Bulls n Bears Daily Market Commentary : 15 February 2023

Thu Feb 16 06:27:35 CAT 2023

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Bulls n Bears Daily Market Commentary : 15 February 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

Heavies drag down the market.

The ZSE recorded losses in the mid-week session mainly dragged down by
heavies. The mainstream All Share Index receded 2.27% to 28325.82pts while,
the Blue Chips Index retreated 3.47% to 17567.80pts. The ZSE Agriculture
Index dropped 0.26% to end at 112.18pts. In contrast, the Mid-Cap Index rose
1.00% to close at 56642.74pts. Delta headlined the decliners of the day on a
7.14% dip to $540.7788 having traded an intraday low of $530.0000. Telecoms
giant Econet succumbed 6.11% to $204.3924 while, hotelier RTG plunged 3.97%
to end pegged at $10.0833. Seed manufacturer SeedCo Limited slid 2.90% to
$223.3333 as microfinance group Getbucks slipped 2.17% to settle $22.5000.
Partially mitigating todays' losses was brick makers Willdale jumped 10.33%
to $2.8687 as apparel retailer Edgars surged 10.09% to close at its all-time
high of $12.0000. African Sun extended 9.02% to $59.5769 while; Ariston
overturned previous day losses to record a 8.06% gain as it closed at
$4.5000. Retailer OKZIM shored up 5.37% to $54.7448.

Turnover jumped 146.77% to $1.66bn as Delta and Innscor claimed 59.46% and
29.47% of the aggregate apiece. Similarly, the volume aggregate rallied
24.48% to 5.30m as Delta, Ariston and Innscor accounted for a combined
73.05% of the total. Padenga added 2.12% to USD$0.2553 as SeedCo
International 0.35% to USD$0.2599. Simbisa trimmed 1.33% to USD$0.4300 on
11,400 shares. Bindura was stable at $0.0210 post the release of its third
quarter trading update in which ore mined was 49% lower and nickel
concentrates sold were down 84%. Morgan and Co MCS was the top laggard
amongst the ETFs as it shed 10.35% trailed by Cass Saddle which retreated
6.64%. The MIZ and Old Mutual ETFs softened 1.48% and 0.01% respectively.
Contrastingly, the Datvest MCS edged up 3.21% to $1.5482. Elsewhere, Hippo
Valley released a third quarter trading update in which tonnes of sugar
produced decreased by 1% as export sales volume increased by
27%..-efesecurities

Global Currencies & Equity Markets

South Africa

South African rand slips as local inflation shows no surprises

(Reuters) - The South African rand weakened against a stronger dollar on
Wednesday after domestic inflation figures came in line with expectations.

At 1532 GMT, the rand traded at 18.0625 against the dollar, 0.82% weaker
than its previous close.

The dollar was up about 0.7% against a basket of global currencies .

The country's headline consumer inflation (ZACPIY=ECI) slowed to 6.9%
year-on-year in January from 7.2% in December, in line with analysts'
forecasts, Statistics South Africa said on Wednesday.

However, core inflation, which excludes prices of food, non-alcoholic
beverages, fuel and energy, stayed at 4.9% year-on-year last month,
statistics agency data showed.

A sharp petrol price cut drove the negative move in the consumer price
index, which was substantial enough to overcome the hefty rise in food
prices at the start of the year, Investec analyst Annabel Bishop said in a
note.

Meanwhile, data from Statistics South Africa showed retail sales (ZARET=ECI)
fell 0.6% year-on-year in December after rising by a revised 0.8% in
November.

Economists polled by Reuters had predicted a 0.1% year-on-year drop in
December.

"December is a seasonally significant month for the retail sector; however,
consumers remain constrained and continue to grapple with heightened living
costs, with many holding back on discretionary purchases," Investec analyst
Lara Hodes said in a note.

Business confidence (ZABCI=ECI) fell in January, with crippling power cuts
by state utility Eskom weighing significantly on sentiment, a survey by the
South African Chamber of Commerce and Industry (SACCI) showed.

On the stock market, the Top-40 (.JTOPI) and the broader all-share (.JALSH)
indexes lost around 0.5% in afternoon trade.

Anglo American Platinum's (Amplats) (AMSJ.J) shares fell to the bottom of
the all-share (.JALSH) index after the South African miner announced that
Chief Executive Natascha Viljoen will step down next year to become
operations chief at U.S.-based Newmont Corporation (NEM.N).

The South African government's benchmark 2030 bond was weaker in afternoon
deals, with the yield up 14 basis points at 9.980%.

- The Thomson Reuters Trust Principles.

Zambia

Zambia Central Bank Raises Key Rate by 25 Basis Points

(Bloomberg) -- Zambia lifted its benchmark interest rate for the first time
since November 2021 to stem a slide in the nation's currency that's placing
upward pressure on inflation as debt restructuring talks drag on.

Policymakers increased the rate to 9.25% from 9%, Governor Denny Kalyalya
told reporters Wednesday in Lusaka, the capital. Two of four analysts polled
by Bloomberg predicted a hike. 

The decision was taken in part because of mounting inflationary pressures
stemming from the kwacha, which is weakening as a result of "negative
sentiments arising from the protracted debt-restructuring negotiations,"
Kalyalya said. 

Delays in talks to rework $12.8 billion of external loans in Africa's first
pandemic-era sovereign defaulter and concerns that non-resident holders of
local currency debt may be asked to take a haircut are putting pressure on
bond yields and the kwacha, Kalyalya said. The government said it won't
include kwacha bonds in the revamp because of the risks to the local
economy.

The currency has depreciated almost 15% against the dollar since the MPC's
last meeting on Nov. 23. That's its worst performance between quarterly MPC
meetings since May 2020, when investors sold off the currency on bets that
the southern African nation would renege on its debt obligations, which it
did in November that year.

The kwacha could face further pressure from expectations that the US may
need to raise interest rates even higher than previously forecast after
January consumer prices rose briskly, which would boost the dollar.

Inflation Projections

Wednesday's moderate rate increase will allow other measures taken by the
central bank to slow a slump in the currency - such as increasing commercial
lenders' reserve ratios on Feb. 13 - to filter through, the governor said.
Failing to halt the slide in the kwacha has the potential to undermine the
emerging stable macroeconomic environment in Zambia, he said.

The monetary policy committee expects the annual inflation rate that's been
approaching the panel's 6% to 8% target range for more than a year to start
increasing, Kalyalya said. Price-growth is forecast to average 11.1% this
year, compared with the 8.5% it projected in November, and remain above
target over the central bank's forecast horizon instead of returning within
range by the first quarter of 2024, the governor said.

Plans to raise electricity tariffs by 37% and a possible reduction in corn
output because of adverse weather conditions and infestations of fall
armyworms may also push up prices, he said.

-Bloomberg L.P.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar rises to six-week peak as strong U.S. retail sales bolster
higher-rates scenario

(Reuters) - The dollar climbed to a six-week peak against a currency basket
after the release of hotter-than-expected U.S. retail sales data on
Wednesday, bolstering investors' expectations that the Federal Reserve would
keep monetary policy tight for some time to fight stubbornly high inflation.

The greenback also ascended to a fresh six-week peak versus the yen.

Data showed that U.S. retail sales surged 3.0% last month, increasing by the
most in nearly two years. The numbers for December were unrevised to show
sales dropping 1.1%. Economists polled by Reuters had forecast sales would
increase 1.8%, with estimates ranging from 0.5% to 3.0%.

On Tuesday, the U.S. government reported that consumer prices accelerated on
a monthly basis in January, rising 0.5%, due in part to higher rental and
food costs. The gain matched economists' expectations in a Reuters poll and
was well above the 0.1% month-on-month rise in December. Year-on-year prices
rose 6.4%, down from 6.5% in December but above economists' expectations of
a 6.2% gain.

"What all this has done, is it's pushed that terminal rate, just 25 basis
points higher than in January. So, now, the terminal rate has been pushed to
about 5.25," said Ivan Asensio, head of FX at Silicon Valley Bank in San
Francisco, referring to the U.S. central bank's benchmark overnight interest
rate.

"It's not just that we have renewed expectations for now 25 (basis points
higher) in March and then 25 as expected in May, but also the possibility
that rates have to stay higher for longer. So, where is the plateau? Every
day that goes by, the 2% (inflation) target for the Fed seems a bit far into
the distance," he added.

In afternoon trading, the dollar index rose 0.6% to 103.90 , after hitting a
six-week peak of 104.11.

Against the yen, the dollar surged to 134.355 yen , the highest since Jan.
6. It was last up 0.8% at 134.16 yen.

The currency pair's consolidation around 127 has extended, wrote Shaun
Osborne, chief FX strategist, at Scotiabank, and the technical picture for
the U.S. dollar has developed more positively through February so far."

He added that U.S. dollar gains above the 133.10 yen zone suggest
additional, corrective gains to the 136.50/137 area will follow.

The euro, meanwhile, fell 0.5% against the dollar to 1.0682 .

Euro

In December, Fed policymakers' median projection saw the central bank's
policy rate peaking at 5.1% this year. But interest rate futures markets
have priced a peak above 5.2% hitting in July, and traders are becoming less
sure that cuts are coming in 2023. Rates currently stand at 4.5% to 4.75%.

Deutsche Bank economists said they now expect the Fed to raise the policy
rate to as high as 5.6%, having previously expected a 5.1% peak.

U.S. CPI inflation is cooling

Sterling dropped 1.3% to $1.2022 in the wake of data showing British
inflation cooled more than expected in January to an annual rate of 10.1%,
alleviating some of the pressure on the Bank of England to keep hiking
interest rates.

Also on investors' radars was an announcement by Scottish First Minister
Nicola Sturgeon that she would step down after more than eight years in the
job.

The Australian dollar fell 1.3% to US$0.6897. Australia's central bank chief
Philip Lowe told members of parliament that rates still had a ways to rise.

Meanwhile, China's yuan traded onshore hit more than a one-month low at
6.8576 to the dollar, which was last up 0.3% at 6.8515.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold drops to over 1-month low as rate-hike bets fuel dollar

Gold prices dropped to their lowest in over a month on Wednesday, weighed
down by a stronger dollar as better-than-expected U.S. economic data raised
worries the Federal Reserve could hike interest rates further.

Spot gold

was last down 0.02%% to $1,835.81 per ounce. U.S. gold futures

futures settled 1.1% lower at $1,845.30.

U.S. retail sales rose 3% in January over the previous month, highlighting
economic resilience despite higher borrowing costs.

Higher retail sales were "another indication that if the Fed wants to cool
inflation, they're going to have to raise interest rates to choke off some
of this demand," said Jim Wyckoff, senior analyst at Kitco Metals.

This comes after data on Tuesday showed the U.S. consumer price index had
increased year-on-year by 6.4%. That was down from 6.5% in December, but
above the 6.2% estimated by economists.

Following the U.S. data, the dollar index rose to an over one-month high,
making gold more expensive for buyers using other currencies.

"In case of a re-acceleration of inflation and a return to more rapid
interest rate increases, gold and silver would suffer," said Carsten Menke,
head of Next Generation Research at Julius Baer.

"In contrast, gold and silver would benefit if the Fed started to reduce
interest rates due to strengthening signs of recession."

Also weighing on gold, Fed officials said earlier this week the U.S. central
bank will need to keep raising interest rates gradually.

The yellow metal is considered an inflation hedge, yet rising interest rates
increase the opportunity cost of holding the non-yielding asset.

Markets are now pricing a peak above 5.2% and traders are becoming less sure
that cuts are coming in 2023. Rates currently stand at 4.5% to 4.75%.

Spot silver dropped 1.1% to $21.60 per ounce, platinum was down 1.6% to
$916.14 and palladium fell 2.5% to $1,460.09.

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
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companies typically involve a higher degree of risk and more volatility than
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for guideline purposes only and sourced from third parties.

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