Bulls n Bears Daily Market Commentary : 18 January 2023

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Bulls n Bears Daily Market Commentary : 18 January 2023

 

 	

 <mailto:info at bulls.co.zw> 

 

 	


ZSE commentary

 

ZSE records third day of losses…

ZSE faltered for the third consecutive session as three of the indices under our review ended pointing southwards. The primary All-Share Index lost 1.09% to 21438.71pts while, the ZSE Top Ten Index eased 1.34% to 13295.91pts. The Midcap Index fell 0.47% to 42723.25pts while, the ZSE-Agriculture Index the only riser among its kind added 0.27% to 86.18pts. Headlining the laggards of the day were bankers First Capital that dropped 10.53% to $13.0363 recording losses for the sixth session. Following was fintech group Ecocash that slipped 8.10% to end pegged at $55.0877. Brick manufacturers Willdale trimmed 5.41% to $3.5000 while, conglomerate Innscor retreated 4.88% to $651.3916. Zimplow capped the top five shakers’ list on a 4.17% dip to close the day at $23.0000. Telecoms giant Econet led the winner’s pack on a 14.78% jump to $138.2263 while, plastics manufacturer Proplastics, surged 10.00% to $35.2000.

 

Hotelier RTG grew 3.62% to $11.9167 while, Seed Co Limited climbed up 3.01% to $103.0000 post releasing a cautionary of its intent to migrate to VFEX . Fastening the top five gainers’ pack was First Mutual Holdings that advanced 1.69% to settle at $22.3710.

 

Activity aggregates were enhanced in the session as volumes traded jumped 160.11% to 8.57m while, turnover soared 681.05% to $1.77bn. The gainers and fallers’ spectrum was equally distributed at twelve apiece. The top volume and valued drivers of the day were Econet and Innscor which accounted for a combined 83.90% of total volumes and 93.66% of the value outturn. Foreigners were net sellers in the session as outflows amounted to $870.83m against purchases of $8.67m. On the VFEX, Bindura and Padenga lost 10.00% and 0.17% to close at USD$0.0180 and USD$0.2945 respectively. Simbisa edged up 1.19% to USD$0.4857 on 3,490 shares. The Cass Saddle and the OMTT ETFs ticked up 0.51% and 0.10% to $1.9800 and $7.4900 accordingly while, the other three ETFS remained unchanged. The Tigere REIT dipped 6.88% to $46.5599 on 5,121 units.efesecurities

 

 

Global Currencies & Equity Markets

 

 

 

 

South Africa

 

South African rand slips after in line local inflation data

(Reuters) - The South African rand weakened on Wednesday after domestic inflation figures came in line with expectations, sparking hopes of smaller rate hikes.

 

At 1733 GMT, the rand traded at 17.1350 against the U.S. dollar, 0.47% weaker than its previous close.

 

The country's headline consumer inflation (ZACPIY=ECI) slowed to 7.2% year-on-year in December from 7.4% in November, in line with analysts' forecasts, Statistics South Africa said on Wednesday.

 

"This will likely be insufficient to see the South African Reserve Bank (SARB) halt its rate hike cycle, but a 50 basis points (bp), instead of a 75 bp hike is likely in January," Investec analyst Annabel Bishop said, adding the United States has similarly slowed its pace of interest rate hikes.

 

The central bank, whose next rate-setting decision (ZAREPO=ECI) is due on Jan. 26, targets inflation of between 3% and 6%.

 

Meanwhile, data from Statistics South Africa showed retail sales (ZARET=ECI) rose 0.4% year-on-year in November after falling by a revised 0.7% in October.

 

Economists polled by Reuters had predicted a 0.2% year-on-year drop in November.

 

Investec analyst Lara Hodes said a favourable Black Friday event, a highlight of November’s consumer calendar, boosted month-on-month activity.

 

On the stock market, the Top-40 (.JTOPI) and the broader all-share (.JALSH) indexes rose around 0.6%.

 

Among gainers, debt-laden Steinhoff International (SNHJ.J) ended 4% higher after raising 315.2 million euros ($340.04 million) on Wednesday from selling 38 million shares or 6.6% of retail group Pepco (PCOP.WA) via an accelerated book build.

 

The government's benchmark 2030 bond was stronger on Wednesday, with the yield down 20.5 basis points at 9.655%.

 

($1 = 0.9270 euros)

 

The Thomson Reuters Trust Principles.

 

 

Malawi

 

Malawi Kwacha value maintained after five banks snub forex auction

The Reserve Bank of Malawi (RBM) says only three out of eight banks participated in the foreign exchange auction last week and the results cannot be used to determine the official exchange rate of Malawi Kwacha.

 

The Central Bank last week announced that Authorized Dealer Banks (ADBs) will be submitting bids to sell foreign exchange to RBM at rates determined by each ADB and these auctions will facilitate the discovery of a prevailing exchange rate for the Malawi Kwacha against major currencies and thereby promote transparency in the determination of the exchange rate.

 

 

However, in a statement yesterday, RBM Governor Wilson Banda said only three out of eight ADBs participated in the auction held on Friday last week.

 

“Consequently, these results cannot be used to determine the official exchange rate as they may not be representative of the sentiments of the entire banking system,” said Banda.

 

He added that the bank will engage all commercial banks in preparation for the next auction.

 

The introduction of the foreign exchange auctions has been condemned by some experts who have argued that RBM wants devalue the Kwacha and blame commercial banks.

 

Former RBM Governor Dalitso Kabambe also described the move as a step in a wrong direction.

 

“It is the lack of financial prudence and sound economic principles that has forced this administration to resort to this measure,” he said. “As it is we can simply say that the Kwacha is being devalued silently with the government opting to heap the blame on the private banks.”

 

According to RBM statistics, the Kwacha is selling at K1036.2485 per one United States Dollar and K62.4710 per one South African Rand.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global markets

 

Dollar touches 7-month low as Fed rate rise expectations slide

 

The dollar touched a seven-month low on Wednesday, reversing a trend that dominated much of 2022 as lower expectations of sharp Federal Reserve rate rises eased pressure on global markets.

 

The fall in the US currency, one of the steepest since the aftermath of the global financial crisis, came as US retail figures showed a 1.1 per cent year-on-year drop in sales in December — a bigger than expected fall that highlighted continuing weakness in the US economy.

 

“The trend has been very much in favour of dollar weakness, so it doesn’t take much to push it further in that direction,” said Alan Ruskin, head of G10 FX strategy at Deutsche Bank. “Any minor macro information can sway [the dollar].”

 

Expectations about the Fed’s future actions are influential in currency trading since higher interest rates drive up yields on US debt, attracting foreign inflows that boost the dollar.

 

The dollar index measuring the currency against a basket of its peers has fallen 10.7 per cent since September, the fastest rate of decline since 2009.

 

Data released on Wednesday also showed a 0.5 per cent month-on-month decline in wholesale prices — the sixth consecutive fall — further boosting hopes that the pressure on the Fed to raise rates is relenting. US consumer inflation has fallen consistently for five months.

 

The trade in the US currency became known as “King dollar” as it rose on the back of big Fed rate rises last year, but the recent data have bolstered market expectations that borrowing costs will not rise much further in 2023.

 

The Fed has already pivoted from 0.75 percentage point to 0.5 point increases and is increasingly expected to shift to 0.25 increments.

 

“We currently have traders putting a 5 per cent chance on a 0.50 percentage point increase at the next Fed meeting. It is not often you get that kind of certainty,” said Ed Al-Hussainy, strategist at Columbia Threadneedle.

 

The Fed next meets on February 1.

 

The fall in the currency has taken the dollar index from over 114 points in September to 101.53 by mid-morning on Wednesday in New York, its lowest point since May 31. However, the dollar recovered to 102.40 in midday trading after Fed officials warned against expecting rates to fall soon.

 

The sliding dollar has boosted emerging market stocks, with MSCI’s EM index rising 7 per cent this year, compared with a fall of 22 per cent in 2022. The group’s debt and currencies have also rebounded this year.

 

“Emerging market assets have begun 2023 on the front foot, posting strong gains in the first two weeks . . . and broadly outperforming developed market peers,” said Caesar Maasry, a strategist at Goldman Sachs.

 

“The fundamental drivers regarding China reopening, softening inflation and better growth on the European front have contributed to this rally but the pivotal shift in markets at the top of EM investors’ minds has been the reversal of the US dollar.”

 

Most commodities are priced in dollars, so a weaker dollar helps cut import bills for emerging markets. It also makes it less expensive to service debt priced in the currency.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold price is going to record highs in 2023 as investors protect themselves against a severe recession - David Rosenberg

(Kitco News) - Investment demand for gold should push prices to all time-highs above $2,000 in 2023 as the U.S. economy falls into a recession, according to David Rosenberg, founder and chief economist at Rosenberg Research.

 

In an exclusive interview with Kitco News, Rosenberg said that when it comes to the health of the economy, the only questions investors should be asking themselves this year are: how bad will the impending recession be and how should they be protecting their wealth?

 

In his 2023 outlook report, Rosenberg said he is using a barbell investment strategy and is bullish on gold and bonds as he sees a peak in the U.S. dollar and the Federal Reserve's monetary policy.

 

Rosenberg's pessimistic outlook comes as the S&P 500 has rallied nearly 4% since the start of the new year. Sentiment on Wall Street has improved as positive employment data and falling inflation are reviving hopes that the U.S. economy will see a soft landing.

 

"I see this outlook as a hope and a prayer," he said. "A recession is as close to a sure thing as anything can ever be."

 

Although inflation has dropped sharply from its 2022 summer highs, it remains persistently high. Rosenberg said that the Federal Reserve's fixation on bringing inflation back down its 2% target means it will be slow to react to growing economic weakness. He added that the Fed won't be quick to cut interest rates because it doesn't want to see a renewed threat of inflation.

 

"What happens in a recession is they ultimately end," he said. "The mild and brief affairs we've seen in the past were predicated on the Fed cutting rates early and aggressively. But there's not going to be a get-at-out-of-jail-free card this time around. I'm more concerned about a more severe downturn, and if it's not more severe in terms of magnitude, then certainly in terms of duration."

 

In this environment, Rosenberg said he sees the Federal Reserve raising interest rates one more time next month and then holding until the recessionary conditions become too difficult to ignore.

 

As for markets pricing in a fed funds rate above 5%, Rosenberg said that investors need to take central bank projections with a significant grain of salt.

 

 

 

Royal Mint sees record bullion demand in 2022 as sales increase 25% for gold, 29% for silver

"This is the same Fed that saw interest rates at the start of last year, ending the year at 0.9%. So what do they do for an encore?" he asked.

 

He added that he sees the Federal Reserve cutting interest rates by the second half of the year, which is why he is bullish on gold.

 

"Gold will be making all-time highs in U.S. dollar terms this year. And let's not forget what a phenomenal year gold had in 2022 as it hit practically new highs in every other currency," he said. "Last year, the U.S. dollar overshot its fundamentals, and we are going to see that revert back to the mean, and that will be positive for gold."

 

As to how bad the recession will be this year, Rosenberg said that it could last more than six quarters, the longest recession since the 1980s.

 

 

Rosenberg used the U.S. housing market as just one example of the impending economic rest. He noted that the housing price bubble is bigger than before the 2008 financial crisis.

 

"Everyone is so consumed with consumer inflation that they have taken their eye off the ball over asset deflation at a time when going into this cycle we are naked long $90 trillion or four-times the U.S. economy, in residential real estate evaluations. We have never seen this before," he said. "The equity market and the housing market are the longest-duration segments of the economy, and They're the most sensitive to interest rates. 2022 was the year of the rate hikes and the impact that had on the market multiple. And 2023 will be the year when those Fed rate hikes percolate to the real economy."

 

Not only is Rosenberg not expecting the Federal Reserve to provide much relief during the impending recession, but he added that consumers shouldn't expect to see any fiscal stimulus from the U.S. government. He noted that the Republican Party, with control over the U.S. House of Representatives, is focused on implementing austerity measures to rein in government spending.

 

 


 

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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