Bulls n Bears Daily Market Commentary : 17 January 2023

Wed Jan 18 06:45:57 CAT 2023

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Bulls n Bears Daily Market Commentary : 17 January 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

Market slips further.

The ZSE continued to falter in Tuesday's session as the primary All-Share
Index fell 1.37% to 21675.81pts while, the ZSE Top Ten Index declined 2.11%
to 13476.05pts spurred by losses in OKZIM, Econet and Delta. Two indices
traded in the positive as ZSE Agriculture Index and the Mid-cap Index as
they rose 1.21% and 0.55% to close at 85.95pts and 42926.56pts respectively.
Top five losers were led by insurer First Mutual Holdings that dropped
12.00% to $22.0000. Following was retailer OK Zimbabwe that succumbed 8.11%
to end at $40.1980. Telecoms giant Econet retreated 6.96% to $120.5084 as
property concern Mashonaland Holdings gave up 5.27% to $8.5256. Brick makers
Willdale lost 3.88% to $3.7000 as it completed the top five fallers' pack.
Media concern Zimpapers headlined the risers of the day on a 14.94% jump to
$3.1925 while, Zimre Holdings firmed up 13.33% to $6.8000. Sugar processor
Star Africa advanced 5.86% to $2.2242 while, seed company Seed Co Limited
climbed 5.20% to $99.9951. Turnall Holdings capped the top five winners of
the day after a 4.63% surge to $4.2400.

Market spend dipped 37.26% to $142.48m while, volume of shares traded
plunged 41.30% to 1.93m. OK Zimbabwe was the top volume and value driver of
the day as the group claimed 48.57% of the former and 26.56% of the latter.
Other notable value drivers of the day were Innscor (22.50%), Delta (9.99%),
Econet Wireless (7.92%) and FBC Holdings (7.58%). A cumulative 106,685
shares worth USD$50,550 exchanged hands on the VFEX. The worst faller was
Padenga that eased 12.20% to USD$0.2950 followed by Seed Co International
that pared 8.68% to USD$0.3000. Simbisa shed 0.29% to settle at USD$0.4800.
On the ETF section, three ETFs gained against one that faltered. Cass Saddle
ticked up 6.47% to $1.9700 on 20,343 units trailed by Datvest that trimmed
0.64% to$1.5800. MIZ was flat $1.3000 on 2,100 units while, the Old Mutual
ETF lost 0.24% to $7.4823. The Tigere REIT let go 5.66% to $50.0000 on a
paltry 100 units.-efesecurities

Global Currencies & Equity Markets

South Africa

South African rand weakens as mining data disappoints

(Reuters) - The South African rand weakened on Tuesday as mining production
continued to decline against a backdrop of crippling power cuts.

At 1548 GMT, the rand traded at 17.1175 against the dollar, 0.4% weaker than
its previous close.

South Africa's total mining output (ZAMNG=ECI) fell 9.0% year on year in
November compared to a revised 11.0% decrease in October, Statistics South
Africa said on Tuesday.

Economists polled by Reuters had predicted a year-on-year contraction of
about 6.85% decrease in November.

"Domestically, persistent, heightened load shedding continues to weigh
heavily on the energy intensive mining sector and remains a key downside
risk to the country's growth potential," Investec analyst Lara Hodes said in
a research note.

Eskom trimmed the level of power cuts from Tuesday, but the long-term power
outlook remains bleak.

On the stock market, the Top-40 (.JTOPI) index ended 0.32% higher, while the
broader all-share (.JALSH) rose 0.27%.

The government's benchmark 2030 bond was almost unchanged in afternoon
deals, with the yield at 9.860%.

On Wednesday, investors will be closely watching the release of November
retail sales (ZARET=ECI) and December consumer inflation numbers
(ZACPIY=ECI).

-The Thomson Reuters Trust Principles.

Malawi

Kwacha depreciates as demand and supply imbalances persist

Official figures are indicating that the Malawi kwacha depreciated against a
majority of key trading currencies in late 2022 amid persistent demand and
supply imbalances on the market.

According to a latest Reserve Bank of Malawi (RBM) economic review, the
local unit weakened by 0.1 % to the US dollar as well as 3.5 % and 4.1 %
against the British pound and the euro respectively.

In other words, the local currency traded at 1,034 kwacha 42 tambala to the
dollar, 1,276 kwacha 81 tambala to the pound and 1,105 kwacha 82 tambala to
the euro.

According to the report, the kwacha's loss of strength to the dollar was due
to demand and supply imbalances on the market; while the pound appreciated
as investor risk appetite towards the British unit increased.

"Meanwhile, the pound appreciated as investor risk appetite towards the
pound increased following dampened expectations on the US dollar due to a
slowdown in the pace of interest rate hikes in the US economy. "Similarly,
the euro gained strength as increased investor risk appetite led to a shift
from US dollar assets to the euro supported by falling energy prices," reads
the statement in part.

The statements further reads; "In the Asian region, the Malawi kwacha lost
6.7 percent, 1.9 percent and 1.0 percent against the Japanese yen, the
Chinese Yuan and the Indian rupee, respectively, and traded at K7.41 per
yen, K143.63 per Yuan and K12.58 per rupee as at end of the review month".

Meanwhile, the RBM has started buying forex on auction at basis from
authorised dealer banks; a move analysts are warning could lead to further
depreciation of the kwacha.

The bank said in a statement that the participating dealer banks will be
selling the forex with the exchange rate determined by them.

Professor of finance and strategy at the Malawi University of Business and
Applied Sciences, James Kamwachale Khomba, has since tipped authorities to
avoid fully liberalising the exchange market.

"Monitoring part of it will be a problem because this now 100 percent
liberalisation without any direct intervention by the central bank because
its core mandate is to ensure that the basic economic parameters are working
according to their interpretation not necessarily the interpretation of
commercial banks," Khomba said.

There are hopes that the results of the preliminary auctions will determin
the way forward on the Kwacha's future.

 <mailto:info at bulls.co.zw> 

Global markets

U.S. dollar falters vs major currencies as sterling gains; yen in spotlight

The dollar fell against most major currencies on Tuesday in choppy trading,
weighed down by expectations of a possible policy shift at the Bank of Japan
(BOJ) that could end its so-called "yield curve control" and be a precursor
to adopting a tighter monetary stance.

The expectations have pushed the yen higher against the dollar over the past
few weeks. Since Jan. 6, the yen has surged nearly 5% against the greenback.

Sterling, meanwhile, led gains versus the dollar, hitting a five-week high
after data showed the pace of pay growth accelerated again in Britain,
closely watched by the Bank of England as it gauges how much higher to raise
interest rates.

The market's focus remained on the BOJ. Speculation is building about a
change or end to Japan's yield curve control (YCC) policy, given that
investors have pushed 10-year bond yields above a ceiling set by the BOJ of
0.5% and the amount of bond buying to defend it has become staggering.

Under the YCC policy, the BOJ targets some short-term interest rates at
-0.1% and the 10-year government bond yield at 0.5% above or below zero,
aimed at achieving a 2% inflation target on a sustained basis.

The BOJ is expected to make a crucial policy decision on Wednesday after a
two-day meeting.

"The market is waiting on tenterhooks to see if the BOJ gets on top of
this," said Amo Sahota, executive director at FX consulting firm Klarity FX
in San Francisco. "If they do, then dollar/yen is headed toward 126. But I
think they're going to hold steady here, giving the same cautionary tale and
wait it out a little bit."

In afternoon trading, the dollar slid 0.2% against the yen to 128.24 yen.

Against the Swiss franc, the dollar dropped 0.5% to 0.9220 francs.

The Australian and New Zealand dollars rose against the greenback, up 0.5%
at US$0.6991 and up 0.8% at US$0.6433 respectively.

The euro fell 0.3% against the dollar to $1.0793, undermined by a Bloomberg
News report saying that while a 50 basis-point (bp) rate hike in February
remains likely, the prospect of a smaller 25-bp increase in March is gaining
support.

The pound rose 0.7% against the dollar to $1.2278, after surging to a
five-week peak of $1.2299. Sterling was lifted by data showing UK wages
growth increased pace in the three months to November, while employment rose
by a faster-than-expected 27,000.

Options data showed that the market is anticipating sharp moves when the BOJ
meeting ends on Wednesday, with overnight implied volatility surging to a
six-year high.

Elsewhere, the U.S. dollar index

Since the end of the first trading week of the year, the dollar index has
fallen nearly 3%, pressured overall by U.S. data showing consumer prices
were rising at a slower pace. That suggested that the Federal Reserve will
continue to ease the pace of rate hikes.

"Inflation is moving in the right direction for the Fed and as a result a 25
basis-point hike has been priced in," said Joe Perry, senior market analyst
at FOREX.com and City Index in New York. "The market is in a wait-and-see
mode after that, until probably the fall when the market seems to think the
Fed will cut rates."

Data on Tuesday confirmed slowing inflation. The New York Fed's barometer of
business activity in the New York state fell in January to the lowest since
mid-2020 as orders plunged and employment growth stalled. The New York Fed's
"Empire State" index on current business conditions plummeted to -32.9 this
month from-11.2 in December. Economists polled by Reuters had forecast the
index at -9.0.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slips as dollar gains momentum

(Reuters) - Gold prices inched lower on Wednesday as the U.S. dollar firmed,
while expectations of a slowdown in the pace of Federal Reserve interest
rate hikes limited the losses.

Spot gold dipped 0.3% to $1,902.79 per ounce, as of 0256 GMT. U.S. gold
futures fell 0.2% to $1,906.00.

The dollar index was up 0.3%. A stronger dollar tends to make gold more
expensive for buyers holding other currencies.

"Gold is going to bounce around the $1,900 level in the near term. I don't
think we are going to see any big moves and it will be stuck in a neutral
zone," said Edward Meir, a metals analyst at Marex.

"Market focus is going to be on economic data. If the narrative continues to
be that inflation is cooling and interest rates will come down, then it will
be bullish for gold."

Investors will keep an eye out for the U.S. producer price index (PPI) and
retail sales data due later in the day.

The U.S. central bank raised rates by 75 basis points (bps) four times last
year, before slowing to a 50-bp increase in December. Traders are mostly
pricing in a 25-bp hike at the Fed's next policy meeting. FEDWATCH

Lower interest rates tend to be beneficial for bullion, decreasing the
opportunity cost of holding the non-yielding asset.

The stopping point for Fed rate increases will depend on the path of
inflation, Richmond Federal Reserve Bank President Tom Barkin said on
Tuesday.

On the physical front, Canadian miner Barrick Gold Corp (ABX.TO) reported on
Tuesday a 13.4% sequential rise in gold production in what could be its
highest quarterly output last year.

Spot silver fell 0.1% to $23.90 per ounce, platinum lost 0.6% to $1,033.06
and palladium dropped 0.2% to $1,740.30.

- 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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