggested that the jobs report has not materially
shifted the Fed's outlook," said Thierry Wizman, global FX and rates
strategist at Macquarie in New York. "Despite the data dependency of the
outlook since last week, Powell did not even answer questions on whether or
not he would have raised rates by more had he seen (the jobs report). Based
on that demeanor, he would have not raised more and the outlook itself has
not changed on one data point."

New York Fed President John Williams on Wednesday added to Fed rhetoric of
further pushing U.S. rates higher. He told a Wall Street Journal event that
moving to a federal funds rate of between 5.00% and 5.25% "seems a very
reasonable view of what we'll need to do this year in order to get the
supply and demand imbalances down."

In afternoon trading, the euro was modestly lower at $1.0724 after falling
to $1.067 the previous session, its lowest since Jan. 9. It remained far
above September's 20-year low of $0.953.

The euro has risen sharply against the dollar this year

Investors also digested hawkish comments from two German officials at the
European Central Bank (ECB).

"From where I stand today we need further, significant rate hikes," German
central bank chief Joachim Nagel told the newspaper Boersen-Zeitung on
Tuesday.

His colleague Isabel Schnabel said it is not yet clear that the ECB rate
hikes so far would bring inflation back to 2%.

Against a basket of currencies, the U.S. dollar index was narrowly up at
103.38, after slipping the previous session.

Sterling rose 0.2% to $1.207, recovering from Tuesday's one-month trough of
$1.196.

The greenback had a short-lived rally following Friday's blockbuster jobs
report, which showed that non-farm payrolls had surged by 517,000 jobs last
month.

That sent the U.S. dollar index to a one-month high of 103.96 on Tuesday, as
investors raised their expectations of how much further the Fed would need
to keep raising interest rates.

Futures pricing on Wednesday showed that markets are expecting the Fed funds
rate to peak just above 5.1% by July, from a range of 4.5% to 4.75%
currently. But the market has priced in Fed cuts as well with the implied
fed funds rate at 4.8% by the end of the year.

"As the market is pricing in a higher terminal rate, the market is also
pricing in higher cuts of 25 or 50 basis points at the end of the year,"
said Joe Perry, senior market analyst at FOREX.com and City Index in New
York. "That's negative for the dollar."

Meanwhile, according to pricing in derivatives markets , traders expect the
ECB to hike rates to rise to around 3.5% in late summer, from 2.5% now.

Elsewhere, the dollar rose 0.2% against the yen to 131.355 yen

Japanese real wages rose for the first time in nine months thanks to robust
temporary bonuses, data on Tuesday showed.

The New Zealand dollar dipped 0.2% to US$0.6308. The Aussie dollar slipped
0.5% to US$0.6925 after surging more than 1% on Tuesday.

The Reserve Bank of Australia on Tuesday raised its cash rate by 25 basis
points.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price to hold the line at $1,800 but investors will have to weigh the
costs as real rates remain positive - CIBC

(Kitco News) - Ongoing uncertainty in global financial markets will support
gold prices in 2023, but investors shouldn't expect any fireworks in
precious metals markets despite the best start to the year in a decade,
according to analysts at CIBC.

The Canadian bank released its 2023 precious metals outlook Monday, and the
analysts said that they see gold prices averaging around $1,800 an ounce
during the year, roughly 5% below current prices. April gold futures last
traded around $1,887.30 an ounce, up 0.13% on the day.

At the same time, CIBC sees silver prices averaging 2023 around $23.50 an
ounce. March silver futures last traded at $22.335 an ounce, up 0.71% on the
day.

The analysts expect the first quarter to represent the peak in gold and
silver prices this year.

"This represents fairly muted downside risk and still provides investors
with a safety trade option against more meaningful movements in other fiat
currencies," they wrote.

Although market volatility will support gold and silver prices this year,
the analysts said that the Federal Reserve's firm stance on interest rates
in a muted inflationary environment will ultimately push real rates higher
through the year.

"There remains uncertainty as to the severity and length of a potential
recession. However, with many stocks already trading below long-term average
P/E multiples and offering attractive yield risk/reward scenarios, investors
will need to weigh those factors vs. the cost of owning gold in a high
interest rate environment," the analysts said.

In the current climate, CIBC expects investment demand in gold-backed
exchange-traded funds to remain muted throughout the year, even as physical
demand remains high through at least the summer.

"ETF demand has proven to be extremely volatile, and we expect it to create
headwinds in the back half of the year as expectations build for a stock
market recovery," the analysts said.

CIBC's neutral outlook on gold comes even after the precious metal beat the
bank's 2022 forecast. Last year CIBC expected gold prices to average around
$1,750; however, gold saw a record annual average price of $1,800.90 an
ounce.

The bank is slightly more bullish on silver compared to last year's
performance. In 2022, silver prices averaged $21.73 an ounce.

"Both metals may, in fact, beat our forecasts, but against a backdrop of
stabilizing inflation rates, a rise in real rates, and perhaps more
importantly, a better stock market in 2024, it is hard to see meaningful
catalysts on the horizon to further support an already multi-year rally in
gold and silver," the analysts said.

WGC says central bank gold demand hit an all-time high in 2022

Although CIBC is roughly neutral on precious metals this year, it continues
to see a solid flow at elevated levels. Long-term, they see gold prices
averaging around $1,650 an ounce by 2025. Silver prices are expected to see
a long-term average of around $20.

"Longer term, we continue to believe that both gold and silver have firmly
established higher base price levels," the analysts said. "The need to
de-carbonize mines, longer permitting cycles, and the lack of development
projects with in situ infrastructure all contribute to our higher-for-longer
commodity price forecasts."

Looking at silver, analysts see slightly more potential for the precious
metal as growing industrial demand pushed the market's supply and demand
outlook into a deficit for the next two years.

"Silver demand for solar applications continues to increase worldwide and
received a boost from President Biden's Inflation Reduction Act in 2022.
Electric vehicles are another key growth area for silver demand, with a
typical electric vehicle needing twice as much silver as a conventional
one," the analysts said.

At the same time, investment demand in silver-backed ETFs remains a major
wild card this year. CIBC notes that any increase in investor demand will
put upside pressure on prices.

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
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
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any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

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