Bulls n Bears Daily Market Commentary : 16 January 2023

Tue Jan 17 05:05:12 CAT 2023

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Bulls n Bears Daily Market Commentary : 16 January 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE All Share Index lost 4.58 points to close at 21,976.83 points. Losses were recorded in INNSCOR AFRICA LIMITED which shed $8.3304 to $691.5733, SEED CO LIMITED  decreased by $2.7313 to $95.0500 and DELTA CORPORATION LIMITED was $2.6215 down at $417.3630. FIRST CAPITAL BANK LIMITED decreased by $1.6071 to $14.3929 whilst OK ZIMBABWE LIMITED lost $1.2014 to $43.7471.

Gains were recorded in MEIKLES LIMITED which increased by $14.9569 to $150.0000, TANGANDA TEA COMPANY LIMITED added $5.1932 to $120.0000 and DAIRIBOARD HOLDINGS LIMITED gained $5.0000 to $55.0000. NMBZ HOLDINGS LIMITED added $3.0000 to $44.0000 whilst AMALGAMATED REGIONAL TRADING HOLDINGS LIMITED was $2.0000 higher at $16.0000.

EXCHANGE TRADED FUNDS (ETF)

MORGAN & CO MULTI SECTOR EXCHANGE TRADED FUND , MORGAN & CO MADE IN ZIMBABWE EXCHANGE TRADED FUND and CASS SADDLE AGRICULTURE EXCHANGE TRADED FUND remained flat at $22.8805, $1.3000 and $1.8502 respectfully. DATVEST MODIFIED CONSUMER STAPLES EXCHANGE TRADED FUND increased by $0.0700 to $1.5700, and OLD MUTUAL ZSE TOP 10  was up $0.5000 to $7.5000.

REAL ESTATE INVESTMENT TRUST (REIT)

TIGERE REAL ESTATE INVESTMENT TRUST shed $1.1700 to close at $53.0000.-zse

Global Currencies & Equity Markets

South Africa

South African rand slumps as power crisis takes centre stage

(Reuters) - The South African rand slumped on Monday as investor concerns mounted over a power crisis that prompted President Cyril Ramaphosa to cancel a trip to the World Economic Forum in Davos.

The struggling state power utility last week ramped up power cuts to their worst-ever level, meaning most South Africans are without power for at least six hours a day and often more.

The South African rand traded at 17.0775 against the dollar at 1230 GMT, about 1.4% weaker than its previous close. It earlier in the day hit its weakest since Dec. 13.

"What we're seeing right now is potentially a realisation of the ramifications of where we are with Eskom and also a bit of unwinding in the USD-ZAR shorts that were on," said Quinten Bertenshaw, executive director of ETM Analytics.

Recent strengthening in the rand had been a "dollar play", he said, adding, "we haven't broken any key technical levels as yet. I think the first big level that I would worry about that would signal a reversal for me, would be closer to the 17.20 mark."

Eskom said on Tuesday it would implement "Stage 6" power cuts until further notice, as more of its generating units broke down. That requires up to 6,000 megawatts (MW) to be shed from the national grid, versus Eskom's 46,000 MW nominal capacity.

Wichard Cilliers, chief dealer at TreasuryONE, said rand moves on Monday were exacerbated by thin liquidity due to U.S. markets being closed.

"The rest of the emerging market space has also been under pressure but the rand is leading the way as load-shedding and the cost to the economy is worrying investors," he said, using a term for power outages.

Shaun Murison, senior market analyst at IG, said softer prices for South African exports were also weighing on the rand.

No major economic data releases are expected in South Africa on Monday. Later this week South African mining output (ZAMNG=ECI) and retail sales (ZARET=ECI) for November are due, as well as December consumer inflation (ZACPIY=ECI).

The South African government's benchmark 2030 bond was weaker, with the yield up 13 basis points to 9.895%.

-The Thomson Reuters Trust Principles.

Nigeria

Again, Naira value depreciates at official market 

The Naira recorded mixed trading as it appreciated against the United States Dollar at the Peer-to-Peer (P2P) but closed weaker at the Investors and Exporters (I&E) as well as the parallel market segments of the foreign exchange (forex) market.

Data obtained showed that the Nigerian currency gained N3 against its American counterpart on Friday to close at N752/$1, in contrast to the N755/$1 it was quoted a day earlier.

However, at the official market according to FMDQ Securities Exchange, Naira depreciated by 73 Kobo or 0.16 percent against the greenback to trade at N461.90/$1 compared with the previous day’s N461.17/$1.

Also the data showed that the value of FX transactions recorded at the official market went down by $16.77 million or 18.9 percent to $72.18 million from the $88.95 million recorded in the preceding session.

In the parallel market also known as the black market, Nigerian currency depreciated against the US Dollar on Friday by N3 to settle at N741/$1 versus Thursday’s exchange rate of N738/$1.

While at the interbank window of the FX market, the local currency was flat against the Pound Sterling and the Euro on Friday at N551.18/£1 and N487.75/€1 apiece.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar finds its footing near seven-month low, all eyes on yen

(Reuters) - The dollar started the week on the back foot, hitting a seven-month low against a basket of major peers in Asian trade before steadying, with the yen in particular focus due to traders' bets the Bank of Japan will tweak its yield control policy further.

The euro hit a fresh nine-month top of $1.0874 in early trade before retreating to last stand 0.16% lower at $1.0816, while the Australian dollar breached the key $0.7000 level for the first time since August, before dipping back to $0.6962.

Thanks also to early strength from sterling and the Japanese yen, the dollar index , which tracks the greenback against a basket of currencies, slumped to a seven-month trough of 101.77, extending its selloff from last week after data showed that U.S consumer prices fell for the first time in more than 2-1/2 years in December.

With decades-high inflation in the world's largest economy showing signs of cooling, investors are now growing increasingly confident that the Fed is nearing the end of its rate-hike cycle, and that rates will not go as high as previously feared.

The Fed's aggressive rate increases were a main driver of the dollar index's 8% surge last year, before signs that inflation was peaking brought it back down.

The dollar has largely traded steady against most currencies since last week's data.

"It's too soon to imagine a significant dollar downtrend, we've had some dollar repricing certainly, but for broad-based dollar weakness you'll need to really see Fed expectations roll over materially and the Fed potentially cutting rates at some point, and we are not at this point," said Samy Chaar, chief economist at Lombard Odier.

Markets are now pricing in a 91% chance of a 25-basis-point increase when the Fed announces its policy decision in February, with a 9% chance of a 50-bp hike.

The dollar steadied in European trading, regaining ground against the pound which was last down 0.3% at $1.2195.

MARKETS CHALLENGE BOJ

A particular focus for currency markets this week is the Japanese yen, due to speculation that the Bank of Japan will make further tweaks to, or fully abandon, its yield control policy at a meeting scheduled to conclude Wednesday.

The dollar slipped to a more than seven-month low on the yen in early trading, before recovering and was last at 128.4 yen, up 0.4%.

"I think the whole world will be focused on Wednesday ... and probably the week in G10 (currencies) will be defined by what happens to the yen and yen crosses, out of that," said Ray Attrill, head of FX strategy at National Australia Bank (NAB).

"I don't think (the BOJ) has the luxury of time to say that they're going to assess and wait until Q2 or Kuroda to see out his term without making any further changes."

BOJ Governor Haruhiko Kuroda will step down in April.

Investors have been pressing for the BOJ to shift away from its ultra-easy monetary policy, which caused the yield on Japan's benchmark 10-year government bonds to breach the central bank's new ceiling for two sessions.

U.S. markets are closed on Monday for a holiday, making for thin trading.

-The Thomson Reuters Trust Principles.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold steadies near 9-month peak on hopes of slower Fed rate hike

Gold prices steadied after climbing to their highest in nearly nine months on Monday, as a softer dollar and expectations of slower interest rate hikes from the U.S. Federal Reserve added to bullion's shine.

Spot gold

held its ground at $1,918.66 per ounce, as of 0548 GMT. Earlier in the session, prices hit $1,929 per ounce, a peak since late April.

U.S. gold futures

rose 0.1% to $1,923.20.

The dollar index

slipped 0.3%, making greenback-priced gold a more attractive bet.

"Fed remains the focus. The market is of the view that the Fed's rate-hike cycle is slowing and may come to an end soon, which is helping gold," said Ilya Spivak, head of global macro at Tastylive.

"Prices are seeing good support around the $1,900-$1,920 levels. The next key level of resistance will be around $1,970."

The Fed raised rates by 75 basis points (bps) four times last year, before slowing to a 50 bps increase in December. Most traders expect a 25 bps hike at the U.S. central bank's next policy meeting on Jan. 31-Feb. 1. 

Bullion is a non-yielding asset, hence gold tends to benefit amid lower rates as it reduces returns on other assets such as government bonds and the dollar.

Investors will also keep an eye out for the U.S. retail sales data due on Wednesday.

Spot silver

edged 0.5% higher to $24.37, after hitting a near two-week peak. Silver is a safe-haven asset, but is also used to manufacture goods including solar panels, automobiles and electronics.

"The growing adoption of green energy sources continues to favor fabrication demand for silver ... Silver bar and coin demand continued to be high," ANZ said in a note.

"We expect silver to perform well, in tandem with gold, as investors look for cheaper alternatives to gold."

Platinum

gained 0.1% to $1,065.46, while palladium

slipped 1.2% to $1,767.69.

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 the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of 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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