Bulls n Bears Daily Market Commentary : 12 January 2023

Fri Jan 13 07:39:20 CAT 2023

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Bulls n Bears Daily Market Commentary : 12 January 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE All Share Index retreated by 45.91 points to close at 21,857.18
points. Losses were recorded in UNIFREIGHT AFRICA LIMITED which went down by
$7.3000 to $51.7000, NMBZ HOLDINGS LIMITED decreased by $3.3259 to $41.0000
and FIRST CAPITAL BANK LIMITED shed $1.9197 to $16.0980. FIRST MUTUAL
HOLDINGS LIMITED lost $0.9524 to $24.0000 and RAINBOW TOURISM GROUP LIMITED
was $0.8500 lower at $10.0000. Gains were recorded in SEED CO LIMITED which
added $6.4842 to $97.1561, MASIMBA HOLDINGS LIMITED increased by $4.0500 to
$84.0500 and MASHONALAND HOLDINGS LIMITED was $0.6025 up at $9.0000.
ZIMBABWE NEWSPAPERS LIMITED  decreased by $0.3621 to $2.7775 whilst DELTA
CORPORATION LIMITED lost $0.3099 to $420.0166. 

EXCHANGE TRADED FUNDS (ETF)

CASS SADDLE AGRICULTURE EXCHANGE TRADED FUND remained flat at $1.8502.
MORGAN & CO MULTI SECTOR EXCHANGE TRADED FUND lost a further $0.0182 to
close at 22.0000 and DATVEST MODIFIED CONSUMER STAPLES 

EXCHANGE TRADED FUND decreased by $0.0036 to $1.5145, MORGAN & CO MADE IN
ZIMBABWE EXCHANGE TRADED FUND shed $0.0470 to $1.2030 and OLD MUTUAL ZSE TOP
10 was down $0.0831 to $7.4190.

REAL ESTATE INVESTMENT TRUST (REIT)

TIGERE REAL ESTATE INVESTMENT TRUST added $0.0033 to close at $54.1500.-zse

Global Currencies & Equity Markets

South Africa

South African rand gains after U.S. inflation data

(Reuters) - South Africa's rand strengthened on Thursday, after U.S. data
offered hope inflation was now on a sustained downward trend, potentially
allowing the Federal Reserve to slow its policy tightening pace and ease the
pressure on global central banks.

At 1601 GMT, the rand traded at 16.8350 against the dollar, 0.63% stronger
than its previous close.

Data showed in the 12 months through December, U.S. consumer prices
increased 6.5%, as expected, slowing from a rise of 7.1% in the prior month.

The dollar index , which measures the currency against six others, fell to a
nearly 9-month low following the inflation reading and was last down 0.44%
at 102.67.

Like most emerging market currencies, the risk-sensitive rand is highly
susceptible to global drivers such as U.S. monetary policy.

Locally, investors will be digesting news of higher power bills for
customers this year after South Africa's energy regulator on Thursday
approved an 18.65% price rise for struggling state utility Eskom.

Eskom is implementing some of the deepest power cuts on record, of about six
to eight hours a day for most households.

Shares on the Johannesburg Stock Exchange ended marginally higher, with the
broader all-share index (.JALSH) closing up 0.13%, while the top-40 index
(.JTOPI) ended 0.14% higher.

The government's benchmark 2030 bond was stronger, with the yield down 5
basis points at 9.775%.

-The Thomson Reuters Trust Principles.

Ghana

Cedi to witness more pressure if current account deficit is not checked –
World Bank

The World Bank has warned that the Ghana cedi may continue to come under
pressure in 2023 against the U.S dollar if efforts are not directed at
controlling the country’s current account deficit to a sustainable level.

The caution was captured in the World Bank’s January 2022 Global Economic
Prospects report.

“Large current account deficits are likely to keep currencies under pressure
in several countries, adding to inflation and external vulnerabilities
(Gambia, Ghana)”, the report said.

The report encouraged government to take extra measures to manage its
current account deficit in 2023.

It further pointed out the need to institute policies that will boost
exports to narrow the current account deficit, while controlling imports.

It stated that introducing these actions together with policies aimed at
checking inflation in the coming months will help stabilise the economy and
deal with some of the threats that will impact negatively on the local
currency.

Cedi recent performance

The Ghana cedi was on January 10, 2023 selling at ¢12 to the US dollar in
the retail or forex market, following days of sustained stability.

This was about 0.86% loss in value since the beginning of the year.

The Bank of Ghana, however quoted a dollar for ¢9.00 on the interbank forex
market.

Checks by Joy Business at some forex bureaus at the time indicated that the
pound was the major currency that had lost more value so far in 2023. One
pound was going for ¢14.20.

The euro had also depreciated by a little over 1%, trading at ¢12.50.

Nigeria

Naira Losing Value As African Currencies Come Under Pressure

The naira, Nigeria’s currency, is expected to come under pressure in the New
Year, with the general election being one of the factors that will weigh
down on its value. This is as currencies across the African continent are
projected to experience varying degrees of depreciation in the year, with
inflation and interest rate increases, and a weak growth outlook accounting
for part of the pressure.

The naira weakened relative to the dollar, exchanging for 752 from 748 at
last week’s close on the parallel market, as demand for foreign exchange
picked up in the New Year.

This came also against the background of the World Bank’s downward revision
of its growth forecast for the country to 2.9 per cent, from an earlier
projection of 3.1 per cent. The bank cited continued weakness in Nigeria’s
oil sector, where theft has deeply hurt production.

“With crude prices moderating and security issues persisting, the country’s
oil production outlook remains challenging. We expect FX demand to weaken
the naira in the near term further,” AZA Finance, Africa’s largest non-bank
currency broker by trading volume, said in a note to its clients on
Thursday.

In Ghana, AZA expects the cedi to decline under the combined weight of the
country’s debt crisis, rising inflation and weaker growth outlook. The
currency, which lost about 37 per cent last year, fell against the dollar to
11.02 from 10.20 at last week’s close, but AZA expects it to trade in the 11
to 12.5 range “in the coming week”. Ghana’s inflation rose to a record 54.1
in December, the seventh highest rate in the world, as investors continue to
exit the market. The Bank of Ghana also raised the interest rate to 27 per
cent last year. The government last month defaulted on its foreign debts,
after announcing a restructuring of its local debts. The World Bank has
forecast a 2.7 per cent economic growth this year.

In Egypt, the central bank devalued the pound, the third in less than a
year, causing the currency to fall to 30.5 to the dollar, from 27.4 where it
closed last week, according to AZA.

“The bank has committed to allowing the currency to float more freely and
not to intervene in the FX market as part of a deal to unlock fresh IMF
funding and to ease the impact of a dollar shortage in the country,” the
currency dealer said.

Egypt’s annual inflation rose to a five-year high of 21.3% last month, from
18.7% in November, led by a sharp rise in food and beverage prices. The
government plans to reduce fiscal spending and shelve infrastructure
projects that consume large quantities of foreign currency. “We expect the
pound to continue depreciating in the short term until those spending cuts
take effect,” AZA said.

Right now, Zimbabwe’s dollar is the world’s worst-performing currency, after
falling 521 per cent to an exchange rate of 689 per dollar from 111. Even
so, AZA says the currency seems destined to fall further, with the country
owing approximately $13bn to international financial institutions and
ineligible for additional lines of credit from the IMF.

It noted that pressure on Africa’s central banks to raise interest rates
continues into 2023 amid lingering inflationary strains. Defending
currencies against depreciation adds to pressure for further rate hikes in
the year ahead.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar slides to nearly 9-month low vs euro after U.S. inflation data

(Reuters) - The dollar tumbled to a nearly nine-month low against the euro
on Thursday after data showed U.S. inflation was easing, prompting bets that
the Federal Reserve will be less aggressive with rate hikes going forward.

The move lower in the dollar came as the Japanese yen surged, hitting a more
than six-month high against the greenback, on a report that the Bank of
Japan may take further steps to address the side effects of monetary easing.

U.S. data showed the consumer price index (CPI) dipped 0.1% last month,
marking the first decline in the data since May 2020, when the economy was
reeling from the first wave of COVID-19 infections.

Register for free to Reuters and know the full story

Price pressures are subsiding as the U.S. central bank's fastest monetary
policy tightening cycle since the 1980s dampens demand, and bottlenecks in
the supply chains ease.

"Three months of relatively lighter core inflation figures are starting to
form a trend ... one that could spur the Fed to slow the pace of tightening
further on February 1," said Sal Guatieri, senior economist at BMO Capital
Markets.

Fed policymakers expressed relief that price pressures were easing, paving
the way for a possible slowdown in interest rate hikes, but they signaled
the central bank's target rate was still likely to rise above 5% and stay
there for some time despite market bets to the contrary.

Following the CPI report, the dollar plunged as much as 1% against the euro,
its weakest versus the common currency since April 21.

Advertisement · Scroll to continue

The euro has been supported by hawkish messaging from European Central Bank
officials, with four on Wednesday calling for additional rate increases.

"Our expectations are for another 125 basis points of rate hikes from the
ECB and stay there until 2024," said Chris Turner, global head of markets at
ING in London.

"Our core views for Fed policy versus ECB policy would be for a stronger
euro-dollar through the year."

The dollar was down 0.83% versus the euro at $1.0845 at 3 p.m. EST (2000
GMT) and down 0.56% against the pound at $1.22195.

The U.S. dollar index was down 0.815% at 102.20, its lowest level since June
6.

The greenback slumped as much as 2.7% against the yen, hitting a 6-1/2-month
low against the Japanese currency.

The yen was boosted by a Yomiuri report that the Bank of Japan (BOJ) will
review the side effects of its monetary easing at next week's policy meeting
and may take additional steps to correct distortions in the yield curve.

The news follows the BOJ's surprise tweak in December to its bond yield
curve control (YCC), though the move has failed to address distortions
caused in the bond market by the central bank's massive bond buying.

"With reports that the BOJ will review its lax monetary policy settings at
its upcoming meeting, speculation has grown that another YCC shift will
occur this quarter," said Mazen Issa, senior FX strategist at TD Securities.

That will likely happen at the BOJ's January meeting, and if not then, by
March, he said.

"We expect 122 this quarter and likely in short order," he said of the
dollar-yen currency pair.

The dollar was last down 2.41% versus the yen at 129.35 yen per dollar .

The Aussie rose 0.92% to $0.69695, while the kiwi was up 0.52% at $0.63995.

China's offshore yuan was at its strongest level in five months, at 6.7331
per dollar, on optimism that China's economy is on the road to recovery.

Meanwhile, bitcoin rose for the fifth consecutive day, hitting its highest
in a month at $18,863.

-The Thomson Reuters Trust Principles.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold set for weekly gain on smaller U.S. rate-hike bets

(Reuters) - Gold prices ticked higher on Friday and were on track for a
fourth consecutive weekly gain, supported by a weaker dollar and
expectations of slower interest rate hikes by the U.S. Federal Reserve.

Spot gold was up 0.1% at $1,898.57 per ounce, as of 0234 GMT. Prices gained
1.8% so far this week.

U.S. gold futures rose 0.1% to $1,899.60.

The dollar index was on track for worst week since Nov. 11, 2022. A weaker
greenback makes bullion more attractive to overseas buyers.

Data on Thursday showed that U.S consumer prices fell for the first time in
more than 2-1/2 years in December, offering hope that inflation was now on a
sustained downward trend.

"Typically gold goes up when inflation is rising. But we see gold continuing
to rise despite cooling inflation because the market is looking at a lower
dollar and smaller interest rate hikes," said Edward Meir, metals analyst,
Marex.

"Prices are facing some resistance around the $1,900 level, so maybe it
won't just continue pushing higher, there might be some selling at these
levels."

Gold is seen as an inflation hedge, but higher interest rates increase the
opportunity cost of holding the asset.

Federal Reserve Bank of Philadelphia leader Patrick Harker said on Thursday
that while the central bank needs to raise rates more to cool off inflation,
it can probably do so at a much slower pace. Atlanta Federal Reserve Bank
president Raphael Bostic said the inflation data may allow the Fed to scale
back to quarter-point rate hikes at its upcoming meeting.

The Fed had raised rates by 75 basis points (bps) four times last year,
before slowing to a 50 bps increase in December.

Spot silver edged 0.1% higher to $23.79, platinum gained 0.1% to $1,068.79
while palladium slipped 0.6% to $1,780.91. All three metals were headed for
a weekly drop.

-The Thomson Reuters Trust Principles.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

National Unity Day

December 22

Christmas Day

December 25

Boxing Day

December 26

Counters trading under cautionary

CBZH

Meikles

Fidelity

TSL

FMHL

Turnall

GBH

ZBFH

GetBucks

Zeco

Lafarge

Zimre

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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for guideline purposes only and sourced from third parties.

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